Outokumpu Annual Accounts Bulletin 2009 - exceptional year with heavy losses but strong cash flow
Outokumpu Annual Accounts Bulletin 2009 - exceptional year with heavy losses but
strong cash flow
FINANCIAL STATEMENT BULLETIN
February 3, 2010 9.00 am EET
Year 2009 highlights
- Operating profit was EUR -438 million (2008: EUR -63 million), underlying
operational result some EUR -340 million (2008: EUR 305 million)
- Strong cash flow of EUR 198 million due to working capital reduction
- Balance sheet remained relatively strong, gearing at 48.2% (2008: 38.4%), well
below target of less than 75%
- The Board of Directors is proposing a dividend of EUR 0.35 per share (2008:
EUR 0.50)
- Cost cutting programme delivering EUR 185 million of savings, ahead of plan
Fourth quarter 2009 highlights
- Operating profit of EUR -29 million (III/2009: EUR -65 million)
- EBITDA EUR 26 million, operative cash flow EUR -108 million
- No major raw material-related inventory gains, underlying operational result
EUR -29 million (III/2009: EUR -82 million)
- Stainless steel deliveries at 277 000 tons as a result of weak demand
Group key figures
IV/09 III/09 IV/08 2009 2008
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Sales EUR million 728 587 966 2 611 5 474
Operating profit EUR million -29 -65 -271 -438 -63
EBITDA EUR million 26 2 -217 -212 149
Non-recurring items
in operating profit EUR million - -15 -17 -20 -83
Profit before taxes EUR million -36 -81 -298 -474 -134
Non-recurring items
in financial income
and expenses EUR million - - -9 - -21
Net profit for the period
from continuing operations EUR million -4 -55 -228 -332 -110
Net profit for the period EUR million -6 -56 -233 -336 -189
Earnings per share
from continuing operations EUR -0.03 -0.30 -1.27 -1.83 -0.61
Earnings per share EUR -0.04 -0.31 -1.30 -1.86 -1.05
Return on capital employed % -3.3 -7.6 -26.8 -11.7 -1.6
Net cash generated from
operating activities 1) EUR million -108 -10 205 198 664
Capital expenditure,
continuing operations EUR million 82 55 129 245 544
Net interest-bearing debt
at end of period EUR million 1 183 1 014 1 072 1 183 1 072
Debt-to-equity ratio at
end of period % 48.2 41.4 38.4 48.2 38.4
Stainless steel deliveries 1 000 tons 277 238 261 1 030 1 423
Stainless steel
base price 2) EUR/ton 1 297 1 307 1 045 1 161 1 185
Personnel at the
end of period,
continuing operations 7 606 7 699 8 471 7 606 8 471
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1) Cash flows presented for continuing operations
2) Stainless steel: CRU - German base price (2 mm cold rolled 304 sheet).
SHORT-TERM OUTLOOK
No major improvement in the underlying demand for stainless steel is yet
visible. Distributors' cautious buying behaviour continued over the year-end.
During the past few weeks, order intake has however been more encouraging. Lead
times on standard grades for mill-deliveries are normal at 6-8 weeks. Inventory
levels at distributors in Europe are estimated to be at normal levels.
Outokumpu's delivery volumes of stainless steel in the first quarter are
expected to be at the same level or slightly higher than in the fourth quarter
of 2009 (277 000 tons). Base prices began to decline during the fourth quarter
2009 but stabilized around the year-end. Thus, Outokumpu's average base prices
for all flat products in the first quarter of 2010 are expected to be 50-100
EUR/ton lower than the average in the fourth quarter. Currently Outokumpu sees
potential for some base price increases.
Outokumpu's underlying operational result in the first quarter is expected to be
at the same level or somewhat weaker than in the fourth quarter of 2009. If
metal prices remain at current levels, no major raw material-related inventory
gains or losses are anticipated. Cash flow is expected to remain negative in the
first quarter without any major impact on gearing, which will remain well below
the Group's set maximum level of 75%.
CEO Juha Rantanen:"Year 2009 was a very difficult one for the stainless steel
industry. Dramatic
drop of end demand, representing an estimated 26% decline in Europe, had a major
negative impact on Outokumpu. We were successful in reducing our costs, however,
this effort was not sufficient to compensate for the volume decline. In spite of
external uncertainties, we stay firm with our plans. Priorities for 2010 are
clear; restoring profitability, continued safety improvement, strategy
implementation and delivering of the Excellence Programmes. These longer term
initiatives build the foundation for our future results."
The attachments present the Management analysis of the fourth quarter 2009
operating result and a summary of the Review by the Board of Directors for
January-December 2009 as well as extracts from the financial statements.All full
year figures are audited.
For further information, please contact:
Päivi Lindqvist, SVP - Communications and IR
tel. +358 9 421 2432, mobile +358 40 708 5351
paivi.lindqvist@outokumpu.com
Ingela Ulfves, VP - Investor Relations and Financial Communications
tel. +358 9 421 2438, mobile +358 40 515 1531
ingela.ulfves@outokumpu.com
Esa Lager, CFO
tel +358 9 421 2516
esa.lager@outokumpu.com
News conference and live webcast today at 1.00 pm
A combined news conference, conference call and live webcast concerning the
annual accounts 2009 will be held on February 3, 2010 at 1.00 pm EET (6.00 am US
EST, 11.00 am UK time, 12.00 pm CET) at Hotel Kämp, conference room Akseli
Gallen-Kallela, Pohjoisesplanadi 29, 00100 Helsinki, Finland.
To participate via a conference call, please dial in 5-10 minutes before the
beginning of the event:
UK: +44 20 3043 2436
US & Canada: +1 866 458 4087
Sweden: +46 8 505 598 53
Password: Outokumpu
The news conference can be viewed live via Internet at www.outokumpu.com.
Stock exchange release and presentation material will be available before the
news conference at www.outokumpu.com/Investors
An on-demand webcast of the news conference will be available at
www.outokumpu.com as of February 3, 2010 at around 3.00 pm EET.
OUTOKUMPU OYJ
Corporate Management
Ingela Ulfves
VP - Investor Relations and Financial Communications
tel. + 358 9 421 2438, mobile +358 40 515 1531
ingela.ulfves@outokumpu.com www.outokumpu.com
MANAGEMENT ANALYSIS - FOURTH QUARTER 2009 OPERATING RESULT
Group key figures
EUR million I/08 II/08 III/08 IV/08 2008
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Sales
General Stainless 1 304 1 222 933 687 4 147
Specialty Stainless 786 778 630 512 2 705
Other operations 64 63 69 62 258
Intra-group sales -465 -514 -362 -295 -1 636
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The Group 1 689 1 549 1 270 966 5 474
Operating profit
General Stainless 81 125 -35 -177 -6
Specialty Stainless 42 44 -63 -123 -101
Other operations -20 4 29 25 38
Intra-group items -3 1 3 4 6
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The Group 100 174 -66 -271 -63
EUR million I/09 II/09 III/09 IV/09 2009
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Sales
General Stainless 476 501 496 592 2065
Specialty Stainless 371 278 258 332 1239
Other operations 66 58 56 62 243
Intra-group sales -233 -220 -224 -259 -935
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The Group 679 617 587 728 2611
Operating profit
General Stainless -157 -52 -38 -12 -259
Specialty Stainless -82 -37 -21 -10 -149
Other operations -12 -5 -4 -9 -31
Intra-group items 2 0 -3 2 1
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The Group -249 -94 -65 -29 -438
Stainless steel
deliveries
1 000 tons I/08 II/08 III/08 IV/08 2008
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Cold rolled 228 192 177 141 739
White hot strip 120 94 64 51 330
Quarto plate 33 35 27 25 120
Tubular products 19 19 16 16 70
Long products 15 15 15 11 55
Semi-finished
products 34 35 25 16 109
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Total deliveries 449 391 323 261 1 423
1 000 tons I/09 II/09 III/09 IV/09 2009
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Cold rolled 133 145 124 143 545
White hot strip 59 69 66 69 263
Quarto plate 19 18 14 16 67
Tubular products 16 13 12 12 53
Long products 10 9 11 10 40
Semi-finished
products 10 14 12 27 63
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Total deliveries 247 268 238 277 1030
Market prices and
exchange rates
I/08 II/08 III/08 IV/08 2008
--------------------------------------------------------------------
Market prices 1)
Stainless steel
Base price EUR/t 1 243 1 307 1 143 1 045 1 185
Alloy surcharge EUR/t 1 702 1 888 1 582 1 293 1 616
Transaction price EUR/t 2 945 3 195 2 725 2 338 2 801
Nickel USD/t 28 957 25 682 18 961 10 843 21 111
EUR/t 19 335 16 440 12 599 8 227 14 353
Ferrochrome
(Cr-content) USD/lb 1.21 1.92 2.05 1.85 1.76
EUR/kg 1.78 2.71 3.00 3.09 2.63
Molybdenum USD/lb 33.81 33.40 33.75 17.29 29.56
EUR/kg 49.77 47.14 49.45 28.92 44.31
Recycled steel USD/t 393 565 465 181 401
EUR/t 262 361 309 138 273
Exchange rates
EUR/USD 1.498 1.562 1.505 1.318 1.471
EUR/SEK 9.400 9.352 9.474 10.234 9.615
EUR/GBP 0.757 0.793 0.795 0.839 0.796
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I/09 II/09 III/09 IV/09 2009
--------------------------------------------------------------------
Market prices 1)
Stainless steel
Base price EUR/t 925 1 117 1 307 1 297 1 161
Alloy surcharge EUR/t 893 634 923 1 049 875
Transaction price EUR/t 1 818 1 751 2 229 2 346 2 036
Nickel USD/t 10 471 12 920 17 700 17 528 14 655
EUR/t 8 036 9 478 12 375 11 860 10 507
Ferrochrome
(Cr-content) USD/lb 0.79 0.69 0.89 1.03 0.85
EUR/kg 1.34 1.12 1.37 1.54 1.34
Molybdenum USD/lb 9.15 9.41 15.36 11.76 11.42
EUR/kg 15.49 15.22 23.67 17.54 18.05
Recycled steel USD/t 207 199 236 250 223
EUR/t 159 146 165 169 160
Exchange rates
EUR/USD 1.303 1.363 1.430 1.478 1.395
EUR/SEK 10.941 10.781 10.424 10.351 10.619
EUR/GBP 0.909 0.879 0.872 0.905 0.891
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1) Sources of market prices:
Stainless steel: CRU - German base price, alloy surcharge and
transaction price (2 mm cold rolled 304 sheet), estimates for
deliveries during the period.
