Outokumpu's first quarter 2009 interim report -...

INTERIM REPORT April 23, 2009 at 9.00 am First quarter 2009 highlights - Operating profit EUR -249 million including raw material-related inventory losses of some EUR 110 million, underlying operational result some EUR -134 million (IV/2008: EUR -69 million) - Stainless steel demand weak, deliveries at 247 000 tons - Very strong cash flow at EUR 301 million, strong financial position - Cost-saving actions proceeding according to plan, additional actions taken Group key figures I/09 IV/08 I/08 2008 Sales EUR million 679 966 1 689 5 474 Operating profit EUR million -249 -271 100 -63 Non-recurring items in operating profit EUR million -5 -17 - -83 Profit before taxes EUR million -252 -298 80 -134 Non-recurring items in financial income and expenses EUR million - -9 -12 -21 Net profit for the period from continuing operations EUR million -188 -228 61 -110 Net profit for the period EUR million -187 -233 63 -189 Earnings per share from continuing operations EUR -1.04 -1.27 0.34 -0.61 Earnings per share EUR -1.04 -1.30 0.35 -1.05 Return on capital employed % -27.5 -26.8 10.0 -1.6 Net cash generated from operating activities EUR million 301 205 107 656 Capital expenditure, continuing operations EUR million 62 129 41 544 Net interest-bearing debt at end of period EUR million 825 1 072 737 1 072 Debt-to-equity ratio at end of period % 32.3 38.4 23.3 38.4 Stainless steel deliveries 1 000 tons 247 261 449 1 423 Stainless steel base price 1) EUR/ton 925 1 045 1 243 1 185 Personnel at the end of period, continuing operations 8 253 8 471 8 137 8 471 1) Stainless steel: CRU - German base price (2 mm cold rolled 304 sheet). SHORT-TERM OUTLOOK Visibility concerning the stainless steel market continues to be short. Both distributors and end-users of stainless steel are still running down their inventories. The reduction of inventories is taking place throughout the value chain. Current very low order volumes are not therefore representative of the underlying trend in demand. Distributor inventories for standard grades are estimated to be at or below normal levels. Outokumpu is currently selling for deliveries in June. Delivery volumes in the second quarter are expected to be around the same level as in the first quarter. Base prices appear to have bottomed out in March and are expected to rise gradually by some 100 EUR/ton by the end of the second quarter. Decided cost savings and price increases are expected to gradually improve the underlying profitability. Thus the underlying operational loss is expected to be at the same level or slightly smaller in the second quarter compared to the first quarter. Assuming that metal prices remain at current levels, no major raw material-related gains or losses are expected. The reduction in working capital is expected to diminish and cash flow is expected to weaken accordingly. CEO Juha Rantanen: "The stainless markets were exceptionally weak and this is reflected in our loss-making first quarter. This market weakness is a result of both lower end-user demand and heavy de-stocking in the long value chain to end consumers. The de-stocking will certainly come to an end at some point. In management, our main focus is now on maximizing cash flow by generating profitable sales, by cutting costs, limiting capital expenditure as well as reducing working capital. It is encouraging that these efforts resulted in strong cash flow generation during the first quarter. As the potential for further reductions in working capital is rather limited, increased effort is going into identifying additional cost-saving actions on top of those already being implemented." The attachments present Management analysis for the first quarter operating result and the Interim review by the Board of Directors for January-March 2009, the accounts and notes to the interim accounts. This report is unaudited. 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 12.00 pm A combined news conference, conference call and live webcast concerning the first-quarter 2009 results will be held on April 23, 2009 at 12.00 pm Finnish time (11.00 am CET, 10.00 am UK time, 5.00 am US EST) 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 the Internet at www.outokumpu.com. A 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 April 23, 2009 at around 6.00 pm. OUTOKUMPU OYJ Corporate Management Ingela Ulfves Vice President - Investor Relations & Financial Communications tel. + 358 9 421 2438, mobile +358 40 515 1531 ingela.ulfves@outokumpu.com www.outokumpu.com Management analysis - first quarter operating result Group key figures EUR million I/08 II/08 III/08 IV/08 2008 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 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 The Group 100 174 -66 -271 -63 EUR million I/09 Sales General Stainless 476 Specialty Stainless 371 Other operations 66 Intra-group sales -233 The Group 679 Operating profit General Stainless -157 Specialty Stainless -82 Other operations -12 Intra-group items 2 The Group -249 Stainless steel deliveries 1 000 tons I/08 II/08 III/08 IV/08 2008 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 Total deliveries 449 391 323 261 1 423 1 000 tons I/09 Cold rolled 133 White hot strip 59 Quarto plate 19 Tubular products 16 Long products 10 Semi-finished products 10 Total deliveries 247 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 I/09 Market prices 1) Stainless steel Base price EUR/t 925 Alloy surcharge EUR/t 893 Transaction price EUR/t 1 818 Nickel