OUTOKUMPU STARTS EMPLOYEE AND UNION CONSULTATIONS ON THE FIXED COST REDUCTION PROGRAM
OUTOKUMPU OYJ STOCK EXCHANGE RELEASE NOVEMBER 10, 2005 AT 3.00 PM
OUTOKUMPU STARTS EMPLOYEE AND UNION CONSULTATIONS ON THE FIXED COST REDUCTION PROGRAM The fixed cost reduction program was announced on September 26, 2005 with the target to reduce the Groups fixed costs by 10% in each stainless business unit, Corporate Management and Group functions. The Group-level reduction target is some EUR 100 million annually, and the plan is for reduced fixed-cost running rates to be in place during the second half of 2006, with full effect achieved in 2007. The business units, Corporate Management and Group functions have now submitted their plans. The final approval of each individual plan will be made only after the appropriate local employee and union consultation processes have been completed. The duration of the employee and union consultation processes on the fixed cost reduction program vary from country to country. The required consultation processes are now starting. In Finland and Sweden they are estimated to be completed by year-end 2005. The plans submitted by the units confirm that the overall 10% reduction target of fixed costs is achievable. More than half of the reduction is coming from other than personnel costs. The proposed reduction in the Groups personnel, which will be discussed in the consultation processes, is some 700 employees in total. The proposed effect in Finland is some 300, in Sweden some 300 and in other countries some 100. The amount of provisions to be booked for the redundancies from the fixed cost reduction program will be defined as the consultation process evolves, and will be booked in the fourth quarter 2005 results. On October 25, 2005, in addition to the fixed cost reduction program, Outokumpu announced its intention to cease the operation of Coil Products Sheffield, which would also affect the shift levels of the Sheffield melt shop. The consultation process already ongoing in Sheffield addresses the possible reduction of 670 employees in total, and the process is expected to be completed by the end of January 2006. CEO Juha Rantanen says: "It is regrettable that we have to take these drastic actions, but they are necessary so that we can ensure that Outokumpu is financially robust even in current difficult market conditions. The goal is to maintain our financial flexibility to be able to capture growth and development opportunities in the years to come." For further information, please contact: Timo Vuorio, EVP - Human Resources Tel. +358 9 421 2460, mobile +358 400 508 812, e-mail: timo.vuorio@outokumpu.com Eero Mustala, SVP - Corporate Communications Tel. +358 9 421 2435, mobile +358 40 504 5146, e-mail: eero.mustala@outokumpu.com OUTOKUMPU OYJ Corporate Management Eero Mustala SVP - Corporate Communications