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Outokumpu interim report January–March 2021: Strong start to the year – adjusted EBITDA increased to EUR 177 million

Outokumpu Oyj

Interim report
May 6, 2021 at 9.00 am EEST

Outokumpu interim report January–March 2021: Strong start to the year – adjusted EBITDA increased to EUR 177 million 

Highlights in January–March 2021

  • Stainless steel deliveries were 608,000 tonnes (Q1/2020: 588,000 tonnes)1.
  • Adjusted EBITDA was EUR 177 million (EUR 106 million).
  • EBITDA was EUR 177 million (EUR 106 million).
  • Operating cash flow was EUR 27 million (EUR -32 million).
  • Net debt was EUR 1,073 million (December 31, 2020: EUR 1,028 million).
  • Gearing was 43.7% (December 31, 2020: 43.6%).

 1) Figures in parentheses refer to the corresponding period for 2020, unless otherwise stated.

Q1 2021 compared to Q1 2020

Outokumpu’s sales amounted to EUR 1,673 million in the first quarter of 2021 (EUR 1,615 million). Adjusted EBITDA increased to EUR 177 million (EUR 106 million) and stainless steel deliveries were 3% higher compared to the reference period. Realized prices were at a weaker level but lower costs supported profitability. Also some one-off provision and accrual reversals reduced costs. Raw material-related inventory and metal derivative gains amounted to EUR 42 million (losses of EUR 22 million), mainly due to positive timing impacts. Other operations and intra-group items’ adjusted EBITDA was EUR -8 million (EUR -6 million).

EBIT was EUR 116 million (EUR 45 million) and the net result amounted to EUR 82 million (EUR 22 million) in January-March 2021.

Q1 2021 compared to Q4 2020

Outokumpu’s sales increased significantly compared to the previous quarter and amounted to EUR 1,673 million (Q4/2020: EUR 1,350 million). Adjusted EBITDA increased to EUR 177 million (Q4/2020: EUR 78 million) and total stainless steel deliveries grew by 16%. Profitability was supported by higher realized prices, especially in Europe, and fixed costs were at a lower level. Raw material-related inventory and metal derivative gains increased significantly from the previous quarter and amounted to EUR 42 million (gains of EUR 15 million), mainly due to positive timing impacts. Other operations and intra-group items’ adjusted EBITDA was EUR -8 million (EUR -10 million).

Group key figures Q1/21 Q1/20 Q4/20 2020
Sales EUR million 1,673 1,615 1,350 5,639
EBITDA EUR million 177 106 30 191
Adjusted EBITDA 1) EUR million 177 106 78 250
EBIT EUR million 116 45 -33 -55
Adjusted EBIT 1) EUR million 116 45 15 4
Result before taxes EUR million 101 22 -57 -151
Net result for the period EUR million 82 22 -39 -116
Earnings per share EUR 0.20 0.05 -0.09 -0.28
Diluted earnings per share EUR 0.19 0.05 -0.09 -0.28
Return on capital employed % 0.5 2.3 -1.4 -1.4
Net cash generated from operating activities EUR million 27 -32 112 322
Net debt at the end of period EUR million 1,073 1,249 1,028 1,028
Debt-to-equity ratio at the end of period % 43.7 48.0 43.6 43.6
Capital expenditure 2) EUR million 47 58 35 180
Stainless steel deliveries 1,000 tonnes 608 588 523 2,121
Personnel at the end of period, full-time equivalent 3) 9,256 9,996 9,602 9,602

1) Adjusted EBITDA or EBIT = EBITDA or EBIT – Items classified as adjustments.
2) In Q4/2020, Outokumpu changed its capital expenditure definition from accrual-based to cash-based capital expenditure. Comparative information is presented accordingly.
3) In Q1/2021, Outokumpu changed its main personnel amount measure from headcount to full-time equivalent personnel. Comparative information is presented accordingly.

