Outokumpu Oyj - increased demand improved profi...

INTERIM REPORT 20 April 2011 at 9.00 am EET First-quarter 2011 highlights - Operating profit EUR 33 million (IV/2010: EUR -85 million) including some EUR 45 million (IV/2010: none) of raw material-related inventory gains, underlying operational result some EUR -12 million (IV/2010: EUR -68 million). - Operational cash flow EUR -10 million (IV/2010: EUR 18 million). - Improved demand from both distributors and end-users, deliveries at 380 000 tonnes (IV/2010: 336 000 tonnes). - Mika Seitovirta appointed Outokumpu's CEO from 1 April 2011. - Plan for efficiency improvement aimed at achieving EUR 25 million in cost savings announced in April. Group key figures     I/11 IV/10 I/10 2010 -------------------------------------------------------------------------------- Sales EUR million 1 371 1 162 929 4 229 Operating profit EUR million 33 -85 -21 -83 EBITDA EUR million 93 -4 35 172 Non-recurring items in operating profit EUR million - -17 - -17 Profit before taxes EUR million 17 -86 -32 -143 Non-recurring items in financial income EUR million - 9 - 9 and expenses Net profit for the period EUR million 16 -91 -21 -124 Earnings per share EUR 0.09 -0.50 -0.11 -0.68 Return on capital employed % 3.1 -8.0 -2.3 -2.1 Net cash generated from operating activities EUR million -10 18 -87 -497 Capital expenditure EUR million 42 48 28 161 Net interest-bearing debt at end of period EUR million 1 873 1 837 1 302 1 837 Debt-to-equity ratio at end of period % 80.4 77.3 53.9 77.3 Stainless steel deliveries 1 000 tonnes 380 336 333 1 315 Stainless steel base price 1) EUR/tonne 1 215 1 213 1 235 1 252 Personnel at the end of period 2)   8 452 8 431 8 048 8 431 -------------------------------------------------------------------------------- 1) Stainless steel: CRU - German base price (2 mm cold rolled 304 sheet). 2) Personnel reported as headcount. Earlier reported as full-time equivalent, comparative figures restated. The improvement in profitability compared to the fourth quarter of 2010 is primarily a result of higher delivery volumes but a somewhat improved product and geographic mix and higher prices also had an impact. Net cash from operating activities in the first quarter totalled EUR -10 million. EUR 93 million of cash was tied up in working capital mainly as a result of higher metal prices. Outokumpu's gearing at the end of the first quarter increased to 80.4% and remained above the Group's target maximum of 75%. Net interest-bearing debt increased marginally to EUR 1 873 million. Current non-interest bearing liabilities include the dividend payout of EUR 45 million, which was made in April. SHORT-TERM OUTLOOK Demand for standard grades of stainless steel has remained relatively stable after the improvement in early 2011. Growth in demand in the first quarter was supported by restocking among distributors. Some destocking occurred towards the end of the quarter as the nickel price declined in March. Underlying demand continued to improve and is expected to remain stable in the second quarter. While the order intake from investment-driven end-use segments has been improving, no major projects utilising special grades have materialised. Lead times for standard grades are normal at 6-8 weeks. No significant changes in distributors' inventory levels have occurred and they are currently estimated to be almost at normal levels. As summer is approaching some softness in demand from distributors may appear in the second quarter. Outokumpu estimates that the Group's delivery volumes in the second quarter will be at a similar level to volumes in the first quarter. Average base prices for stainless steel in the second quarter are expected to be somewhat higher than average prices in the first quarter. Outokumpu's operating profit in the second quarter is expected to be slightly positive or around break-even with no material impact from raw material-related inventory gains or losses (at current metal prices). In addition, the Group's operating profit in the second quarter is expected to be impacted by non-recurring restructuring provisions related to on-going statutory negotiations in Europe. The extent of the provisions will be determined later in the second quarter once these personnel-related negotiations have been concluded. CEO Mika Seitovirta: "The first weeks at Outokumpu have proven to be a great learning experience. I am energised and encouraged while going forward and gaining further knowledge of this great company and fascinating industry. Our immediate actions will be focused on profitability, cash flow and improving the balance sheet. Most of the management attention this year will be spent on the implementation of the short- term agenda, which is currently being prepared." The attachments present the Management analysis for the first quarter operating result and the Interim review by the Board of Directors for January-March 2011, 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 1.00 pm A combined news conference, conference call and live webcast concerning the first-quarter 2011 financial results will be held on 20 April 2011 at 1.00 pm EET (6.00 am US EST, 11.00 am UK time, 12.00 pm CET) at Restaurant Bank, meeting rooms 12-14, address Unioninkatu 20, 00130 Helsinki, Finland. To participate via a conference call, please dial in 5-10 minutes before the beginning of the event: UK: +44 203 043 2436 US & Canada: +1 866 458 4087 Sweden: +46 8 505 598 53 Password: Outokumpu The news conference can be viewed live via Internet at www.outokumpu.com. 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 20 April 2011 at around 3.00 pm EET. OUTOKUMPU OYJ Corporate Management ENG Q1 2011 interim report: http://hugin.info/3010/R/1507872/442776.pdf This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Outokumpu Oyj via Thomson Reuters ONE [HUG#1507872]
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