Nickel: London Metal Exchange (LME) cash quotation
Ferrochrome: Metal Bulletin - Quarterly contract price,
Ferrochrome lumpy chrome charge, basis 52% chrome
Molybdenum: Metal Bulletin - Molybdenum oxide - Europe
Recycled steel: Metal Bulletin - Steel scrap HMS 1&2 fob Rotterdam
Slight recovery of volumes for stainless steel continued in Europe
After a moderate improvement in the global market conditions for stainless steel
in the third quarter of 2009, apparent consumption of flat products in the
fourth quarter of 2009 is estimated to have increased a further 6% in Europe but
decreased by 11% globally. In China the decline was 25%. Compared to the fourth
quarter of 2008, apparent consumption of flat products is estimated to have
increased by 24% globally with an increase of 8% in Europe and very strong
growth of 46% in China. Compared to the third quarter of 2009, fourth-quarter
production of stainless steel is estimated to have declined by 7% in Europe and
10% globally, with production in China down by 15%. Compared to the fourth
quarter of 2008, production of stainless is estimated to have been flat in
Europe but to have grown by 30% globally, with significant growth of 63% in
China.
According to CRU, the average base price for 2mm cold rolled 304 stainless steel
sheet in Germany was 1 297 EUR/ton in the fourth quarter (III/2009: 1 307
EUR/ton). The alloy surcharge increased somewhat in the fourth quarter and was
on average 1 049 EUR/ton (III/2009: 923 EUR/ton). The average transaction price
during the quarter was 2 346 EUR/ton (III/2009: 2 229 EUR/ton). The price
difference between Europe and Asia diminished slightly during the review period.
(CRU)
Among the alloying elements, global demand for nickel in the fourth quarter was
7% lower than in the previous quarter. Supplies of nickel market in the last
quarter of 2009 continued to be constrained by production cuts and strikes, and
production was 3% lower than in the third quarter. Nickel inventories at the
LME, however, were at historically high levels. The nickel price traded in
15 800 - 19 500 range USD/ton during the quarter and ended the year at 18 480
USD/ton. The average nickel price in the quarter was 17 528 USD/ton (III/2009:
17 700 USD/ton). In January 2010, the price of nickel was in the range 17 700 -
19 000 USD/ton. Compared to the third quarter, global demand for ferrochrome in
the fourth quarter was down by 9% while production was up by 13%. The quarterly
contract price for ferrochrome in the fourth quarter was 1.03 USD/lb (III/2009:
0.89 USD/lb) and has preliminarily been settled at 1.01 USD/lb for the first
quarter of 2010. The price of molybdenum also fell and averaged 11.76 USD/lb
(III/2009: 15.36 USD/lb) in the fourth quarter. The price of recycled steel was
250 USD/ton in the fourth quarter (III/2009: 236 USD/ton).
Operating profit in the fourth quarter of 2009
Group sales in the fourth quarter totalled EUR 728 million (III/2009: EUR 587
million). Deliveries of stainless steel increased by 16% and totalled 277 000
tons (III/2009: 238 000 tons). Capacity utilization in the fourth quarter was
slightly above 60%.
Operating loss in the fourth quarter totalled EUR 29 million (III/2009: EUR -65
million). No major raw material-related inventory gains or losses (III/2009: EUR
32 million) are included in the operating loss. Operating loss in the third
quarter included some EUR 32 million of raw material-related inventory gains and
EUR 15 million of non-recurring write-downs. Underlying operational loss in the
fourth quarter improved to EUR 29 million (III/2009: EUR -82 million) mainly as
a result of both higher delivery volumes and better prices. Outokumpu's average
base prices for flat products realized in the fourth quarter increased by 80
EUR/ton but were lower than the base prices reported by CRU for German 304
sheet.
The Group's cost-saving programmes, initiated in December 2008, delivered more
than earlier estimated EUR 150 million. The fixed-cost savings achieved in 2009
totalled EUR 185 million, half of which are expected to be sustainable. Some
EUR 20 million of total cost savings are related to the closure of Sheffield
Special Strip in the UK.
Return on capital employed in the fourth quarter was -3.3% (III/2009: -7.6%).
Earnings per share totalled EUR -0.04 (III/2009: EUR -0.31).
Net cash from operating activities in continuing operations was negative at EUR
-108 million (III/2009: EUR -10 million) mainly because of somewhat higher
inventory levels.
Capital expenditure in the fourth quarter totalled EUR 82 million (III/2009: EUR
55 million).
Sales by General Stainless in the fourth quarter totalled EUR 592 million
(III/2009: EUR 496 million), and deliveries totalled 250 000 tons (III/2009:
221 000 tons). Operating loss was EUR 12 million (III/2009: EUR -38 million) and
includes a total of EUR 12 million of net-positive accounting items recorded at
the year-end. Tornio Works posted a profit of EUR 22 million (III/2009: EUR -44
million). The Tornio Works operating profit includes EUR 35 million of positive
accounting items related to the valuation of raw materials, fuels and supplies.
Sales by Specialty Stainless in the fourth quarter totalled EUR 332 million
(III/2009: EUR 258 million), and deliveries totalled 87 000 tons (III/2009:
75 000 tons). Operating loss was EUR 10 million (III/2009: EUR -21 million).
Other operations posted an operating loss of EUR 9 million (III/2009: EUR -4
million) in the fourth quarter.
Additional restructuring actions at OSTP
In November 2009, Outokumpu decided on further restructuring action within
Outokumpu Stainless Tubular Products (OSTP). The main effect will be the closure
of Group operations in Veteli, Finland. Some production lines will be moved to
Jakobstad in Finland and some to Örnskiöldsvik in Sweden. Fifty people are
currently employed at Veteli, completion of changes is planned for the end of
the first quarter of 2010.
Events after the review period
According to a seismic research report produced by the Geological Survey of
Finland in late 2009, the mineral resources at the Kemi Mine could turn out to
be significantly greater than earlier estimates. The intrusion containing
chromium ore extends to a depth of 2-3 kilometres, possibly to four kilometres
and the chromitite layer possibly extends to a depth of at least 2-2.5
kilometres or more.
Proven ore reserves at the Kemi Mine total some 37 million tons and the quantity
of mineral resources totals some 87 million tons (estimated to a depth of 1
kilometre). The new information indicates the existence of resources sufficient
to allow centuries of mining activity even with doubled annual production
volumes (the previous estimate was 70-80 years). Outokumpu's mineral resources
will not be updated based on these findings.
SUMMARY OF THE REVIEW BY THE BOARD OF DIRECTORS FOR 2009
Determined action taken as stainless steel markets hit by the global recession
2009 was an exceptional year for the stainless steel industry in many ways. The
global recession had a significant impact on the industry, especially in Europe.
During the first part of 2009, demand was extremely weak and stainless steel
markets were characterized by heavy destocking. Some recovery occurred in the
summer but markets softened again towards the end of the year. In 2009, China
was the only market in which demand grew and production significantly increased.
The very difficult market conditions in 2009 forced Outokumpu to take drastic
short-term measures to cut costs and secure its balance sheet and liquidity.
Cost-cutting actions included production cuts and personnel adjustments. The
ongoing recession limited progress towards strategic targets and the Group
postponed the majority of its planned investment programme. Outokumpu's strategy
is aimed at achieving a more stable and profitable business model by increasing
the share of sales to end-user and project customers as well as building more
stable relationships with key distributor customers. Other objectives include
increasing the proportion of value-added special grades and products as well as
non-nickel containing grades of stainless steel.
Group sales for 2009 totalled EUR 2 611 million (down by 52% from the previous
year) and stainless steel deliveries were 1 030 000 tons, down by 28% from the
level in 2008. Operating loss totalled EUR 438 million (2008: EUR -63 million)
and underlying operational result was EUR -340 million (2008: EUR 305 million
positive). Net cash from operating activities was good at EUR 198 million (2008:
EUR 664 million).
Return on capital employed was -11.7% (2008: EUR -1.6%) and gearing was 48.2%
(2008: 38.4%). Although Outokumpu's financial target of a return on capital
employed higher than 13% was not reached, gearing remained below the Group's
target of less than 75%. Earnings per share totalled EUR -1.86 (2008: EUR
-1.05). The Board of Directors is proposing to the Annual General Meeting 2010
that a dividend of EUR 0.35 per share be paid for 2009 (2008: EUR 0.50).
Very weak stainless steel markets with historically low deliveries in Europe
The global recession resulted in demand for stainless steel being very weak at
the beginning of the year. Heavy destocking along the whole value chain resulted
in significant production cuts by producers especially in Europe with capacity
utilization at the historically extremely-low levels of 50-55%. Demand for
stainless steel mainly from distributors, recovered somewhat in the summer and
stabilised towards the end of the year. Metal prices were at very low levels at
the beginning of the year but began to rise after the spring, mainly as a result
of improving demand in China. Base prices, which had fallen to very low levels
in historical terms, began to recover after the first quarter. Compared to
2008, apparent consumption of stainless steel in 2009 is estimated to have
decreased by 29% in Europe and by 8% globally. In China, however, apparent
consumption is estimated to have increased by 31%. The average German base price
for 2mm 304 cold rolled sheet in 2009 was 1 161 EUR/ton, 2% lower than in 2008.
The transaction price for stainless steel averaged 2 036 EUR/ton in 2009, 27%
lower than in the previous year. The main reason for this was the much lower
metal prices in 2009. (CRU)
Sales and deliveries
Sales
EUR million 2009 2008 2007
------------------------------------------------
General Stainless 2 065 4 147 5 321
Specialty Stainless 1 239 2 705 3 456
Other operations 243 258 237
Intra-group sales -935 -1 636 -2 101
------------------------------------------------
The Group 2 611 5 474 6 913
Stainless steel deliveries
1 000 tons 2009 2008 2007
------------------------------------------------
Cold rolled 545 739 703
White hot strip 263 330 314
Quarto plate 67 120 146
Tubular products 53 70 65
Long products 40 55 54
Semi-finished products 63 109 137
------------------------------------------------
Total deliveries 1 030 1 423 1 419
Group sales for 2009 declined to EUR 2 611 million (2008: EUR 5 474 million) due
to the very low delivery volumes and lower transaction prices for stainless
steel. Delivery volumes declined to 1 030 000 tons (2008: 1 423 000 tons). Sales
by General Stainless were down by 50% and sales by Specialty Stainless were down
by 54%.