President & CEO Heikki Malinen

We have had a strong start to the year. Outokumpu’s adjusted EBITDA increased to EUR 177 million in the first quarter and all business areas improved their performance compared to the previous quarter. Demand for stainless steel strengthened, which resulted in 16% higher stainless steel deliveries. A strong market environment and positive impacts from raw materials supported our profitability in the first quarter while in parallel we also determinedly executed our strategic measures.

After launching the new strategy in November 2020 to de-risk the company, we have kept our focus on its rigorous implementation. Our target is to achieve a EUR 200 million EBITDA run-rate improvement by the end of 2022 and net debt to EBITDA below 3.0. We are executing our strategy systematically and we have achieved an annualized run-rate improvement of EUR 84 million so far. We are building a solid foundation for our business, outlined in the actions taken, and continue the diligent execution as planned.

Business area Europe’s adjusted EBITDA amounted to EUR 78 million. Stainless steel deliveries increased by 13% compared to the fourth quarter and higher prices supported profitability.

Business area Americas significantly improved its performance as stainless steel deliveries increased by 19% compared to the fourth quarter. Adjusted EBITDA amounted to EUR 54 million in the first quarter, which is now the sixth consecutive quarter of positive adjusted EBITDA. I am very pleased to see the results of the turnaround measures we have taken there during the past two years.

Import penetration into Europe increased to 27% in the first quarter and followed the same pattern as last year. For Europe, it is important to ensure a level playing field and a sustainable future for the stainless steel industry, and this requires trade enforcement tools to be applied in full.

Sustainability is at the core of Outokumpu. Therefore, we have just launched an updated and more ambitious sustainability strategy. Our vision is to be the customer’s first choice in sustainable stainless steel.

Despite the challenging COVID-19 situation, I am proud to share that our own safety performance has remained strong. We delivered the best first-quarter safety results in years and the total recordable injury frequency rate (TRIFR) improved to 1.4. I want to thank all of our teams for their continued contribution in this important work. Such a great performance proves to me that we have managed to establish a culture in which health and safety are our priority. We will continue our focused safety work.

We are well on track to meet our current environmental targets, including 20% emission reduction by 2023 and carbon neutrality by 2050. As we aim to be the stainless steel industry benchmark, we have decided to commit to the Business Ambition for 1.5ºC and this will take us towards our vision.

De-risking the company remains our key strategic priority during the first phase of the strategy 2021–2022. We will continue our determined strategy execution and strengthen our competitiveness as the sustainability leader in the stainless steel industry.

Outlook for Q2 2021

Stainless steel deliveries in the second quarter are expected to increase by 0–5% compared to the first quarter.

European ferrochrome benchmark price increased to USD 1.56/lb for the second quarter.

Planned maintenance costs are expected to increase by approximately EUR 10 million compared to the first quarter.

Raw material prices have recently been very volatile. With the current prices, the significant level of raw material-related inventory and metal derivative gains in the first quarter are not expected to be of the same magnitude in the second quarter.

Adjusted EBITDA in the second quarter of 2021 is expected to be on a similar or higher level compared to the first quarter.

Webcast and conference call today at 1.00 pm EEST

Today, on May 6, 2021, Outokumpu will arrange a webcast and conference call to investors and analysts at 1.00 pm EEST. You can follow the live webcast at https://outokumpu.videosync.fi/2021-q1-results.

Please dial in the conference call using any of the following numbers 10–15 minutes before the beginning of the event. At the close of the event, you may ask questions via the conference call.

Finland: +358 9 8171 0310
United Kingdom: +44 333 3000 804
United States: +1 631 9131 422
Passcode: 86287614#

The webcast and conference call are hosted by President and CEO Heikki Malinen and CFO Pia Aaltonen-Forsell. The link to the webcast, its recording and presentation materials are available at www.outokumpu.com/webcasts.

Directly after the results webcast, Outokumpu will host a virtual Capital Markets Update at 2.00 pm EEST. For more information and the program of the event, please visit www.outokumpu.com/en/CMD.

For more information:

Outokumpu media desk, tel. +358 9 421 3840

Investors: Linda Häkkilä, Head of Investor Relations, tel. +358 400 719 669

Outokumpu Oyj