USD/t 10 471 EUR/t 8 036 Ferrochrome (Cr-content) USD/lb 0.79 EUR/kg 1.34 Molybdenum USD/lb 9.15 EUR/kg 15.49 Recycled steel USD/t 207 EUR/t 159 Exchange rates EUR/USD 1.303 EUR/SEK 10.941 EUR/GBP 0.909 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 Weak demand and low prices during the first quarter Global market conditions for stainless steel remained very poor during the first quarter of 2009. Apparent consumption of stainless flat products increased however by 8% in Europe and by 17% globally compared to the even weaker fourth quarter of 2008. Compared to the first quarter of 2008, apparent consumption is estimated to have declined by 24% in Europe and 25% globally. Low investment and construction activity and cautious consumer spending have reduced underlying demand for stainless steel. Heavy de-stocking continued as both distributors and end-users continued to run down existing inventories due to low consumption and the still-declining prices of alloying materials. Stainless markets remained oversupplied and producers continued to make heavy cuts in production. Compared to the fourth quarter of 2008, production of stainless steel was almost flat in Europe but increased by some 9% globally and fell by 38% in Europe and by 29% globally compared to the first quarter 2008. The average base price for 2mm cold rolled 304 stainless steel sheet in Germany in the first quarter declined to 925 EUR/ton (IV/2008: 1 045 EUR/ton). At the end of March, the base price was 985 EUR/ton. As a result of declining metal prices, especially ferrochrome, the alloy surcharge fell to the very low level of 893 EUR/ton (IV/2008: 1 293 EUR/ton). The average transaction price during the first quarter was 1 818 EUR/ton (IV/2008: 2 338 EUR/ton). Currently, there is no major price difference between Europe and Asia. (CRU) Among the alloying elements, nickel markets remained oversupplied and, production was cut back further, declining by 12% compared to the fourth quarter of 2008. The nickel price fell marginally during the first quarter and averaged 10 471 USD/ton (IV/2008: 10 843 USD/ton). Nickel traded in the range 9 400 - 13 400 USD/ton during the quarter. Since the end of March, the price of nickel has increased from around 9 400 USD/ton to the level of 12 000 USD/ton. Ferrochrome markets also remained very weak and globally oversupplied, and producers continued to cut back production. The quarterly contract price for ferrochrome in the first quarter was 0.79 USD/lb (IV/2008: 1.85 USD/lb) and has preliminary been settled at 0.69 USD/lb for the second quarter. The price of molybdenum remained at the low level reached in November 2008 and averaged 9.15 USD/lb (IV/2008: 17.29 USD/lb) in the first quarter of 2009. The price of recycled steel increased to 207 USD/ton in the first quarter (IV/2008: 181 USD/ton). Significant operating loss in very weak stainless steel markets, strong cash flow Group sales in the first quarter declined by 30% to EUR 679 million (IV/2008: EUR 966 million) mainly as a result of declining metal prices. Deliveries of stainless steel were down by 5% and totalled 247 000 tons (IV/2008: 261 000 tons). As a result of very weak demand, Outokumpu cut back production at all the Group's production units. Capacity utilization was approximately 55% in the first quarter. Operating loss was EUR 249 million (IV/2008: EUR 271 million loss) including EUR 110 million of raw material-related losses (IV/2008: EUR 185 million losses), mainly as a result of the decline in the ferrochrome price. Underlying operational result was EUR -134 million (IV/2008: EUR -69 million). The main reasons for the further decline in the result were lower base prices and low delivery volumes. Outokumpu's cost saving programs launched in December 2008 are proceeding according to plan. A variety of measures have been initiated to cut fixed costs: a general Group-wide cost-saving program was initiated in December, both permanent and temporary personnel reductions have been implemented and the Group's Excellence Programs have been refocused to cut costs. Including actions taken most recently, Outokumpu estimates that total fixed-cost savings in 2009 will be in excess of EUR 100 million with the majority of these savings being achieved during the second half of the year. Return on capital employed was -27.5% (IV/2008: -26.8%). Earnings per share totalled EUR -1.04 (IV/2008: EUR -1.30). Outokumpu's gearing continued to improve and was at the very good level of 32.3% at the end of the first quarter (Dec 31, 2008: 38.4%), well below the target of being below 75%. At the end of the quarter, net interest-bearing debt totalled EUR 825 million (Dec 31, 2008: EUR 1 072 million). Net working capital declined by EUR 555 million to EUR 880 million. Net cash from operating activities was strong at EUR 301 million (IV/2008: EUR 205 million). To a large extent, the decline in working capital is a result of lower metal prices and an efficient reduction in inventory levels throughout the supply chain. The current non-interest bearing payables include the dividend payout of EUR 90 million. Sales by General Stainless totalled EUR 476 million (IV/2008: EUR 687 million) in the first quarter, and deliveries totalled 210 000 tons (IV/2008: 223 000 tons). Operating loss totalled EUR 157 million (IV/2008: EUR -177 million) of which the Tornio Works posted a loss of EUR 129 million (IV/2008: EUR -93 million). The majority of the raw material-related inventory losses were related to General Stainless. Sales by