Outokumpu's annual accounts 2010 - stainless ma...

PRESS RELEASE
February 2, 2011 at 9.10 am EET


Year 2010 highlights
- Deliveries up 28%, stainless prices and metal prices higher
- Operating loss reduced to EUR 83 million, underlying operational result EUR
-91 million
- Investments for EUR 550 million decided
- Dividend proposal EUR 0.25 per share (2009: EUR 0.35)

Fourth quarter highlights
- Operating loss EUR 85 million
- Higher deliveries, lower prices and reduced cost efficiency


Group key figures, EUR million           IV/10 IV/09 III/10  2010  2009
------------------------------------------------------------------------


Sales                                    1 162   736  1 014 4 229 2 641

Operating profit                           -85   -31    -49   -83  -441

Profit before
taxes                                      -86   -38    -88  -143  -479

Net profit for the
period                                     -91    -6    -56  -124  -336

Earnings per share,
EUR                                      -0.50 -0.04  -0.31 -0.68 -1.86

Net cash generated from operating
activities                                  18  -111   -111  -497   201



Stainless steel deliveries, 1000
tonnes                                     336   277    307 1 315 1 030

Stainless steel base price, EUR/t 1)     1 213 1 297  1 245 1 252 1 161

Stainless steel transaction price,
EUR/t 2)                                 2 909 2 346  2 866 2 780 2 036



1)  CRU: German base price (2mm cold rolled 304
sheet)

2)  CRU: German transaction price (2mm cold rolled 304
sheet)



After a very weak 2009, stainless steel markets recovered in 2010. The global
consumption of stainless steel is estimated to have increased by 20%. In Europe,
the growth was even stronger at 25%. Despite the strong recovery, European
consumption is still well below its pre-crisis level. The demand in first half
of 2010 was stronger and supported by restocking. During the second half metal
prices declined and inventories were reduced. In early 2011, demand for standard
grades began to pick-up. Demand for investment-driven end-use segments has not
yet shown any major recovery.

Outokumpu's deliveries in 2010 increased to 1.3 million tonnes, up by 28%,
representing approximately 75% capacity utilisation. Average reference base
price was 8% higher than in 2009, whereas average transaction price, which also
includes raw material cost, increased by 36%. Main raw materials of stainless
steel were traded at clearly higher prices; nickel price was up by 49% and
ferrochrome 46%. As a result of significant increases in both volume and price
levels, Outokumpu's sales in 2010 totalled EUR 4.2 billion, 60% higher than in
2009.

Growth in delivery volumes and higher price levels enabled Outokumpu to reduce
its loss from the previous year. The Group's ferrochrome operations also
contributed to improved profitability as a result of increased production and
higher price level. Operating loss in 2010 totalled EUR 83 million, compared
with a loss of EUR 441 million in 2009. The underlying operational result, which
excludes any raw-material related inventory gains or losses totalled EUR -91
million (2009: -343 million). Capacity utilisation below optimal levels, as well
as weak geographic and product mix in sales were the main reasons for the loss-
making result.

Towards the end of 2010 stainless markets softened, distributors were destocking
and base prices declined. Outokumpu's deliveries in the fourth quarter were
336 000 tonnes, up by 21% from the fourth quarter of 2009, which together with
metal price-driven transaction price increase resulted in 58% higher sales of
EUR 1 162 million. Operating loss in the fourth quarter was EUR 85 million,
higher than the EUR 31 million loss in 2009 or the EUR 49 million loss in the
third quarter of 2010. The main reasons for this deterioration in profitability
were lower base prices, weaker geographic and product mix and increased costs.

Due to higher delivery volumes and metal prices Outokumpu's working capital
increased, consuming EUR 476 million of cash in 2010. Consequently, the Group's
net debt increased and gearing amounted to 77% at the end of the year. The Board
of Directors proposes a dividend of EUR 0.25 per share for 2010 (2009: EUR
0.35).

In 2010 Outokumpu reviewed some of its postponed investment projects and decided
to proceed with two investments totalling EUR 550 million in June. Outokumpu
will double the production capacity of ferrochrome in Tornio, Finland and expand
the quarto plate production capability and capacity in Degerfors, Sweden.

Outokumpu's order intake has been encouraging from the beginning of 2011.
Outokumpu estimates that delivery volumes in the first quarter of 2011 will be
some 10-20% higher than in the fourth quarter of 2010. Operating profit in the
first quarter is expected to be around break-even or slightly positive.

CEO Juha Rantanen:

"The market environment in 2010 continued to be difficult in our home market,
Europe. Demand for stainless was well below the pre-crisis levels, especially
for investment-driven applications. The resulting still rather low capacity
utilisation and deteriorated cost-efficiency were the main reasons for the
clearly loss-making result in 2010. Currently, the overall economic development
indicates better stainless markets for this year. Our focus stays on the
essentials; better profitability, stronger balance sheet and implementation of
our strategy. Last year we made good progress on many operational areas, like
safety, inventory levels and delivery performance. It gives me confidence to
expect significant progress on our financial performance this year."

This press release presents the highlights of Outokumpu's official annual
accounts bulletin, which has been distributed as a separate stock exchange
release and is available at www.outokumpu.com/investors.

For further information, please contact:

Päivi Lindqvist, SVP - Communications and IR
tel. [phone], mobile [phone]
[e-mail]

Ingela Ulfves, VP - Investor Relations and Financial Communications
tel. [phone], mobile [phone]
[e-mail]

Esa Lager, CFO
tel. [phone]
[e-mail]


OUTOKUMPU OYJ


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



ENG Q4 AA Media release 02022011: 


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