Outokumpu first quarter interim statement 2020 – First-quarter adjusted EBITDA at EUR 106 million, market uncertainty caused by coronavirus (COVID-19) pandemic is expected to continue throughout 2020
Outokumpu Oyj
Stock exchange release
May 6, 2020 at 9.00 am EEST
Outokumpu first quarter interim statement 2020 – First-quarter adjusted EBITDA at EUR 106 million, market uncertainty caused by coronavirus (COVID-19) pandemic is expected to continue throughout 2020
Highlights in the first quarter of 2020
- Stainless steel deliveries were 588,000 tonnes (621,000 tonnes)1.
- Adjusted EBITDA was EUR 106 million (EUR 54 million).
- EBITDA was EUR 106 million (EUR 40 million).
- Operating cash flow was EUR -32 million (EUR 39 million).
- Net debt was EUR 1,249 million (December 31, 2019: EUR 1,155 million).
- Gearing was 48.0% (December 31, 2019: 45.1%).
1 Figures in parentheses refer to the corresponding period for 2019, unless otherwise stated.
Q1 2020 compared to Q1 2019
Outokumpu’s sales decreased to EUR 1,615 million the first quarter of 2020 (EUR 1,715 million) while adjusted EBITDA increased to EUR 106 million (EUR 54 million). Stainless steel deliveries in the first quarter declined by 5% compared to the reference period in 2019 and realized prices were lower. Profitability was however positively impacted by significantly improved raw material efficiency and lower costs. Raw material-related inventory and metal derivative losses were EUR 22 million (losses of EUR 13 million). Lower ferrochrome benchmark price had a negative impact on business area Ferrochrome’s profitability. Other operations and intra-group items’ adjusted EBITDA was EUR -6 million (EUR 1 million).
| Group key figures | Q1/20 | Q1/19 | Q4/19 | 2019 | ||
| Sales | EUR million | 1,615 | 1,715 | 1,398 | 6,403 | |
| EBITDA | EUR million | 106 | 40 | 90 | 266 | |
| Adjusted EBITDA 1) | EUR million | 106 | 54 | 73 | 263 | |
| EBIT | EUR million | 45 | -17 | 30 | 33 | |
| Adjusted EBIT 1) | EUR million | 45 | -3 | 13 | 30 | |
| Result before taxes | EUR million | 22 | -35 | 6 | -41 | |
| Net result for the period | EUR million | 22 | -39 | -15 | -75 | |
| Earnings per share | EUR | 0.05 | -0.09 | -0.04 | -0.18 | |
| Diluted earnings per share | EUR | 0.05 | -0.09 | -0.04 | -0.18 | |
| Return on capital employed | % | 2.3 | 4.3 | 0.8 | 0.8 | |
| Net cash generated from operating activities | EUR million | -32 | 39 | 143 | 371 | |
| Net debt at the end of period | EUR million | 1,249 | 1,370 | 1,155 | 1,155 | |
| Debt-to-equity ratio at the end of period | % | 48.0 | 51.6 | 45.1 | 45.1 | |
| Capital expenditure | EUR million | 52 | 50 | 65 | 221 | |
| Stainless steel deliveries | 1,000 tonnes | 588 | 621 | 458 | 2,196 | |
| Personnel at the end of period | 10,315 | 10,449 | 10,390 | 10,390 | ||
| 1) Adjusted EBITDA or EBIT = EBITDA or EBIT – Items classified as adjustments. |
President & CEO Roeland Baan
“The breakout of the COVID-19 pandemic has cast a huge shadow over the world. It has led to a massive impact on individuals, companies and national economies around the globe. At Outokumpu, our priority is always to secure the health and safety of our employees and people around us. Thanks to our fast and decisive measures, the implications of COVID-19 on our operations, deliveries and customer service were limited during the first quarter. It goes without saying that the global economic impacts from the pandemic will have a negative effect also on Outokumpu’s performance.
Outokumpu’s first-quarter results were in line with our guidance with the Group adjusted EBITDA amounting to EUR 106 million.
