OUTOKUMPU COMMENCES A PROFITABILITY IMPR
OUTOKUMPU OYJ STOCK EXCHANGE RELEASE January 23, 2003 at 9.30 am
OUTOKUMPU COMMENCES A PROFITABILITY IMPROVEMENT PROGRAM IN COPPER PRODUCTS EUROPE DIVISION Weakening of the global demand has significantly reduced also the demand of copper products in Europe. Competitive situation has become tighter and has depressed profitability throughout the whole industry. The effect has also been seen in the Europe division of the Outokumpu Copper Products business area where the profitability development has been weak. In order to restore the divisions profitability into a good level an improvement program with several steps has been commenced. This will lead to a need to reduce personnel with 260 persons, 13 %. The demand for copper products has declined in customer businesses in Europe, such as the building and construction, electrical and electronics industries. The over-supply situation and stringent price competition has also been caused by deep recession of the telecommunications industry and strong decline in demand of coin blanks following the completion of the European monetary reform and decrease in investment activity. Additionally, export outside Europe has fallen. Key factors of the improvement program aim to restore profitability and improve product mix by increasing the share of value-added products. The objective is also to rationalize and modernizise marketing, sales and administration and focus on closer customer relations. Profitability improvement program will also lead to a need to reduce personnel. For the Europe division this means 260 persons of which 200 are working for Outokumpu Poricopper Oy, in Pori, Finland, the largest unit of the division. In Pori regulatory employee/employer negotiations have started today and involve both salaried and office workers. As far as possible Outokumpu will try to offer alternative jobs in its other operations. Improvement actions in the division have already started in 2002 and the personnel was reduced by 100, about 5 %. According to the program profitability level will gradually improve with some EUR 20 million euro so that the improvement in 2003 will be EUR 10 million. However, the amount will be reduced with one-time costs relating to the measures. Full improvement amount of EUR 20 million will be reached by the end of 2004. Net sales of the Europe division in 2001 were EUR 527 million and operating profit EUR 34 million. Respectively net sales during January-September 2002 were EUR 406 million and operating profit EUR 7 million. The division employs 2 033 persons, at the Pori plant 1 158. Main products of the division are copper tubes, demanding wire, profile and strip products, building products and certain high technology products such as superconducting wire. Most important customer segments are power generation, electrical, telecommunications and building and construction industries. Production activities are located in addition to Finland in Sweden, Spain, Austria, Britain, Italy and the US where superconductors are manufactured. Outokumpu Copper Products business area includes four operative divisions: Europe, Americas, Automotive Heat Exchangers, Appliance Heat Exchangers & Asia. Net sales of the business area in 2001 were EUR 1 403 million and for January-September 2002 EUR 1 113 million. Currently the business area employs some 7 128 persons. The business area has also other operations in Sweden, the Netherlands, the US, China, Malaysia and Thailand. For additional information please contact: Jussi Helavirta, Managing director of Outokumpu Poricopper Oy, phone +358 2 626 6000 Ari Ingman, Senior Vice President & General Manager, Europe Division, phone +358 40 502 6624. Media contact: Mirja Lavisto, Manager Business Communications, Outokumpu Copper Products, phone +358 40 506 6954 OUTOKUMPU OYJ Corporate Management Eero Mustala Senior Vice President - Corporate Communications tel.+358 9 421 2435, fax +358 9 421 2429 e-mail: eero.mustala@outokumpu.com home page: http://www.outokumpu.com