The European share of Group sales was 74% in 2009 (2008: 78%). Asia and the
Americas accounted for 14% (2008: 8%) and 10% (2008: 11%), respectively.
Operating profit
EUR million 2009 2008 2007
---------------------------------------------------------------------
Operating profit
General Stainless -259 -6 220
Specialty Stainless -149 -101 337
Other operations -31 38 21
Intra-group items 1 6 11
---------------------------------------------------------------------
Operating profit -438 -63 589
Share of results in associated companies -12 -2 4
Financial income and expenses -25 -69 206
---------------------------------------------------------------------
Profit before taxes -474 -134 798
Income taxes 142 24 -138
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Net profit, continuing operations -332 -110 660
Net profit, discontinued operations -4 -79 -18
---------------------------------------------------------------------
Net profit for the financial year -336 -189 641
---------------------------------------------------------------------
Operating profit margin, % -16.8 -1.2 8.5
Return on capital employed, % -11.7 -1.6 13.9
Earnings per share from continuing operations, EUR -1.83 -0.61 3.63
Earnings per share, EUR -1.86 -1.05 3.52
Operating loss in 2009 totalled EUR 438 million (2008: EUR -63 million). In
2009, net non-recurring items of EUR -20 million were included in the operating
loss (EUR 5 million of restructuring provisions mainly relating to Sweden and
EUR 15 million of write-downs from the cancelled melt-shop capacity expansion in
Avesta, Sweden). In 2008, non-recurring costs of some EUR 83 million were
included in the operating loss. Raw material-related inventory losses of some
EUR 78 million are included in the operating profit (2008: some EUR 285
million). Underlying operational result for 2009 was some EUR -340 million
(2008: EUR 305 million). While extremely-low delivery volumes were the primary
reason for the weak result, a somewhat negative price and product mix and a
reduced contribution from ferrochrome production also had negative impacts. The
cost savings achieved had a mitigating effect. Loss before tax totalled EUR 474
million (2008: EUR -134 million).
The Group's cost-saving programmes, initiated in December 2008, delivered more
than earlier estimated EUR 150 million. The fixed-cost savings achieved in 2009
totalled EUR 185 million, half of which are expected to be sustainable. Some
EUR 20 million of total cost savings are related to the closure of Sheffield
Special Strip in the UK.
Capital structure
Key financial indicators on financial position
EUR million 2009 2008 2007
-------------------------------------------------------------------
Net interest-bearing debt
Long-term debt 1 038 1 219 1 046
Current debt 705 581 464
Total interest-bearing debt 1 742 1 800 1 510
Interest-bearing assets -548 -711 -589
Net assets held for sale -11 -16 -132
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Net interest-bearing debt 1 183 1 072 788
Shareholders' equity 2 451 2 794 3 337
Return on equity, % -12.8 -6.2 20.0
Debt-to-equity ratio, % 48.2 38.4 23.6
Equity-to-assets ratio, % 50.6 52.4 56.5
Net cash generated from operating activities 1) -108 664 658
Net interest expenses 22 54 58
1) Cash flows presented for continuing operations
During 2009 Outokumpu's net interest-bearing debt increased only marginally by
EUR 110 million and totalled EUR 1 183 million at the end of 2009 (Dec
31, 2008: EUR 1 072 million). Outokumpu's balance sheet was relatively strong at
the end of the year with gearing at 48.2% (Dec 31, 2008: 38.4%), well below the
Group's target of below 75%. At the end of 2009, the Group's equity-to-assets
ratio stood at 50.6%.
In June 2009, Outokumpu signed a three-year EUR 900 million revolving credit
facility. This committed credit facility for general corporate purposes replaced
the five-year EUR 1 billion facility signed in June 2005. At the end of 2009
this facility was undrawn. In addition, two bilateral long-term revolving credit
facilities amounting to more than EUR 200 million were signed in 2009.
Consequently, Outokumpu has committed undrawn credit facilities totalling EUR
1.1 billion.
Net cash generated from operating activities in continuing operations in 2009
was good and totalled EUR 198 million (2008: EUR 664 million). Cash released
from working capital as a result of lower metal prices and reductions in
inventory levels totalled EUR 548 million. Cash and cash equivalents totalled
EUR 112 million (2008: EUR 224 million) at the end of the year.
Capital expenditure and the postponed investment programme
Capital expenditure
EUR million 2009 2008 2007
------------------------------------
General Stainless 129 332 57
Specialty Stainless 93 170 69
Other operations 23 42 64
------------------------------------
The Group 245 544 190
Depreciation 211 206 204
Capital expenditure by the Group in 2009 totalled EUR 245 million. The largest
investments in 2009 were the modernization of the No. 2 annealing and pickling
line in Tornio, expansion of the service centre in Willich in Germany,
establishment of a service centre in China, the doubling of production capacity
in special grades at Nyby in Sweden and the expansion of quarto plate production
capacity in New Castle in the US. The service centre in China is planned to
start operation in the spring 2010 and the investment at New Castle is planned
to be finalized at about the same time.
In December 2008 as the global recession had started, Outokumpu decided to
postpone almost its entire investment programme worth some EUR 1.5 billion for a
period of at least 12 months. The programme included an expansion of ferrochrome
production capacity in Finland, investments in bright-annealed production
capacity at Tornio Works in Finland, expansion of quarto plate production
capacity in Degerfors in Sweden, the expansion of melting capacity in Avesta in
Sweden and the construction of service centres in Europe. In October, a decision
was made to cancel the investment in expanded melting capacity at Avesta as no
need for additional melting capacity is seen in the medium-term. Continuation of
any project in the Group's investment programme is subject to a separate
decision based on an updated feasibility study. Further decisions on the
postponed investments will be made by the end of 2010.
Excluding decisions on any new investment projects, capital expenditure by the
Group in 2010 is expected to be below EUR 200 million. This figure includes
annual capital expenditure on maintenance and the finalizing of some ongoing
investment projects.
Personnel adjustments
As a response to the very weak demand for stainless steel because of the ongoing
recession, Outokumpu took a number of actions to adjust to the poor market
conditions. Production was cut back heavily and consequent adjustments of
personnel numbers through both temporary and permanent layoffs were implemented.
In Finland, the low order load resulted in temporary layoffs for most employees
at the Tornio Works. Some 250 employees at the Kemi Mine and the Ferrochrome
Works were temporarily laid off from March until the end of September.
Approximately 1 600 employees working on other steel production lines,
maintenance and support functions were temporarily laid off in sequences
starting from March. In September, some 700 employees were taken back and the
remaining 900 who had been laid off temporarily returned to work in October.
Some 50 permanent job reductions have been made in Finland.
In Sweden, a total of some 400 job reductions were made in 2009. The number of
working shifts was reduced and related temporary lay-offs were implemented.
In the UK, the closure of Sheffield Special Strip, reduced production in the
Sheffield melt-shop and actions taken in the service centre and the sales
company resulted in approximately 350 job reductions and temporary adjustments
due to reduced working shifts.
Approximately 150 job reductions were implemented in other countries.
Operational Excellence programs
Outokumpu's Operational Excellence programme was launched in 2005 and originally
comprised Production and Commercial Excellence. In 2007, the programme was
expanded to include Supply Chain Excellence. Targets included improving Group
performance by EUR 40 million in 2007 and by EUR 80 million in 2008 (compared to
2005). The targeted benefits were achieved in both years and benefits totalling
EUR 86 million were delivered in 2008. In 2009, the Operational Excellence
programme delivered benefits totalling EUR 150 million compared to 2005. The
original target of EUR 200 million by 2009 was not achieved mainly as a
consequence of the very low delivery volumes of stainless steel and the lower
metal prices.
The original target of EUR 300 million of benefits in 2010 will not be reached
considering the current run-rate of delivery volumes. However, Outokumpu's
Operational Excellence programmes continue to be a high-focus area and the
intention is to achieve higher benefits than in 2009 (EUR 150 million).
Class actions regarding the sold fabricated copper products business
In 2003, the European Commission issued its judgment on Outokumpu's
participation in a European price-fixing and market-sharing cartel involving
copper air-conditioning tubes during 1988-2001. A fine of EUR 18 million was
imposed on the Group. In 2004, Outokumpu lodged an appeal with the Court of
First Instance for Europe regarding the basis for the calculation and the level
of the fine. According to a decision issued by the court in May 2009, the amount
of the fine remains unchanged.
In a cartel investigation concerning sanitary copper tubes, the European
Commission issued its judgement in September 2004 and imposed a fine of EUR 36
million on the Group for participation in cartel activities. Outokumpu lodged an
appeal with the Court of First Instance for Europe in 2004 regarding the level
of the fine. In August 2009, Outokumpu paid the fine of EUR 36 million in
advance. The final decision from the Court of First Instance concerning the
sanitary tubes case is expected during 2010.
In 2003, Outokumpu booked provisions for fines in both of these cases. Fines
totalling EUR 54 million and interest totalling EUR 9 million was paid in 2009.
Outokumpu exited the copper fabrication business by divesting a major part of
the company's business in 2005 and the remainder in April 2008.
Customs investigation of exports to Russia by Tornio Works
In March 2007, Finnish Customs authorities initiated a criminal investigation
into the Group's Tornio Works' export practices to Russia. It was suspected that
a forwarding agency based in south-eastern Finland had prepared defective and/or
forged invoices regarding the export of stainless steel to Russia. The
preliminary investigation focused on possible complicity by Outokumpu Tornio
Works in the preparation of defective and/or forged invoices by the forwarding
agent.
In June 2009, the Finnish Customs completed its preliminary investigation and
forwarded the matter for consideration of possible charges to the prosecuting
authorities. The process of considering possible charges is expected to be
completed in the spring of 2010.
Immediately after the Finnish Customs authorities began their investigations in
2007, Outokumpu initiated its own investigation into the trade practices
connected with stainless steel exports from Tornio to Russia. In June 2007,
based on its own investigation, a leading Finnish law firm Roschier Attorneys
Ltd. concluded that it had not found evidence that any employees of Tornio Works
or the Group had committed any of the crimes alleged by the Finnish Customs.