Business area Americas had a strong start for the year with an adjusted EBITDA of EUR 20 million, which was almost EUR 40 million higher compared to the first quarter last year. This achievement demonstrates the effectiveness of the extensive measures the new management has implemented during the past year.
Business area Europe’s profitability remained on a good level despite high import penetration, low prices and weaker demand. Productivity continued to improve ahead of target as a result of rigorous execution of projects related to operational excellence. Tight cost control further added to a successful mitigation of the negative market dynamics.
The new provisional antidumping duties for hot-rolled products launched in April by the European Union are essential in protecting the European market from unfair trade practices. In the midst of the current COVID-19 crisis, it is extremely important that the European Union strengthens the safeguards in line with the new market reality. Demand will slow down into the second quarter while exporting countries will aggressively be looking for markets. Lowering of the import quotas in line with the reduced steel demand is needed to ward off diverted trade flows.
Weakening customer demand started to become apparent in April with some customers delaying deliveries and order intake trending down. The current uncertainty in the stainless steel market is expected to continue. Outokumpu has developed a range of scenarios with specific action plans linked to each one of them. These contingency plans will ensure continued customer service, mitigate operational risks and secure our financial position whichever of these potential scenarios will occur. Our liquidity is sufficient to take us through these exceptional times, and we have implemented the needed monitoring processes to trigger fast action in case we need to adjust our operations and reallocate our resources to even lower demand and further market deterioration.
I am extremely proud of the resilience of our people and operations during these difficult times. The transformation that Outokumpu has gone through during the past four years has made the company a much stronger entity, capable of surviving even the hardest of storms. We have a solid balance sheet, world class operations, a strong market position and a talented workforce. With these competitive advantages Outokumpu is not just able to tackle the current hurdles, but moreover recover swiftly from this crisis and is uniquely positioned to benefit from the following market opportunities.”
Outlook for Q2 2020
Due to the global economic uncertainty caused by the COVID-19 pandemic, Outokumpu will not give quarterly guidance on adjusted EBITDA until further notice.
The preventative measures and lockdowns related to the COVID-19 pandemic are expected to have a significant impact on the stainless steel industry during 2020. As a result of lower industrial production and diminishing consumer spending, the demand for stainless steel is expected to decline from the first quarter. Outokumpu expects its stainless steel deliveries to decrease in all business areas by 10–20% compared to the first quarter of 2020.
Conference call today at 3.00 pm EEST
A conference call for investors and analysts will be held on Wednesday, May 6, 2020 at 3.00 pm EEST (8.00 am US EST, 1.00 pm UK, 2.00 pm CET). The results call will be hosted by Outokumpu’s CEO Roeland Baan and CFO Pia Aaltonen-Forsell. To participate in the conference call, please dial in 10−15 minutes before the beginning of the event:
Finland: +358 9 4245 0806
UK/Europe: +44 20 71 92 8000
US & Canada: +1 631 510 7495
Confirmation code: 1428255
The event can be viewed live at https://edge.media-server.com/mmc/p/b8rwrfyk.
The stock exchange release and the presentation material will be available before the event at www.outokumpu.com/investors.
A recording of the event will be available at https://www.outokumpu.com/en/investors/financial-calendar/webcasts as of May 6, 2020 at around 6.00 pm EEST.
For more information:
Reeta Kaukiainen, EVP – Communications & IR, tel. +358 50 522 0924
Outokumpu Oyj
Outokumpu is the global leader in stainless steel. We aim to be the best value creator in stainless steel through customer orientation and efficiency. The foundation of our business is our ability to tailor stainless steel into any form and for almost any purpose. Stainless steel is sustainable, durable and designed to last forever. Our customers use it to create civilization’s basic structures and its most famous landmarks as well as products for households and various industries. Outokumpu employs 10,000 professionals in more than 30 countries, with headquarters in Helsinki, Finland and shares listed in Nasdaq Helsinki. www.outokumpu.com