Specialty Stainless in the first quarter totalled EUR 371 million (IV/2008: EUR 512 million), and deliveries totalled 92 000 tons (IV/2008: 106 000 tons). Operating loss was EUR 82 million (IV/2008: EUR -123 million). Operating loss in Other operations in the first quarter totalled EUR 12 million (IV/2008: EUR 25 million profit). This was mainly attributable to unrealised hedging losses. Statutory negotiations on personnel adjustments concluded The statutory personnel negotiations initiated in February at Tornio Works in Finland were concluded in March and resulted in temporary lay-offs for most employees. Due to the low order load, production at the Group's Kemi Mine, at the Ferrochrome Works and in one of the melt-shops was temporarily halted in April, with some 330 employees being laid off for a fixed period. The plan is to restart production in the autumn depending on the market situation. Until further notice, approximately 1 500 employees working on other steel production lines, maintenance and support functions are temporarily laid off in sequences with a minimum duration of two weeks per quarter. In December 2008, Outokumpu announced its intention to eliminate some 450 jobs in Sweden. Negotiations resulted in a total of 171 job reductions at Degerfors, Nyby, Långshyttan and in Group functions in Sweden. Negotiations are still ongoing in Avesta. In accordance with actions announced in February 2009, some 120 jobs have also been cut and some 35 people have been temporary laid off at Outokumpu Stainless Tubular Products in a number of countries. Events after the review period Due to the very weak demand for stainless steel, Outokumpu intends to reduce the annual production capacity at the melt shop in Sheffield in the UK to some 200 000 tons from some 350 000 tons of annual operational production capacity today. This will also lead to some 110 job reductions. Once implemented, these cuts will mean that the number of Outokumpu employees in the UK will total approximately 450. Interim review by the board of directors - january-march 2009 (Unaudited) Weak stainless steel markets with significantly lower prices for stainless steel Global market conditions for stainless steel continued to be very poor during the first quarter of 2009. Compared to 2008, apparent consumption is estimated to have declined by 24% in Europe and 25% globally. Stainless markets remained oversupplied and producers continued to make heavy cuts in production. The average base price for 2mm cold rolled 304 stainless steel sheet in Germany in the first quarter fell by 26% to 925 EUR/ton (I/2008: 1 243 EUR/ton). The average transaction price during the quarter was 1 818 EUR/ton (I/2008: 2 945 EUR/ton), a decline by 38%. (CRU) Prices of most alloying materials declined during the first quarter. The nickel price averaged 10 471 USD/ton (I/2008: 28 957 USD/ton) and fluctuated in a range 9 400 - 13 400 USD/ton. Ferrochrome markets continued to be very weak. The quarterly contract price of ferrochrome in the first quarter was 0.79 USD/lb (I/2008: 1.21 USD/lb). The average price of molybdenum was 9.15 USD/lb (I/2008: 33.81 USD/lb). The price of recycled steel averaged 207 USD/ton in the first quarter (I/2008: 393 USD/ton). Significant operating loss but strong cash flow Group sales in the first quarter totalled EUR 679 million (I/2008: EUR 1 689 million), 60% lower than in the first quarter 2008. Deliveries of stainless steel were down by 45% to 247 000 tons (I/2008: 449 000 tons). The causes of these lower sales figures included significantly reduced delivery volumes and clearly lower transaction prices. Outokumpu posted an operating loss of EUR 249 million (I/2008: EUR 100 million profit) including some EUR 110 million (I/2008: some EUR 60 million losses) of raw material-related inventory losses, most of which resulted from the decline in the ferrochrome price. Underlying operational result was EUR -134 million (I/2008: EUR 160 million profit). The main reasons for the negative result were very low delivery volumes, very low base prices and raw material-related inventory losses. Net financial income and expenses totalled EUR 0 million (I/2008: EUR -20 million). Net loss for the period from continuing operations totalled EUR 188 million (I/2008: EUR 61 million profit). Earnings per share totalled EUR -1.04 (I/2008: EUR 0.35) and earnings per share from continuing operations totalled EUR -1.04 (I/2008: 0.34). Return on capital employed in the first quarter was -27.5% (I/2008: 10.0%). Net cash generated from operating activities was very strong and totalled EUR 301 million (I/2008: EUR 107 million). Some EUR 555 million was released from working capital during the first quarter. For the most part the decline in working capital is a result of lower metal prices and an efficient decrease in inventory levels throughout the supply chain. Net interest-bearing debt decreased by EUR 247 million compared to the end of the fourth quarter of 2008 and amounted to EUR 825 million at the end of March (March 31, 2008: EUR 737 million). Outokumpu's gearing is at the good level of 32.3% (March 31, 2008: 23.3%), well below the target of below 75%. Risks and uncertainties Outokumpu operates in accordance with the risk management policy approved by its Board of Directors. This policy defines the objectives, approaches and areas of responsibility in risk management. Risks and uncertainties may, if they materialize, have a substantial impact on earnings and cash flows. Key risks are assessed and updated on a regular