Roschier has subsequently, at Outokumpu's request, examined the preliminary
investigation material produced by the Finnish Customs' and concluded that it
contains no evidence that any Outokumpu employees committed forgery or the
alleged accounting offences by the Finnish Customs. Outokumpu's Auditor, KPMG Oy
Ab, has also stated that suspicions related to the making of false financial
statements are groundless.
Outokumpu has stated that neither the Group nor its personnel have committed any
of the crimes alleged by the Finnish Customs.
Risk management
Outokumpu operates in accordance with the risk management policy approved by the
Board of Directors. The risk management policy defines the objectives,
approaches and areas of responsibility in risk management activities. Risk
management supports the Group's strategy and also helps to define a balanced
risk profile from the perspective of shareholders as well as other stakeholders
such as customers, suppliers, personnel and lenders. Outokumpu has defined risk
to be anything that might have an adverse impact on activities that the company
has undertaken to achieve its objectives. Risks can thus be threats,
uncertainties or lost opportunities that relate to present or future operations.
In 2009 risk workshops were implemented with management teams from most of the
Group's business units and several corporate functions such as Energy and Legal
Affairs and IPR. Workshops included the identification of different business,
operational and financial risks, the evaluation and mitigation of these risks in
connection with strategic planning and performance management processes. During
the year, Outokumpu also initiated a systematic crises management programme.
Corporate-level crises management teams were trained in the handling of
situations presenting different challenges.
No major damage to Group property or business interruptions occurred in 2009.
The most significant risks realised during the year were connected with
structural issues in stainless steel markets and the global recession, with the
latter having an impact on steel markets and also on the Group's willingness and
ability to implement planned investment projects.
Strategic and business risks
The most important identified strategic and business risks include structural
overcapacity and weak market conditions affecting stainless steel production,
fierce competition in stainless steel markets and Euro-centricity of Group
operations.
Demand for stainless steel remained depressed in Outokumpu's main served
markets. Increased stainless steel production capacity, especially in China, is
creating a situation of gradually developing global overcapacity. Outokumpu has
taken actions to address these strategic and business risks by maintaining cost
efficiency and delivery reliability in the Group's operations, developing its
distribution channels and aiming to increase sales to end-users and building
stable relationships with key distributors. During 2009 Outokumpu also expanded
its operations in China by investing in a new service centre in Kunshan in
Shanghai. Activities at this new facility will focus on special products and
grades and operations will begin in the spring of 2010. Outokumpu continues to
study ways of strengthening its position outside Europe in future years.
Operational risks
Operational risks arise as a consequence of inadequate or failed internal
processes, employee actions, systematic or other events such as natural
catastrophes and misconduct or crime. Key operational risks include major fires
or accidents, variations in production performances, unsuccessful project
implementation and a lack of progress towards achieving a strong corporate
culture and a one-company approach.
To minimise damage to property and business interruptions that could result from
fire at Outokumpu's sites, the Group has systematic fire and security audit
programmes in place. Part of this type of risk is covered by insurances. In
2009, some 40 security and fire-safety audits were carried out using the Group's
own resources, often jointly with technical experts from insurers and insurance
brokers. Outokumpu also continued developing its corporate security during 2009
with a focus on crisis management.
Outokumpu has been systematically developing the performance of its operations
through excellence initiatives. Even so, risks associated with not being able to
adapt production capacity to meet wide fluctuations in demand can have an impact
on the company's business. The Group is mitigating these types of risks in two
ways: by expanding its Operational Excellence programmes; and by building on
strong Group-level functions such as Supply Chain Management and Group Sales and
Marketing to enhance strategy implementation.
Outokumpu's aim is to achieve a strong and unified corporate culture throughout
its organization. For all Group personnel, the approach is to create "One
Outokumpu", but this type of cultural change can take time. While it provides a
great opportunity to increase operational effectiveness by increasing
cross-cultural cooperation, corporate cultures that are one-country based or too
independent can have an adverse effect on progress from an operational
perspective, endangering the achievement of strategic goals. The implementation
of strong Group-level functions such as Supply Chain Management and Group Sales
and Marketing is a vital component in driving forward the one-company -approach.
Due to the global financial crisis and the weakness in stainless steel market
almost the entire already-announced investment programme was postponed at the
end of 2008. Some investments, such as the service centre expansion in Willich
in Germany and the establishment of a new service centre in China are however
continuing and will be finalized early in 2010. In preparation for the future,
Outokumpu is aiming to further develop its project management methods to support
the implementation of investment projects and to manage risks related to the
Group's entire project portfolio. At the end of the third quarter, Outokumpu
decided to permanently cancel the investment project which would have provided
additional melting capacity in Avesta in Sweden.
Financial risks
Financial risks include market, liquidity, refinancing, country and credit risk.
One consequence of the global economic crisis is that sales-related credit
losses have increased to some extent; but much of these losses are covered by
credit insurance. At the end of 2009, Outokumpu updated its principles
concerning the management of country and credit risk. Implementation of these
principles will take place gradually during 2010.
A weak Swedish krona has been mainly beneficial for the Group because of a
significant amount of krona-denominated fixed and variable cost. Changes in the
price of nickel and the value of the US dollar have an impact on Group earnings,
cash flows and the balance sheet. Outokumpu also has exposure to changes in
interest rates, credit risk related to certain loan receivables and risks
connected with equity prices.
During 2009 Outokumpu hedged part of the forecast risk associated with cash flow
in Swedish krona and sterling, hedged against rises in interest rates associated
with fixed part of financing costs and continued nickel risk hedging to reduce
the impacts of any price changes on earnings.
Liquidity and refinancing risks are taken into account in capital management
decisions and, when necessary, in making investment and other business
decisions. In 2009, Outokumpu signed a three-year revolving credit facility of
EUR 900 million. This facility was fully undrawn at the end of the year.
Environment, Health and Safety
Emissions to air and discharges to water remained within permitted limits and
the breaches that occurred were temporary, were identified and caused only
minimal environmental impact. Outokumpu is not a party in any significant
juridical or administrative proceeding concerning environmental issues, nor is
it aware of any realised environmental risks that could have a material adverse
effect on the Group's financial position.
At approximately 540 000 tons (2008: 820 000 tons), carbon dioxide emissions
under the EU Emissions Trading Scheme were at a very-low level in 2009 due to
reduced levels of production. During the year, the Group sold 454 000 tons
(2008: 1 022 000 tons) of carbon dioxide allowances for EUR 6 million (2008: EUR
22 million). Outokumpu's carbon dioxide allowances in the UK, Sweden and Finland
were proved sufficient for the Group's production.
Occupational safety continues to be a major focus area within the Group and
Outokumpu has a separate safety function responsible for safety management and
development.
In 2009, the lost-time injury rate (i.e. lost-time accidents per million working
hours) was 5.9 (2008: 9.0), slightly higher than the Group's 2009 target of less
than five. No severe accidents were reported in 2009. The target for 2010 is
less than four.
Corporate Responsibility
In March 2009, Outokumpu was selected as a member of the Kempen/SNS Smaller
Europe SRI Universe, a concept launched by Kempen Capital Management. Membership
is only offered to companies with the very highest standards and codes of
practice in three areas: business ethics, human resources and the environment.
In September, the results of the annual review carried out for the Dow Jones
World and Dow Jones STOXX Sustainability indexes by the Sustainable Asset
Management Group (SAM) were published. Outokumpu retained its membership in both
indices and received the highest possible score in two sustainability criteria:
environmental reporting and occupational health and safety.
Once again, Outokumpu received an award in 2009 for being Finland's best
corporate responsibility reporter.
Research and Development
Group expenditure on research and development in 2009 totalled EUR 19 million or
0.7% of sales (2008: EUR 20 million and 0.4%). Outokumpu has research centres in
Tornio in Finland and in Avesta in Sweden. Some process and technology
development work is also carried out in production units. R&D operates in close
cooperation with the Group's commercial organization and customers, and direct
feedback regarding customer needs serves as input for further product
development. The R&D function employed almost 200 professionals in 2009.
Outokumpu also conducts research in collaboration with research institutes and
universities.
In 2009, the main focus was on further developing new low-nickel and nickel-free
stainless steels to reducing the effects of volatile nickel prices. Much effort
has been put into developing duplex grades which offer a good combination of
strength and corrosion resistance. Ideal applications for duplex grades include
large, heavy-wall tanks, where weight savings of as much as 20% can be achieved.
Customers have shown growing interest in LDX 2101®. New applications are
continually being developed and the production technology has been improved.
Non-nickel ferritic grades represent another opportunity to reduce the influence
of the nickel price on raw material costs. Optimum process parameters and
product properties for standard ferritic grades have been studied intensively at
production scale. The primary focus has been on surface quality, formability and
corrosion resistance. Four different grades, mostly intended for use in indoor
applications, kitchen utensils, domestic appliances and the transportation
sector, are now part of the Group's product portfolio.
Cr-Mn-Ni grades (200 series), a third opportunity to reduce the use of nickel,
also represent an interesting alternative in many applications. The most common
grade is 201, the chemistry of which has been modified by Outokumpu. The
corrosion-resistant properties of this grade are almost equal to those of
standard austenitic 304 (Cr-Ni), and it also features higher strength and good
formability.
In application development, the traditional focus has been on the process
industries where stainless steel plays a dominant role in the manufacturing of
industrial equipment used in the Pulp and Paper, Oil and Gas, Desalination and
Chemical segments. Outokumpu's R&D experts provide both customers and the
Group's commercial personnel with advice on product properties and material
selection. The 10th edition of the Outokumpu Corrosion Handbook was published in
the autumn. For more than 60 years, the handbook has been a reliable source of
essential information for metallurgists, design engineers and fabricators around
the world.
In addition to new products and new applications for stainless steel, the
Group's R&D operations focus on innovative manufacturing processes that reduce
costs, result in lower emissions, shorten lead times and improve quality levels.
The main subject of environmental research in 2009 was slag utilization. Studies
of the properties of different slag products and the development of new
applications continue.
Personnel
Personnel
Dec. 31 2009 2008 2007
---------------------------------------
General Stainless 3 753 3 938 3 571
Specialty Stainless 3 361 4 006 4 099
Other operations 492 527 439
---------------------------------------
The Group 7 606 8 471 8 108
In 2009, the Group's continuing operations employed an average of 7 941 people
(2008: 8 551) in some 30 countries. At the end of 2009, the number of people
employed by the Group was 7 606 (2008: 8 471). The net decrease in the number of
people employed was 865 (2008: increase of 363) caused by actions to adjust to
the very weak stainless steel markets in 2009. Personnel expenses in 2009
totalled EUR 446 million (2008: EUR 520 million).
Outokumpu's development programmes, including management development programmes
and the Production Excellence training programme, continued during 2009. The
first eight Stainless Pro Graduates completed their two-year programme and
transferred to new positions within the Group. Seven Stainless Pro Graduates are
expected to complete their training in August 2010.
Almost all Group employees participated in Performance and Development Dialogues
in 2009, but the goal of 100% participation was not achieved.
The Outokumpu Personnel Forum (OPF) 2009 held its 18th annual meeting in Espoo,
Finland. The Group Working Committee appointed by the OPF - a forum for
continuing dialogue between personnel and management - met six times during
2009.
The fifth O'People personnel survey was conducted in 2009. The response rate was
72% (2008: 75%) and the overall O'People index was almost unchanged at 617
(2008: 621).
Ideas for fast actions, a web-based survey for Outokumpu employees, was
organised in the spring. Participants were encouraged to contribute concrete
ideas on how to get through difficult times, where to cut costs and how to
improve overall Group performance.
Organizational change and appointments
In December, Mr Kari Parvento was appointed EVP - Group Sales and Marketing and
a member of Outokumpu Group's Executive Committee as of May 1, 2010 at the
latest. He will report to CEO Juha Rantanen. Group Sales and Marketing has been
headed by Mr Bo Annvik, EVP - Specialty Stainless, on a temporary basis since
February 2009 when Mr Andrea Gatti, former EVP - Group Sales and Marketing at
Outokumpu, assumed the role of Corporate Vice President outside the Executive
Committee. Mr Gatti left Outokumpu in December 2009.
In addition to his current duties, Mr Pekka Erkkilä, EVP - General Stainless,
took over management of the Tornio Works in September 2009. At the end of 2009,
Mr Erkkilä resigned from Outokumpu Oyj to join Outotec Oyj as of May 1, 2010 at
the latest.
Shares and shareholders
According to the Nordic Central Securities Depository, Outokumpu's largest
shareholders by group at the end of 2009 were the State of Finland through
Solidium Oy (31.1%), foreign investors (28%), Finnish public sector institutions
(15.4%), Finnish private households (13.6%), Finnish financial and insurance
institutions (6.1%), Finnish corporations (3.4%) and Finnish non-profit
organizations (2.5%).
Shareholders that have more than 5% of the shares and votes in Outokumpu Oyj are
Solidium Oy (31.1%) and the Finnish Social Insurance Institution (8.1%).
At the year-end, Outokumpu's closing share price was EUR 13.26 (2008: EUR
8.28), up 60%. The average share price during the year was EUR 11.49 (2008: EUR
18.99) with EUR 15.67 (2008: EUR 33.99) as the year's highest price and EUR
7.72 (2008: EUR 6.33) as the year's lowest price. At the year-end, the market
capitalization of Outokumpu Oyj shares totalled EUR 2 413 million (2008: EUR
1 502 million). Share turnover in 2009 was significantly lower than in 2008,
with 355.1 million shares being traded on the Nasdaq OMX Helsinki Ltd exchange
(2008: 511.1 million). The total value of share turnover in 2009 was EUR 4 079
million (2008: EUR 9 693 million).
Outokumpu's fully paid share capital at the year-end totalled EUR 309 million
and consisted of 182 010 542 shares. The average number of shares outstanding
during 2009 was 180 825 569.
Annual General Meeting 2009
The 2009 Annual General Meeting (AGM) approved a dividend of EUR 0.50 per share
for 2008. Dividends totalling EUR 90 million were paid on April 3, 2009.
The AGM authorized the Board of Directors to decide to repurchase the Group's
own shares. The maximum number of shares to be repurchased is 18 000 000,
currently representing 9.92% of total number of registered shares. Based on
earlier authorizations Outokumpu currently holds 1 040 888 of its own shares.
The AGM authorized the Board of Directors to decide to issue shares and to grant
special rights entitling to shares. The maximum number of new shares to be
issued through the share issue and/or by granting special rights entitling to
shares is 18 000 000, and, in addition, the maximum number of treasury shares to
be transferred is 18 000 000. The authorization includes the right to resolve
upon directed share issues. These authorizations are valid 12 months or until
the next AGM, however no longer than May 31, 2010. To date the authorizations
have not been used.
The AGM decided on the number of the Board members, including the Chairman and
Vice Chairman, to be eight. Evert Henkes, Ole Johansson, Jarmo Kilpelä, Victoire
de Margerie, Anna Nilsson-Ehle, Leena Saarinen and Anssi Soila were re-elected
as members of the Board of Directors, and Jussi Pesonen was elected as a new
member. The AGM re-elected Ole Johansson as Chairman of the Board and Anssi
Soila as Vice Chairman of the Board. The AGM also resolved to form a
Shareholders' Nomination Committee to prepare proposals on the composition and
remuneration of the Board of Directors for presentation to the next AGM.
At its first meeting, the Board of Directors of Outokumpu appointed two
permanent committees consisting of Board members. Anssi Soila (Chairman), Jarmo
Kilpelä and Leena Saarinen were elected as members of the Board Audit Committee.
Ole Johansson (Chairman), Evert Henkes, Anna Nilsson- Ehle and Jussi Pesonen
were elected as members of the Board Nomination and Compensation Committee.
KPMG Oy Ab, Authorized Public Accountants, was re-elected as the Company's
auditor for the term ending at the close of the next AGM.
Shareholders' Nomination Committee
Outokumpu's Annual General Meeting of March 24, 2009 decided to establish a
Shareholders' Nomination Committee to prepare proposals on the composition of
the Board of Directors along with director remuneration for the following Annual
General Meeting. The representatives of Outokumpu's three largest shareholders
registered in the Finnish book-entry securities system on November 2, 2009,
which accepted the assignment. The Shareholders' Nomination Committee of
Outokumpu consists of the following three shareholders: Solidium Oy (Kari
Järvinen, CEO), The Social Insurance Institution of Finland (Jorma Huuhtanen,
Director General) and Ilmarinen Mutual Pension Insurance Company (Harri Sailas,
CEO). Kari Järvinen acts as Chairman the Committee. Ole Johansson, the Chairman
of Outokumpu's Board of Directors, and Evert Henkes, member of Outokumpu's Board
of Directors, serve as expert members. The Shareholders' Nomination Committee is
required to submit its proposals to the Board of Directors of the company no
later than February 1, 2010.
Events after the review period
According to a seismic research report produced by the Geological Survey of
Finland in late 2009, the mineral resources at the Kemi Mine could turn out to
be significantly greater than earlier estimates. The intrusion containing Kemi
chromium ore extends to a depth of 2-3 kilometres, possibly to four kilometres
and the chromitite layer possibly extends to a depth of at least 2-2.5
kilometres or more.
Proven ore reserves at the Kemi Mine total some 37 million tons and the quantity
of mineral resources totals some 87 million tons (estimated to a depth of 1
kilometre). The new information indicates the existence of resources sufficient
to allow centuries of mining activity even with doubled annual production
volumes (the previous estimate was 70-80 years). Outokumpu's mineral resources
will not be updated based on these findings.
SHORT-TERM OUTLOOK
No major improvement in the underlying demand for stainless steel is yet
visible. Distributors' cautious buying behaviour continued over the year-end.
During the past few weeks, order intake has however been more encouraging. Lead
times on standard grades for mill-deliveries are normal at 6-8 weeks. Inventory
levels at distributors in Europe are estimated to be at normal levels.
Outokumpu's delivery volumes of stainless steel in the first quarter are
expected to be at the same level or slightly higher than in the fourth quarter
of 2009 (277 000 tons). Base prices began to decline during the fourth quarter
2009 but stabilized around the year-end. Thus, Outokumpu's average base prices
for all flat products in the first quarter of 2010 are expected to be 50-100
EUR/ton lower than the average in the fourth quarter. Currently Outokumpu sees
potential for some base price increases.
Outokumpu's underlying operational result in the first quarter is expected to be
at the same level or somewhat weaker than in the fourth quarter of 2009. If
metal prices remain at current levels, no major raw material-related inventory
gains or losses are anticipated. Cash flow is expected to remain negative in the
first quarter without any major impact on gearing, which will remain well below
the Group's set maximum level of 75%.
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 Group's
profit for the period with the aim to have stable annual payments to
shareholders. In its annual dividend proposal, the Board of Directors will, in
addition to financial results, take into consideration the Group's investment
and developing needs.
The Board of Directors is proposing to the Annual General Meeting to be held on
March 30, 2010 that a dividend of EUR 0.35 per share be paid from the parent
company's distributable funds on December 31, 2009 and that any remaining
distributable funds be allocated to retained earnings. The suggested dividend
record date is April 6, 2010 and the dividend will be paid on April 13, 2010.
According to the Group's financial statements on December 31, 2009,
distributable funds of the parent company totalled EUR 850 million. No material
changes have taken place in the company's financial position after the balance
sheet date and the proposed dividend does not compromise the company's financial
standing.