basis. Important strategic and business risks include structural overcapacity in stainless steel production, competition in stainless steel markets and Euro-centricity. During the first quarter, strategic risks related to the continuing weak market situation were added to Group's list of key risks. To mitigate risks related to structural overcapacity and fierce competition in stainless steel markets, Outokumpu aims to maintain the cost efficiency of its operations, broaden the Group's product offering and increase sales to end-users by, for example, developing distribution channels. This strategy is supported by the Group Sales and Marketing function, which ensures that customers are served in an optimal way. To mitigate any possible impacts of Euro-centricity, Outokumpu is also aiming at growth outside Europe. During first quarter of 2009, the global financial crisis weakened stainless steel markets even further and Outokumpu responded with production cuts and personnel adjustments. Outokumpu is monitoring the situation continuously and has taken some short-term actions to mitigate the further impact of weak markets. Operational risks arise as a consequence of inadequate or failed internal processes, employee actions, systematic or other events such as natural catastrophes, misconduct or crime. Key operational risks include a major fire or accident, variations in production performance, failures in project implementation and the inability to work according to a one-company approach. These risks are mitigated through insurances, a variety of preventive and corrective actions and initiatives. To minimize damage to property and business interruptions that could result from fire at some of the Group's major production sites, Outokumpu has instituted systematic fire and security audit programs. During the first quarter, the Group's crisis management procedures were implemented by the Group Executive Committee and training of crisis management teams began. The annual renewal for most of the Group's insurances is by the end of March. Renewals were completed successfully during the first quarter. Financial risks include exposure to market prices and the risk of default as well as preserving the ability to maintain adequate liquidity and keeping refinancing risks at a low level. The regular wider analysis and review of financial risks was carried out during the first quarter. The most important financial risks are variations in the price of nickel, variations in the exchange rate between the Swedish krona and the euro, the value of the US dollar, credit risk related to loan receivables and capability to preserve adequate liquidity and keeping refinancing risks at a low level. Outokumpu is also exposed to changes in prices for equities and debt security. A proportion of the market risks is mitigated through the use of financial derivative contracts. Liquidity and refinancing risks are taken into account in capital management decisions and, when necessary, in making investment and other business decisions. Outokumpu's aim is to mitigate credit risk related to sales receivables through insurance and other arrangements. In the first quarter, some currency hedging was carried out in relation to local costs in Sweden. Outokumpu is closely monitoring the turbulence in the global financial markets. If the market situation continues to be difficult, Outokumpu is prepared to take additional action to improve the Group's profitability. While increases in credit margins have not yet had any major impact on Outokumpu's funding costs, higher margins during 2009 are expected to have such an impact. 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 realized environmental risks that could have a material adverse effect on the Group's financial position. Occupational safety continues to be a major focus area within the Group and Outokumpu has now established a separate safety function responsible for safety management and development. In I/2009, the lost-time injury rate (i.e. lost-time accidents per million working hours) was six (I/2008: 13). In 2009, the target is less than five. No severe accidents were reported during the review period. Corporate Responsibility Year 2008 was Outokumpu's Corporate Responsibility Theme Year. The aim was to highlight the importance of environmental and social responsibility. Plants and offices were given measurable targets to reduce energy consumption, landfill waste and the number of accidents. Improving well-being at work was another target. Energy consumption at production plants fell by 0.3%/ton processed (target: 2% reduction). The target of a reduction of 5% of energy consumption was not achieved in all of the Group's offices. The quantity of waste taken to landfill fell by a remarkable 40%/ton processed (target: 10%), mainly as a result of successful efforts over several years to commercialize by-products. In offices, reductions taken to landfill fell short of the 5% target. The injury rate fell from 11 to nine accidents per million working hours (target: eight). Well-being among personnel improved slightly compared to 2007. In our employee survey the response rate increased by 11 percentage units and the work satisfaction index was 4% higher than in 2007. In March 2009, Outokumpu was selected to be 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 the three areas of business ethics, human resources and the environment. Personnel The Group's continuing operations employed an average of 8 336 people during January-March 2009 (I/2008: 8 145). At the end of March, Outokumpu had 8 253 employees (March 31, 2008: 8 137). Class actions regarding the sold fabricated copper products business The fabricated copper products business sold in 2005, comprised, among others, Outokumpu Copper (USA), Inc. This company has been served with one individual damage claim for ACR Tubes under US antitrust laws. Outokumpu believes that the allegations in this case are groundless and will defend itself in any proceedings. In connection with the transaction to sell the fabricated copper products business to Nordic Capital, Outokumpu has agreed to indemnify and hold harmless Nordic Capital with respect to this claim. Customs investigation of exports to Russia by Outokumpu Tornio Works In March 2007, Finnish Customs authorities initiated a criminal investigation into the Group's Tornio Works' export practices to Russia. The preliminary investigation is connected with another preliminary investigation concerning a forwarding agency based in south-eastern Finland. It is suspected that defective and/or forged invoices have been prepared at the forwarding agency as regards the export of stainless steel to Russia. The preliminary investigation is focusing on possible complicity by Outokumpu Tornio Works in the preparation of defective and/or forged invoices by the forwarding agency in question. Directly after the Finnish Customs authorities started their investigations, Outokumpu initiated its own investigation into the trade practices connected with stainless steel exports from Tornio to Russia. In June 2007, after carrying out its 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. Organizational change and appointments Mr Andrea Gatti former EVP - Group Sales and Marketing at Outokumpu has assumed the role of Corporate Vice President outside the Executive Committee from February 24, 2009. He will work with strategic corporate projects and report to Karri Kaitue, Deputy CEO. Bo Annvik, EVP - Specialty Stainless, has assumed Mr. Gatti's duties for an interim period. Shares and shareholders According to the Nordic Central Securities Depository, Outokumpu's largest shareholders by group at the end of the first quarter were Finnish corporations (33.57%), foreign investors (32.49%), Finnish public sector institutions (15.52%), Finnish private households (9.65%), Finnish financial and insurance institutions (6.09%), and Finnish non-profit organizations (2.69%). The list of largest shareholders is updated regularly on Outokumpu's Internet pages: www.outokumpu.com Shareholders that have more than 5% of the shares and votes in Outokumpu Oyj are Solidium Oy (owned by the State of Finland) (31.01%) and the Finnish Social Insurance Institution (8.05%). At the end of March, Outokumpu's closing share price was EUR 8.16 (I/2008: EUR 28.81). The average share price during the first quarter was EUR 8.94 (I/2008: EUR 23.45) with EUR 11.18 (I/2008: EUR 29.80) as the highest price and EUR 7.72 (I/2008: EUR 17.20) as the lowest price during the quarter. At the end of March, the market capitalization of Outokumpu Oyj shares totaled EUR 1 485 million (I/2008: EUR 5 225 million). Share turnover on the Nasdaq OMX Helsinki exchange during the quarter totalled 108.2 million (I/2008: 141.6 million) shares. The total value of shares traded during the first quarter was EUR 967.4 million (I/2008: EUR 3 320.8 million). Outokumpu's fully paid-up share capital at the end of March totalled EUR 309.4 million and consisted of 181 994 266 shares. The average number of shares outstanding during the first quarter was 180 413 041 excluding treasury shares. Annual General Meeting 2009 The 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 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. Events after the review period Due to the very weak demand for stainless steel, Outokumpu intends to reduce the annual production capacity at the melt shop in Sheffield in the UK to some 200 000 tons from some 350 000 tons of annual operational production capacity today. This would also lead to some 110 job reductions. The proposed job reductions will take the number of Outokumpu employees to approximately 450 in the UK. Short-term outlook Visibility concerning the stainless steel market continues to be short. Both distributors and end-users of stainless steel are still running down their inventories. The reduction of inventories is taking place throughout the value chain. Current very low order volumes are not therefore representative of the underlying trend in demand. Distributor inventories for standard grades are estimated to be at or below normal levels. Outokumpu is currently selling for deliveries in June. Delivery volumes in the second quarter are expected to be around the same level as in the first quarter. Base prices appear to have bottomed out in March and are expected to rise gradually by some 100 EUR/ton by the end of the second quarter. Decided cost savings and price increases are expected to gradually improve the underlying profitability. Thus the underlying operational loss is expected to be at the same level or slightly smaller in the second quarter compared to the first quarter. Assuming that metal prices remain at current levels, no major raw material related gains or losses are expected. The reduction in working capital is expected to diminish and cash flow is expected to weaken accordingly. In Espoo, April 23, 2009 Board of Directors CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Income statement Jan- Jan- Jan- March March