In Espoo, February 3, 2010
Board of Directors
Outokumpu is a global leader in stainless steel with the vision to be the
undisputed number one. Customers in a wide range of industries use our stainless
steel and services worldwide. Being fully recyclable, maintenance-free, as well
as very strong and durable material, stainless steel is one of the key building
blocks for sustainable future. Outokumpu employs some 7 500 people in more than
30 countries. The Group's head office is located in Espoo, Finland. Outokumpu is
listed on the NASDAQ OMX Helsinki.
www.outokumpu.com
STATEMENT OF COMPREHENSIVE INCOME
(all full year figures are audited)
Income statement
Jan- Jan- Oct- Oct-
Dec Dec Dec Dec
EUR million 2009 2008 2009 2008
--------------------------------------------------------------------------------
Continuing operations:
Sales 2 611 5 474 728 966
Other operating income 28 57 11 37
Costs and expenses -3 044 -5 552 -760 -1 267
Other operating expenses -32 -42 -8 -8
----------------------------
Operating profit -438 -63 -29 -271
Share of results in
associated companies -12 -2 -3 -1
Financial income and expenses
Interest income 17 20 4 5
Interest expenses -38 -74 -10 -21
Market price gains and losses -2 -2 2 -0
Other financial income 5 11 1 0
Other financial expenses -6 -24 -1 -10
----------------------------
Profit before taxes -474 -134 -36 -298
Income taxes 142 24 32 71
----------------------------
Net profit for the period
from continuing operations -332 -110 -4 -228
Discontinued operations:
Net profit for the period
from discontinued operations -4 -79 -2 -5
Net profit for the period -336 -189 -6 -233
Attributable to:
Owners of the parent -336 -189 -7 -233
Non-controlling interests -0 -0 0 -0
Earnings per share for profit attributable
to the owners of the parent:
Earnings per share, EUR -1.86 -1.05 -0.04 -1.30
Diluted earnings per share, EUR -1.86 -1.04 -0.04 -1.29
Earnings per share from continuing operations
attributable to the owners of the parent:
Earnings per share, EUR -1.83 -0.61 -0.03 -1.27
Earnings per share from discontinued operations
attributable to the owners of the parent:
Earnings per share, EUR -0.02 -0.44 -0.01 -0.03
Statement of other comprehensive income
Jan- Jan- Oct- Oct-
Dec Dec Dec Dec
EUR million 2009 2008 2009 2008
--------------------------------------------------------------------------------
Net profit for the period -336 -189 -6 -233
Other comprehensive income:
Exchange differences on translating foreign
operations 29 -75 3 -49
Available-for-sale financial assets
Fair value changes during the period 34 -37 9 -29
Reclassification adjustments from other
comprehensive income to profit - 5 - -
Income tax relating to
available-for-sale financial assets -9 8 -1 5
Cash flow hedges
Fair value changes during the period 23 -65 2 -49
Reclassification adjustments from other
comprehensive income to profit 1 -5 1 -
Income tax relating to cash flow hedges -6 18 -1 13
Net investment hedges
Fair value changes during the period 1 13 - 10
Income tax relating to net investment hedges -0 -3 - -3
Share of other comprehensive income of associated
companies 5 - -3 -
----------------------------
Other comprehensive income for the period,
net of tax 77 -140 11 -103
Total comprehensive income for the period -259 -329 5 -336
Attributable to:
Owners of the parent -259 -329 5 -336
Non-controlling interests -1 -0 0 -0
Statement of financial position
Dec 31 Dec 31
EUR million 2009 2008
----------------------------------------------------------------
ASSETS
Non-current assets
Intangible assets 566 584
Property, plant and equipment 2 097 2 027
Investments in associated companies 1) 152 156
Available-for-sale financial assets 1) 98 67
Derivative financial instruments 1) 7 9
Deferred tax assets 42 37
Trade and other receivables
Interest-bearing 1) 140 132
Non interest-bearing 55 55
---------------
Total non-current assets 3 157 3 067
Current assets
Inventories 1 016 1 204
Available-for-sale financial assets 1) 14 8
Derivative financial instruments 1) 16 92
Trade and other receivables
Interest-bearing 1) 9 25
Non interest-bearing 508 701
Cash and cash equivalents 1) 112 224
---------------
Total current assets 1 674 2 252
---------------
Receivables related to assets held for sale 1) 20 22
TOTAL ASSETS 4 850 5 341
EQUITY AND LIABILITIES
Equity attributable to the
equity holders of the Company
Share capital 309 308
Premium fund 706 702
Other reserves 37 -13
Retained earnings 1 735 1 984
Net profit for the financial year -336 -189
---------------
2 451 2 794
Non-controlling interests 0 1
---------------
Total equity 2 451 2 795
Non-current liabilities
Long-term debt 1) 997 1 170
Derivative financial instruments 1) 41 48
Deferred tax liabilities 100 216
Pension obligations 65 64
Provisions 17 28
Trade and other payables 1 2
---------------
Total non-current liabilities 1 221 1 529
Current liabilities
Current debt 1) 652 501
Derivative financial instruments 1) 45 54
Income tax liabilities 3 5
Provisions 26 48
Trade and other payables
Interest-bearing 1) 7 26
Non interest-bearing 437 378
---------------
Total current liabilities 1 170 1 012
Liabilities related to assets held for sale 1) 8 6
TOTAL EQUITY AND LIABILITIES 4 850 5 341
1) Included in net interest-bearing debt.
Consolidated statement
of changes in equity
Attributable to the owners of the parent
-------------------------------------------
Share Share Other Fair value
capital premium reserves reserves
EUR million fund
-----------------------------------------------------------------------
Equity on December 31, 2007 308 701 16 57
-----------------------------------------------------------------------
Total comprehensive
income for the period - - -0 -85
Transfers within equity - - +0 -
Dividends - - - -
Share-based payments - - - -
Share options exercised 0 1 - -
-----------------------------------------------------------------------
Equity on December 31, 2008 308 702 15 -28
-----------------------------------------------------------------------
Total comprehensive
income for the period - - - 50
Transfers within equity - - -0 -
Dividends - - - -
Share-based payments - - - -
Share options exercised 1 3 - -
-----------------------------------------------------------------------
Equity on December 31, 2009 309 706 15 22
-----------------------------------------------------------------------
Attributable to the owners of the parent
-------------------------------------------
Treasury Cumulative Retained Non- Total
shares translation earnings controlling equity
EUR million differences interests
------------------------------------------------------------------------------
Equity on December 31, 2007 -27 -82 2 364 - 3 337
------------------------------------------------------------------------------
Total comprehensive
income for the period - -56 -189 1 -329
Transfers within equity - - -0 - -
Dividends - - -216 - -216
Share-based payments - - 2 - 2
Share options exercised - - - - 1
------------------------------------------------------------------------------
Equity on December 31, 2008 -27 -138 1 961 1 2 795
------------------------------------------------------------------------------
Total comprehensive
income for the period - 28 -336 -0 -259
Transfers within equity - - 0 - -
Dividends - - -90 - -90
Share-based payments 2 - -1 - 1
Share options exercised - - - - 4
------------------------------------------------------------------------------
Equity on December 31, 2009 -25 -110 1 534 0 2 451
------------------------------------------------------------------------------
Condensed statement of cash flows
Jan- Jan- Oct- Oct-
Dec Dec Dec Dec
EUR million 2009 2008 2009 2008
------------------------------------------------------------
Net profit for the period -336 -189 -6 -233
Adjustments
Depreciation and amortization 211 206 55 54
Impairments 15 30 1 11
Other adjustments -230 329 -15 105
Change in working capital 548 373 -148 269
Dividends received 3 12 0 -
Interests received 8 8 4 1
Interests paid -57 -77 -8 -23
Income taxes paid 36 -29 10 21
---------------------
Net cash from
operating activities 198 664 -108 205
Purchases of assets -232 -316 -58 -122
Purchase of subsidiaries - -204 - -7
Proceeds from the sale of subsidiaries - 49 - -
Proceeds from the sale
of other assets 17 31 5 23
Net cash from other
investing activities -2 0 -2 0
---------------------
Net cash from
investing activities -216 -440 -55 -107
Cash flow before
financing activities -19 223 -163 98
Share options exercised 4 1 0 0
Borrowings of long-term debt 130 341 70 177
Repayment of long-term debt -350 -236 -42 -38
Change in current debt 212 24 37 -119
Dividends paid -90 -216 - -
Proceeds from the sale
of other financial assets 0 0 -0 -0
Other financing cash flow -1 3 -2 3
---------------------
Net cash from
financing activities -97 -83 64 23
Net change in cash
and cash equivalents -115 141 -99 121
Cash and cash equivalents at
the beginning of the period 224 86 210 107
Foreign exchange rate effect 3 -5 1 -4
Discontinued operations'
net change in cash effect 0 2 -0 -0
Net change in cash
and cash equivalents -115 141 -99 121
Cash and cash equivalents
at the end of the period 112 224 112 224
Cash flows presented for continuing operations.
Key figures
Jan-Dec Jan-Dec
EUR million 2009 2008
---------------------------------------------------------------
Sales 2 611 5 474
Operating profit -438 -63
Operating profit margin, % -16.8 -1.2
EBITDA -212 149
Return on capital employed, % -11.7 -1.6
Return on equity, % -12.8 -6.2
Return on equity, continuing operations, % -12.7 -3.6
Capital employed at end of period 3 634 3 867
Net interest-bearing
debt at end of period 1 183 1 072
Equity-to-assets ratio
at end of period, % 50.6 52.4
Debt-to-equity ratio at end of period, % 48.2 38.4
Earnings per share, EUR -1.86 -1.05
Earnings per share from
continuing operations, EUR -1.83 -0.61
Earnings per share from
discontinued operations, EUR -0.02 -0.44
Average number of shares
outstanding, in thousands 1) 180 826 180 185
Fully diluted earnings per share, EUR -1.86 -1.04
Fully diluted average number
of shares, in thousands 1) 180 970 180 995
Equity per share at end
of period, EUR 13.54 15.50
Number of shares outstanding
at end of period,in thousands 1) 180 970 180 233
Capital expenditure,
continuing operations 245 544
Depreciation, continuing operations 211 206
Deliveries, continuing operations, 1 000 tons 1 030 1 423
Average personnel for the
period, continuing operations 7 941 8 551
---------------------------------------------------------------
1) The number of own shares repurchased is excluded.
NOTES TO THE INCOME STATEMENT AND BALANCE SHEET
This annual accounts bulletin is prepared in accordance with IAS 34 (Interim
Financial Reporting). Mainly the same accounting policies and methods of
computation have been followed in the interim financial statements as in the
annual financial statements for 2008.
Outokumpu has applied the IFRS 8 - Operating segments as of January 1, 2009.
According to IFRS 8, segment information should be based on management's
internal reporting structure and accounting principles. As disclosed in the
financial statement for 2008, Outokumpu's segment information has already been
based on management reporting structure and therefore the operating segments are
the same as they were previously, General Stainless and Specialty Stainless.