Dec EUR million 2009 2008 2008 Continuing operations: Sales 679 1 689 5 474 Other operating income 10 1 57 Costs and expenses -924 -1 583 -5 552 Other operating expenses -15 -7 -42 Operating profit -249 100 -63 Share of results in associated companies -3 0 -2 Financial income and expenses Interest income 5 5 20 Interest expenses -13 -16 -74 Market price gains and losses 5 -7 -2 Other financial income 3 10 11 Other financial expenses 0 -13 -24 Profit before taxes -252 80 -134 Income taxes 64 -19 24 Net profit for the period from continuing operations -188 61 -110 Discontinued operations: Net profit for the period from discontinued operations 0 2 -79 Net profit for the period -187 63 -189 Attributable to: Owners of the parent -187 63 -189 Non-controlling interests -0 - -0 Earnings per share for profit attributable to the owners of the parent: Earnings per share, EUR -1.04 0.35 -1.05 Diluted earnings per share, EUR -1.04 0.35 -1.04 Earnings per share from continuing operations attributable to the owners of the parent: Earnings per share, EUR -1.04 0.34 -0.61 Earnings per share from discontinued operations attributable to the owners of the parent: Earnings per share, EUR 0.00 0.01 -0.44 Statement of other comprehensive income Jan- Jan- Jan- March March Dec EUR million 2009 2008 2008 Net profit for the period -187 63 -189 Other comprehensive income: Exchange differences on translating foreign operations 17 -37 -74 Available-for-sale financial assets Fair value changes during the financial period -1 16 -38 Reclassification adjustments from equity to profit - 5 5 Income tax relating to available-for-sale financial assets -3 -2 8 Cash flow hedges Fair value changes during the financial period -4 -5 -76 Reclassification adjustments from equity to profit - -0 6 Income tax relating to cash flow hedges 1 1 18 Net investment hedges Fair value changes during the financial period 1 -1 13 Income tax relating to net investment hedges -0 0 -3 Share of other comprehensive income of associated companies 18 - - Other comprehensive income for the period, net of tax 29 -22 -140 Total comprehensive income for the period -158 41 -329 Attributable to: Owners of the parent -158 41 -329 Non-controlling interests -0 - -0 Statement of financial position March 31 March 31 Dec 31 EUR million 2009 2008 2008 ASSETS Non-current assets Intangible assets 580 472 584 Property, plant and equipment 2 043 1 966 2 027 Investments in associated companies 1) 177 164 156 Available-for-sale financial assets 1) 72 135 67 Derivative financial instruments 1) 9 16 9 Deferred tax assets 34 27 37 Trade and other receivables Interest-bearing 1) 139 121 132 Non interest-bearing 57 51 55 Total non-current assets 3 111 2 953 3 067 Current assets Inventories 878 1 511 1 204 Available-for-sale financial assets 1) 7 9 8 Derivative financial instruments 1) 34 31 92 Trade and other receivables Interest-bearing 1) 28 12 25 Non interest-bearing 521 1 126 701 Cash and cash equivalents 1) 381 107 224 Total current assets 1 849 2 796 2 252 Receivables related to assets held for sale 1) 16 198 22 TOTAL ASSETS 4 976 5 947 5 341 EQUITY AND LIABILITIES Equity attributable to the equity holders of the Company Share capital 309 308 308 Premium fund 705 702 702 Other reserves 3 84 -13 Retained earnings 1 719 2 006 1 984 Net profit for the financial year -187 63 -189 2 550 3 162 2 794 Non-controlling interests 1 -0 1 Total equity 2 551 3 162 2 795 Non-current liabilities Long-term debt 1) 1 152 1 025 1 170 Derivative financial instruments 1) 55 5 48 Deferred tax liabilities 161 242 216 Pension obligations 66 57 64 Provisions 28 35 28 Trade and other payables 2 2 2 Total non-current liabilities 1 464 1 366 1 529 Current liabilities Current debt 1) 422 381 501 Derivative financial instruments 1) 27 25 54 Income tax liabilities 5 31 5 Provisions 44 38 48 Trade and other payables Interest-bearing 1) 26 27 26 Non interest-bearing 2) 432 850 378 Total current liabilities 955 1 353 1 012 Liabilities related to assets held for sale 1) 6 66 6 TOTAL EQUITY AND LIABILITIES 4 976 5 947 5 341 1) Included in net interest-bearing debt. 2) Dividend of EUR 90 million, which was paid out on April 3, 2009, is included in current non interest-bearing debt on March 31, 2009. Consolidated statement of changes in equity Attributable to the owners of the parent Share Unregister- Share Other Fair value capital ed share premium reserves reserves EUR million capital fund Equity on December 31, 2007 308 - 701 16 57 Total comprehensive income for the period - - - - 11 Dividends - - - - - Share-based payments - - - - - Share options exercised 0 - 0 - - Equity on March 31, 2008 308 - 702 16 68 Equity on December 31, 2008 308 - 702 15 -28 Total comprehensive income for the period - - - - 16 Dividends - - - - - Share-based payments - - - - - Share options exercised 1 - 3 - - Equity on March 31, 2009 309 - 705 15 -12 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 - -33 63 - 41 Dividends - - -216 - -216 Share-based payments - - 0 - 0 Share options exercised - - - - 0 Equity on March 31, 2008 -27 -115 2 211 - 3 162 Equity on December 31, 2008 -27 -138 1 961 1 2 795 Total comprehensive income for the period - 13 -187 0 -158 Dividends - - -90 - -90 Share-based payments - - 0 - 0 Share options exercised - - - - 4 Equity on March 31, 2009 -27 -125 1 684 1 2 551 Condensed statement of cash flows Jan-March Jan-March Jan-Dec EUR million 2009 2008 2008 Net profit for the period -187 63 -189 Adjustments Depreciation and amortization 52 50 206 Impairments 0 16 36 