Outokumpu has also applied amended standard IAS 1 - Presentation of financial
statements as of January 1, 2009, which has changed the presentation of income
statement and statement of changes in equity. These changes have impacted the
presentation of financial statements.
Use of estimates
The preparation of the financial statements in accordance with IFRS requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, as well as the disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of
income and expenses during the reporting period. Accounting estimates are
employed in the financial statements to determine reported amounts, including
the realizability of certain assets, the useful lives of tangible and intangible
assets, income taxes, provisions, pension obligations, impairment of goodwill
and other items. Although these estimates are based on management's best
knowledge of current events and actions, actual results may differ from the
estimates.
Shares and share capital
The total number of Outokumpu Oyj shares was 182 010 542 and the share capital
amounted to EUR 309.4 million on December 31, 2009. Outokumpu Oyj held
1 040 888 treasury shares on December 31, 2009. This corresponded to 0.6% of the
share capital and the total voting rights of the Company on December 31, 2009.
Outokumpu has a stock option program for management (2003 option program). The
stock options have been allocated as part of the Group's incentive programs to
key personnel of Outokumpu. The option program has three parts 2003A, 2003B and
2003C. On December 31, 2009 a total of 650 881 Outokumpu Oyj shares had been
subscribed for on the basis of 2003A stock option program, a total of 89 106
Outokumpu Oyj shares on the basis of 2003B stock option program and a total of
20 000 Outokumpu Oyj shares on the basis of 2003C stock option program. Share
subscription period with the Outokumpu stock options 2003A ended on March
1, 2009. An aggregate maximum of 939 714 shares can be subscribed with the
remaining 2003B stock options and 80 500 shares with the remaining 2003C stock
options. In accordance with the terms and conditions of the option program, the
dividend adjusted share price for a stock option 2003B was EUR 9.81 and for
stock option 2003C EUR 10.44 on December 31, 2009. As a result of the share
subscriptions with the 2003 stock options, Outokumpu Oyj's share capital may be
increased by a maximum of EUR 1 734 364 and the number of shares by a maximum of
1 020 214 shares. This corresponds to 0.6% of the Company's shares and voting
rights.
Outokumpu has also two share-based incentive programs for years 2006-2010 and
2009-2013 as part of the key employee incentive and commitment system of the
Company.
The first earning period for 2006-2010 incentive program was ended on December
31, 2008. Based on the achievement of the targets, the Board confirmed that the
participants would receive 50% of the maximum number of shares. Altogether
177 715 shares were distributed to 125 persons in March 2009. Outokumpu used its
treasury shares for the reward payment, which means that the total number of
shares of the company did not change.
On February 3, 2009, the Board of Directors of Outokumpu approved the second
share-based incentive plan to be offered to the key management of Outokumpu for
years 2009-2013. The program will last five years, comprising three earning
periods of three calendar years each. The earning periods commence on January
1, 2009, January 1, 2010 and January 1, 2011. The Board approves the number of
participants, final allocations and performance criteria separately for each
earning period. For earning period 2009-2011, the Board approved 139 employees
to be in the scope of the program. The amount of reward will be determined and
paid to the participants on the basis of the achievement of performance targets
after the financial statements of the last year of earning period have been
prepared. The rewards to be paid on the basis of the program will correspond to
a maximum of 1 500 000 Outokumpu shares. No new shares will be issued in
connection with the program and therefore the incentive plan will have no
diluting effect.
If persons covered by both share-based incentive programs were to receive the
number of shares in accordance with the maximum reward, currently a total of
975 590 shares, their shareholding obtained via the program would amount to
0.5% of the Company's shares and voting rights.
The detailed information of the 2003 option program and of the share-based
incentive programs can be found in the annual report of Outokumpu and from
Outokumpu's Internet site www.outokumpu.com.
Non-current assets held for sale and discontinued operations
Outokumpu Brass produces brass rods for applications in the construction,
electrical and automotive industries. The brass rod plant is located in Drünen
in the Netherlands and the unit also has a 50% stake in a brass rod company in
Gusum, Sweden. Outokumpu Brass employs some 150 employees. The assets and
liabilities of brass rod business are presented as held for sale. Outokumpu
intends to divest the brass rod business.
Specification of non-current
assets held for sale
and discontinued operations
Income statement
Jan-Dec Jan-Dec
EUR million 2009 2008
---------------------------------------------------
Sales 31 267
Profit after taxes -1 -6
Impairment loss recognized on the
fair valuation of the Outokumpu
Copper Tube and Brass'
assets and liabilities -3 -6
Loss on the sale of copper tube
business - -66
---------------------------------------------------
Net profit for the period
from discontinued operations -4 -79
Statement of financial position
Dec 31 Dec 31
EUR million 2009 2008
---------------------------------------------------
Assets
Intangible and tangible assets 2 2
Other non-current assets 2 3
Inventories 11 9
Other current non
interest-bearing assets 5 8
---------------------------------------------------
20 22
Liabilities
Provisions 2 2
Other non-current non
interest-bearing liabilities 1 1
Trade payables 3 2
Other current non
interest-bearing liabilities 2 1
---------------------------------------------------
8 6
Cash flows
Jan-Dec Jan-Dec
EUR million 2009 2008
---------------------------------------------------
Operating cash flows 3 -8
Investing cash flows -3 -9
Financing cash flows 0 19
---------------------------------------------------
Total cash flows 0 2
Major non-recurring items
in operating profit
Jan-Dec Jan-Dec
EUR million 2009 2008
-----------------------------------------------------
Write-down of Avesta
melt-shop investment -15 -
Redundancy provisions -5 -17
Thin Strip restructuring in Britain - -66
-----------------
-20 -83
Major non-recurring items in
financial income and expenses
Jan-Dec Jan-Dec
EUR million 2009 2008
-----------------------------------------------------
Impairment of Belvedere shares - -21
-----------------
- -21
Income taxes
Jan-Dec Jan-Dec
EUR million 2009 2008
-----------------------------------------------------
Current taxes -4 -6
Deferred taxes 146 30
-----------------
142 24
Property, plant and equipment
Jan 1 - Jan 1 -
Dec 31 Dec 31
EUR million 2009 2008
-----------------------------------------------------
Historical cost at the
beginning of the period 4 021 3 984
Translation differences 69 -190
Additions 246 301
Acquisition of subsidiaries - 36
Disposals -23 -108
Reclassifications -4 -2
-----------------
Historical cost at
the end of the period 4 309 4 021
Accumulated depreciation at
the beginning of the period -1 994 -2 004
Translation differences -38 115
Disposals 20 83
Reclassifications 0 -0
Depreciation -185 -188
Impairments -15 -
Accumulated depreciation at
-----------------
the end of the period -2 211 -1 994
Carrying value at
the end of the period 2 097 2 027
Carrying value at the
beginning of the period 2 027 1 980
Commitments
Dec 31 Dec 31
EUR million 2009 2008
----------------------------------------------------
Mortgages and pledges
Mortgages on land 185 189
Other pledges 1 5
Guarantees
On behalf of subsidiaries
for commercial commitments 22 55
On behalf of associated companies
for financing 1 5
Other commitments 53 59
Minimum future lease payments
on operating leases 62 59
----------------------------------------------------
Group's off-balance sheet investment commitments
totaled EUR 62 million on December 31, 2009
(Dec 31, 2008: EUR 93 million).
Related party transactions
Transactions and balances
with associated companies
Dec 31 Dec 31
EUR million 2009 2008
----------------------------------------------------
Sales 0 0
Purchases -8 -13
Financial income and expenses 1 2
Loans and other receivables 11 7
Trade and other receivables 1 0
----------------------------------------------------
Fair values and nominal
amounts of
derivative instruments
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
2009 2009 2009 2008 2009 2008
Positive Negative Net Net
fair fair fair fair Nominal Nominal
EUR million value value value value amounts amounts
----------------------------------------------------------------------------
Currency and interest
rate derivatives
Currency forwards 12 54 -42 0 1 784 1 920
Interest rate swaps - 3 -3 2 199 200
Cross-currency swaps 5 13 -8 7 212 46
Currency options, bought 1 - 1 - 30 -
Currency options, sold - 0 -0 - 31 -
Interest options, bought 2 - 2 - 78 -
Interest options, sold - 2 -2 - 78 -
Tons Tons
----------------------------------------------------------------------------
Metal derivatives
Forward and futures
nickel contracts - - - -0 - 4 729
Nickel options, bought 2 - 2 14 13 290 16 758
Nickel options, sold - 4 -4 -14 13 290 11 478
Forward and futures
copper contracts 0 1 -0 -0 1 275 4 925
Forward and futures
zinc contracts 0 0 -0 -0 400 1 025
Emission allowance
derivatives 1 0 0 1 404 000 270 000
TWh TWh
----------------------------------------------------------------------------
Electricity
derivatives 1 10 -8 -11 0.8 1.3
----------------------------------------------------------------------------
Stock options - - - 0
------------------------------------------------------------
22 86 -63 -1
Segment information
General Stainless
EUR million I/08 II/08 III/08 IV/08 2008
-------------------------------------------------------
Sales 1 304 1 222 933 687 4 147
of which Tornio Works 905 833 567 396 2 701
Operating profit 81 125 -35 -177 -6
of which Tornio Works 67 114 -22 -93 66
Operating capital at
the end of period 2 722 2 671 2 820 2 663 2 663
Average personnel
for the period 3 578 4 000 4 163 3 989 3 933
Deliveries of main
products (1 000 tons)
Cold rolled 196 162 151 121 628
White hot strip 102 85 58 51 297
Semi-finished products 100 113 76 51 340
-------------------------------------------------------
Total deliveries
of the division 398 359 285 223 1 265
-------------------------------------------------------
EUR million I/09 II/09 III/09 IV/09 2009
-------------------------------------------------------
Sales 476 501 496 592 2 065
of which Tornio Works 270 300 303 420 1 292
Operating profit -157 -52 -38 -12 -259
of which Tornio Works -129 -33 -44 22 -183
Operating capital at
the end of period 2 390 2 379 2 355 2 421 2 421
Average personnel
for the period 3 917 3 848 3 820 3 752 3 834
Deliveries of main
products (1 000 tons)
Cold rolled 114 132 112 128 486
White hot strip 57 64 64 62 248
Semi-finished products 39 51 45 61 196
-------------------------------------------------------
Total deliveries
of the division 210 248 221 250 929
-------------------------------------------------------
Specialty Stainless
EUR million I/08 II/08 III/08 IV/08 2008
-------------------------------------------------------
Sales 786 778 630 512 2 705
Operating profit 42 44 -63 -123 -101
Operating capital at
the end of period 1 430 1 449 1 378 1 174 1 174
Average personnel
for the period 4 115 4 096 4 192 4 103 4 127
Deliveries of main
products (1 000 tons)
Cold rolled 46 44 35 29 154
White hot strip 45 40 31 27 142
Quarto plate 35 37 28 27 126
Tubular products 19 18 14 15 66
Long products 14 14 14 10 52
-------------------------------------------------------
Total deliveries
of the division 161 153 121 106 541
-------------------------------------------------------
EUR million I/09 II/09 III/09 IV/09 2009
-------------------------------------------------------
Sales 371 278 258 332 1 239
Operating profit -82 -37 -21 -10 -149
Operating capital at
the end of period 1 007 906 965 1 035 1 035
Average personnel
for the period 3 892 3 656 3 433 3 372 3 588
Deliveries of main
products (1 000 tons)
Cold rolled 25 19 19 24 86
White hot strip 23 25 21 24 92
Quarto plate 20 19 15 18 71
Tubular products 14 12 10 11 47
Long products 9 8 10 10 38
-------------------------------------------------------
Total deliveries
of the division 92 82 75 87 335
-------------------------------------------------------
Other operations
EUR million I/08 II/08 III/08 IV/08 2008
-------------------------------------------------------
Sales 64 63 69 62 258
Operating profit -20 4 29 25 38
Operating capital at
the end of period -20 283 266 214 214
Average personnel
for the period 447 487 507 525 492
-------------------------------------------------------
EUR million I/09 II/09 III/09 IV/09 2009
-------------------------------------------------------
Sales 66 58 56 62 243
Operating profit -12 -5 -4 -9 -31
Operating capital at
the end of period 108 252 233 240 240
Average personnel
for the period 527 526 521 497 518
-------------------------------------------------------
Income statement by quarter
EUR million I/08 II/08 III/08 IV/08 2008
----------------------------------------------------------------
Continuing operations:
Sales
General Stainless 1 304 1 222 933 687 4 147
of which intersegment sales 284 337 216 157 993
Specialty Stainless 786 778 630 512 2 705
of which intersegment sales 124 120 85 78 407
Other operations 64 63 69 62 258
of which intersegment sales 57 57 61 61 235
Intra-group sales -465 -514 -362 -295 -1 636
----------------------------------------------------------------
Total sales 1 689 1 549 1 270 966 5 474
Operating profit
General Stainless 81 125 -35 -177 -6
Specialty Stainless 42 44 -63 -123 -101
Other operations -20 4 29 25 38
Intra-group items -3 1 3 4 6
----------------------------------------------------------------
Total operating profit 100 174 -66 -271 -63
Share of results
in associated companies 0 1 -2 -1 -2
Financial income and expenses -20 -8 -14 -26 -69
----------------------------------------------------------------
Profit before taxes 80 166 -82 -298 -134
Income taxes -19 -36 9 71 24
----------------------------------------------------------------
Net profit for the period
from continuing operations 61 130 -73 -228 -110
Net profit for the period
from discontinued
operations 2 -74 -1 -5 -79
----------------------------------------------------------------
Net profit for the period 63 56 -74 -233 -189
----------------------------------------------------------------
Attributable to:
The owners of the parent 63 56 -74 -233 -189
Non-controlling interests - - - -0 -0
EUR million I/09 II/09 III/09 IV/09 2009
----------------------------------------------------------------
Continuing operations:
Sales
General Stainless 476 501 496 592 2 065
of which intersegment sales 97 100 107 117 421
Specialty Stainless 371 278 258 332 1 239
of which intersegment sales 75 67 64 87 293
Other operations 66 58 56 62 243
of which intersegment sales 5 52 52 55 221
Intra-group sales -233 -220 -224 -259 -935
----------------------------------------------------------------
Total sales 679 617 587 728 2 611
Operating profit
General Stainless -157 -52 -38 -12 -259
Specialty Stainless -82 -37 -21 -10 -149
Other operations -12 -5 -4 -9 -31
Intra-group items 2 0 -3 2 1
----------------------------------------------------------------
Total operating profit -249 -94 -65 -29 -438
Share of results
in associated companies -3 -0 -6 -3 -12
Financial income and expenses 0 -11 -11 -4 -25
----------------------------------------------------------------
Profit before taxes -252 -105 -81 -36 -474
Income taxes 64 20 26 32 142
----------------------------------------------------------------
Net profit for the period
from continuing operations -188 -85 -55 -4 -332
Net profit for the period
from discontinued
operations 0 -2 -1 -2 -4
----------------------------------------------------------------
Net profit for the period -187 -87 -56 -6 -336
----------------------------------------------------------------
Attributable to:
The owners of the parent -187 -87 -55 -7 -336
Non-controlling interests -0 -0 -0 0 -0
Major non-recurring
items in operating profit
EUR million I/08 II/08 III/08 IV/08 2008
----------------------------------------------------------------
Specialty Stainless
Write-down of Avesta
melt-shop investment - - - - -
Redundancy provisions - - - -17 -17
Thin Strip restructuring
in Britain - - -66 - -66
----------------------------------------------------------------
- - -66 -17 -83
EUR million I/09 II/09 III/09 IV/09 2009
----------------------------------------------------------------
Specialty Stainless
Write-down of Avesta
meltshop investment - - -15 - -15
Redundancy provisions -5 - - - -5
Thin Strip restructuring
in Britain - - - - -
----------------------------------------------------------------
-5 - -15 - -20
Major non-recurring items in
financial income and expenses
EUR million I/08 II/08 III/08 IV/08 2008
----------------------------------------------------------------
Impairment of Belvedere shares -12 - - -9 -21
----------------------------------------------------------------
-12 - - -9 -21
EUR million I/09 II/09 III/09 IV/09 2009
----------------------------------------------------------------
Impairment of Belvedere shares - - - - -
----------------------------------------------------------------
- - - - -
Key figures by quarter
EUR million I/08 II/08 III/08 IV/08
----------------------------------------------------------------------
Sales 1 689 1 549 1 270 966
Operating profit 100 174 -66 -271
Operating profit margin, % 5.9 11.2 -5.2 -28.1
EBITDA 150 224 -8 -217
Return on capital employed, % 10.0 17.2 -6.3 -26.8
Return on equity, % 7.7 7.0 -9.3 -31.5
Return on equity,
continuing operations, % 7.5 16.3 -9.2 -30.8
Capital employed at end of period 3 899 4 166 4 228 3 867
Net interest-bearing
debt at end of period 737 939 1 096 1 072
Equity-to-assets ratio
at end of period, % 53.2 54.8 52.3 52.4
Debt-to-equity ratio
at end of period, % 23.3 29.1 35.0 38.4
Earnings per share, EUR 0.35 0.31 -0.41 -1.30
Earnings per share from
continuing operations, EUR 0.34 0.72 -0.41 -1.27
Earnings per share from
discontinued operations, EUR 0.01 -0.41 -0.01 -0.03
Average number of shares
outstanding, in thousands 1) 180 112 180 172 180 223 180 231
Equity per share
at end of period, EUR 17.56 17.91 17.38 15.50
Number of shares outstanding
at end of period, in thousands 1) 180 127 180 222 180 228 180 233
Capital expenditure,
continuing operations 41 56 317 129
Depreciation, continuing operations 50 50 52 54
Deliveries, continuing operations,
1 000 tons 449 391 323 261
Average personnel for the period,
continuing operations 8 140 8 583 8 862 8 617
----------------------------------------------------------------------
EUR million I/09 II/09 III/09 IV/09
----------------------------------------------------------------------
Sales 679 617 587 728
Operating profit -249 -94 -65 -29
Operating profit margin, % -36.7 -15.3 -11.1 -4.0
EBITDA -198 -42 2 26
Return on capital employed, % -27.5 -11.1 -7.6 -3.3
Return on equity, % -28.0 -13.8 -9.0 -1.0
Return on equity,
continuing operations, % -28.1 -13.5 -8.9 -0.7
Capital employed at end of period 3 376 3 423 3 459 3 634
Net interest-bearing
debt at end of period 825 926 1 014 1 183
Equity-to-assets ratio
at end of period, % 51.3 52.2 50.8 50.6
Debt-to-equity ratio
at end of period, % 32.3 37.1 41.4 48.2
Earnings per share, EUR -1.04 -0.48 -0.31 -0.04
Earnings per share from
continuing operations, EUR -1.04 -0.47 -0.30 -0.03
Earnings per share from
discontinued operations, EUR 0.00 -0.01 -0,00 -0.01
Average number of shares
outstanding, in thousands 1) 180 413 180 955 180 963 180 963
Equity per share
at end of period, EUR 14.09 13.79 13.51 13.54
Number of shares outstanding
at end of period, in thousands 1) 180 953 180 963 180 963 180 970
Capital expenditure,
continuing operations 62 45 55 82
Depreciation, continuing operations 52 52 52 55
Deliveries, continuing operations,
1 000 tons 247 268 238 277
Average personnel for the period,
continuing operations 8 336 8 031 7 774 7 621
----------------------------------------------------------------------
1) The number of own shares repurchased is excluded.
Definitions of key financial figures
EBITDA = Operating profit before depreciation,
amortization and impairments
Capital employed = Total equity + net interest-bearing debt
Operating capital = Capital employed + net tax liability
Return on equity = Net profit for the financial period × 100
------------------------------------------
Total equity (average for the period)
Return on capital = Operating profit × 100
------------------------------------------
employed (ROCE) Capital employed (average for the period)
Net interest- Total interest-bearing debt
bearing debt = - total interest-bearing assets
Equity-to-assets ratio = Total equity × 100
------------------------------------------
Total assets - advances received
Debt-to-equity ratio = Net interest-bearing debt × 100
------------------------------------------
Total equity
Net profit for the financial period
Earnings per share = attributable to the owners of the parent
------------------------------------------
Adjusted average number
of shares during the period
Equity attributable to
Equity per share = the owners of the parent
------------------------------------------
Adjusted number of shares
at the end of the period