Other adjustments -69 1 321 Change in working capital 494 -21 370 Dividends received 3 10 12 Interests received 1 2 5 Interests paid -13 -15 -76 Income taxes paid 20 2 -30 Net cash from operating activities 301 107 656 Purchases of assets -72 -47 -325 Purchase of subsidiaries - - -204 Proceeds from the sale of subsidiaries - - 49 Proceeds from the sale of other assets 6 1 31 Net cash from other investing activities -0 -0 0 Net cash from investing activities -66 -46 -449 Cash flow before financing activities 236 61 207 Borrowings of long-term debt 9 - 341 Repayment of long-term debt -9 -8 -236 Change in current debt -79 -30 47 Dividends paid - - -216 Proceeds from the sale of other financial assets 0 - 0 Other financing cash flow 1 -0 -1 Net cash from financing activities -78 -38 -64 Net change in cash and cash equivalents 157 22 143 Cash and cash equivalents at the beginning of the period 224 86 86 Foreign exchange rate effect 0 -1 -5 Net change in cash and cash equivalents 157 22 143 Cash and cash equivalents at the end of the period 381 107 224 Key figures Jan-March Jan-March Jan-Dec EUR million 2009 2008 2008 Operating profit margin, % -36.7 5.9 -1.2 Return on capital employed, % -27.5 10.0 -1.6 Return on equity, % -28.1 7.7 -6.2 Return on equity, continuing operations, % -28.0 7.5 -3.6 Capital employed at end of period 3 376 3 899 3 867 Net interest-bearing debt at end of period 825 737 1 072 Equity-to-assets ratio at end of period, % 51.3 53.2 52.4 Debt-to-equity ratio at end of period, % 32.3 23.3 38.4 Earnings per share, EUR -1.04 0.35 -1.05 Earnings per share from continuing operations, EUR -1.04 0.34 -0.61 Earnings per share from discontinued operations, EUR 0.00 0.01 -0.44 Average number of shares outstanding, in thousands 1) 180 413 180 112 180 185 Fully diluted earnings per share, EUR -1.04 0.35 -1.04 Fully diluted average number of shares, in thousands 1) 180 248 181 050 180 995 Equity per share at end of period, EUR 14.09 17.56 15.50 Number of shares outstanding at end of period,in thousands 1) 180 953 180 127 180 233 Capital expenditure, continuing operations 62 41 544 Depreciation, continuing operations 52 50 206 Average personnel for the period, continuing operations 8 336 8 145 8 552 1) The number of own shares repurchased is excluded. NOTES TO THE INCOME STATEMENT AND BALANCE SHEET This interim financial report 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 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 181 994 266 and the share capital amounted to EUR 309.4 million on March 31, 2009. Outokumpu Oyj held 1 040 888 treasury shares on March 31, 2009. This corresponded to 0.6% of the share capital and the total voting rights of the Company on March 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 March 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 82 830 Outokumpu Oyj shares on the basis of 2003B stock option program and a total of 10 000 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 945 990 shares can be subscribed with the remaining 2003B stock options and 90 500 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 10.31 and for stock option 2003C EUR 10.94 on March 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 1 762 033 and the number of shares by a maximum of 1 036 490 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 meant 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 the programs were to receive the number of shares in accordance with the maximum reward, currently a total of 911 430 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-March Jan-March Jan-Dec EUR million 2009 2008 2008 Sales 8 145 267 Expenses -7 -138 -269 Operating profit 1 7 -2 Net financial items -0 -1 -4 Profit before taxes 1 6 -6 Taxes -0 -1 -0 Profit after taxes 1 5 -6 Impairment loss recognized on the fair valuation of the Outokumpu Copper Tube and Brass division's assets and liabilities -0 -3 -6 Loss on the sale of copper tube business - - -66 Taxes - - - After-tax result from the disposal and impairment loss -0 -3 -73 Non-controlling interests - - - Net profit for the period from discontinued operations 0 2 -79 Statement of financial position March 31 March 31 Dec 31 EUR million 2009 2008 2008 Assets Intangible and tangible assets 2 6 2 Other non-current assets 3 4 3 Inventories 7 97 9 Other current non interest-bearing assets 5 92 8 16 198 22 Liabilities Provisions 2 5 2 Other non-current non interest-bearing liabilities 1 4 1 Trade payables 2 45 2 Other current non interest-bearing liabilities 0 12 1 6 66 6 Cash flows Jan-March Jan-March Jan-Dec EUR million 2009 2008 2008 Operating cash flows 6 0 -8 Investing cash flows 0 -3 -16 Financing cash flows -6 6 19 Total cash flows 0 2 -5 Major non-recurring items in operating profit Jan-March Jan-March Jan-Dec EUR million 2009 2008 2008 Redundancy provisions -5 - -17 Thin Strip restructuring in Britain - - -66 -5 - -83 Major non-recurring items in financial income and expenses Jan-March Jan-March Jan-Dec EUR million 2009 2008 2008 Impairment of Belvedere shares - -12 -21 - -12 -21 Income taxes Jan-March Jan-March Jan-Dec EUR million 2009 2008 2008 Current taxes -0 -19 -6 Deferred taxes 64 0 30 64 -19 24 Property, plant and equipment Jan 1 - Jan 1 - Jan 1 - March 31 March 31 Dec 31 EUR million 2009 2008 2008 Historical cost at the beginning of the period 4 021 3 984 3 984 Translation differences 2 -22 -190 Additions 64 40 301 Acquisition of subsidiaries - - 36 Disposals -2 -4 -108 Reclassifications -1 -1 -2 Historical cost at the end of the period 4 083 3 997 4 021 Accumulated depreciation at the beginning of the period -1 994 -2 004 -2 004 Translation differences -2 16 115 Disposals 1 4 83 Reclassifications 0 0 -0 Depreciation -45 -47 -188 Accumulated depreciation at the end of the period -2 040 -2 030 -1 994 Carrying value at the end of the period 2 043 1 966 2 027 Carrying value at the beginning of the period 2 027 1 980 1 980 Commitments March 31 March 31 Dec 31 EUR million 2009 2008 2008 Mortgages and pledges Mortgages on land 189 121 189 Other pledges 5 0 5 Guarantees On behalf of subsidiaries for commercial commitments 37 36 55 On behalf of associated companies for financing 5 4 5 Other commitments 57 63 59 Minimum future lease payments on operating leases 55 53 52 Group's off-balance sheet investment commitments totaled EUR 99 million on March 31, 2009 (March 31, 2008: EUR 48 million, Dec 31, 2008: EUR 93 million). Related party transactions Transactions and balances with associated companies March 31 March 31 Dec 31 EUR million 2009 2008 2008 Sales 0 0 0 Purchases -2 -3 -13 Financial income and expenses 0 0 2 Loans and other receivables 7 9 7 Trade and other receivables 1 1 0 Fair values and nominal amounts of derivative instruments March March 31 March 31 31 Dec 31 March 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 27 61 -33 0 1 757 1 920 Interest rate swaps - 2 -2 2 200 200 Cross-currency swaps 8 - 8 7 106 46 Currency options, bought 1 - 1 - 35 - Currency options, sold - 1 -1 - 36 - Number Number of of shares, shares, million million Stock options Belvedere Resources Ltd. 0 - 0 0 3.7 3.7 Tons Tons Metal derivatives Forward and futures nickel contracts 0 2 -2 -0 429 4 729 Nickel options, bought 2 - 2 14 6 780 16 758 Nickel options, sold - 0 -0 -14 5 460 11 478 Forward and futures copper contracts 1 1 0 -0 3 625 4 925 Forward and futures zinc contracts 0 0 0 -0 725 1 025 Emission allowance derivatives 2 - 2 1 270 000 270 000 TWh TWh Electricity derivatives 1 16 -15 -11 1.1 1.3 43 82 -39 -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 3 583 4 000 4 163 3 989 3 934 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 Sales 476 of which Tornio Works 270 Operating profit -157 of which Tornio Works -129 Operating capital at the end of period 2 390 Average personnel for the period 3 917 Deliveries of main products (1 000 tons) Cold rolled 114 White hot strip 57 Semi-finished products 39 Total deliveries of the division 210 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 Sales 371 Operating profit -82 Operating capital at the end of period 1 007 Average personnel for the period 3 892 Deliveries of main products (1 000 tons) Cold rolled 25 White hot strip 23 Quarto plate 20 Tubular products 14 Long products 9 Total deliveries of the division 92 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 Sales 66 Operating profit -12 Operating capital at the end of period 108 Average personnel for the period 527 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 Continuing operations: Sales General Stainless 476 of which intersegment sales 97 Specialty Stainless 371 of which intersegment sales 75 Other operations 66 of which intersegment sales 5 Intra-group sales -233 Total sales 679 Operating profit General Stainless -157 Specialty Stainless -82 Other operations -12 Intra-group items 2 Total operating profit -249 Share of results in associated companies -3 Financial income and expenses 0 Profit before taxes -252 Income taxes 64 Net profit for the period from continuing operations -188 Net profit for the period from discontinued operations 0 Net profit for the period -187 Attributable to: The owners of the parent -187 Non-controlling interests -0 Major non-recurring items in operating profit EUR million I/08 II/08 III/08 IV/08 2008 Specialty Stainless Redundancy provisions - - - -17 -17 Thin Strip restructuring in Britain - - -66 - -66 - - -66 -17 -83 EUR million I/09 Specialty Stainless Redundancy provisions -5 Thin Strip restructuring in Britain - -5 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 Impairment of Belvedere shares - - Key figures by quarter EUR million I/08 II/08 III/08 IV/08 Operating profit margin, % 5.9 11.2 -5.2 -28.1 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 Average personnel for the period, continuing operations 8 145 8 583 8 862 8 617 EUR million I/09 Operating profit margin, % -36.7 Return on capital employed, % -27.5 Return on equity, % -28.1 Return on equity, continuing operations, % -28.0 Capital employed at end of period 3 376 Net interest-bearing debt at end of period 825 Equity-to-assets ratio at end of period, % 51.3 Debt-to-equity ratio at end of period, % 32.3 Earnings per share, EUR -1.04 Earnings per share from continuing operations, EUR -1.04 Earnings per share from discontinued operations, EUR 0.00 Average number of shares outstanding, in thousands 1) 180 413 Equity per share at end of period, EUR 14.09 Number of shares outstanding at end of period, in thousands 1) 180 953 Capital expenditure, continuing operations 62 Depreciation, continuing operations 52 Average personnel for the period, continuing operations 8 336 1) The number of own shares repurchased is excluded. Definitions of key financial figures Total equity + net interest-bearing Capital employed = 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 attributable to the owners of the Earnings per share = 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 This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.

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