On Octobre 30th Outokumpu published its January-September interim report and arranged a webcast.
President & CEO Kati ter Horst about the third quarter of 2024:
I am honored to have started as Outokumpu’s President and CEO and be given the opportunity to lead the company into its next strategic phase. My immediate focus will be on ensuring a smooth transition and continuing to deliver on the EUR 350 million profitability improvement target by the end of 2025. I want to thank my predecessor Heikki Malinen for his leadership to strengthen Outokumpu’s balance sheet and making us the undisputed sustainability leader in stainless steel. This is a good foundation on which to build our future success.
My priorities are to reinforce our operational performance, strengthen our competitiveness, and maintain financial discipline. These are even more important now, as we are facing challenging market conditions both in Europe and the Americas. For us at Outokumpu, financial discipline means acting promptly in response to a changing market environment. In this situation, we adjust our business and steer it towards focusing on cash flow and shareholder returns.
During the third quarter, Outokumpu’s adjusted EBITDA increased to EUR 86 million, while stainless steel deliveries decreased by 2% compared to the previous quarter. Imports into both Europe and North America have continued to increase, and put pressure on stainless steel prices. However, we maintained our strong market positions, ranking number one in Europe and number two in North America.
In business area Europe, adjusted EBITDA improved to EUR 59 million, and stainless steel deliveries remained stable compared to the previous quarter. Within advanced materials, I am pleased to welcome Rolf Schencking to Outokumpu’s Leadership Team. He brings with him extensive technical and commercial experience in the specialty stainless steel business.
In business area Americas, adjusted EBITDA amounted to EUR 5 million, and stainless steel deliveries decreased by 8% compared to the previous quarter. Delivery volumes reflect the deterioration in the manufacturing sector, along with some postponements of deliveries to the fourth quarter due to flooding at our Mexico mill. However, our long-term view regarding the U.S. market remains highly positive.
Business area Ferrochrome had a solid result thanks to excellent operational performance and adjusted EBITDA reached EUR 29 million. The demand for our low emission ferrochrome remained resilient. Our Kemi mine is the only chrome mine in the EU area with the lowest carbon footprint globally and it will become the first carbon-neutral mine in the world by 2025.
Safety is our priority. Our safety performance remained at a world-class level despite a somewhat higher incident rate in the third quarter. We want to ensure that all our employees get home safe every day.
Decarbonization is one of the key focus areas in Outokumpu’s strategy. I am pleased to state that we are firmly committed to this path and are making good progress. We have maintained our recycled material content at 95%, which is the highest in the industry and a key contributor to us having the industry’s lowest carbon footprint.
I am very excited to embark on this journey at Outokumpu. My message is one of continuity and confidence – Outokumpu has a strong foundation, and there is great potential ahead. I look forward to working with our employees, customers, suppliers and other stakeholders to advance Outokumpu’s strategic journey.
Highlights in Q3 2024
- Stainless steel deliveries were 459,000 tonnes (449,000 tonnes)*.
- Adjusted EBITDA amounted to EUR 86 million (EUR 51 million).
- EBITDA was EUR 81 million (EUR 18 million).
- ROCE amounted to -7.1% (5.3%).
- Free cash flow was EUR -113 million (EUR -24 million incl. discontinued operations).
- Earnings per share was EUR 0.05 (EUR -0.13).
- On July 9, 2024, Kati ter Horst was appointed as the President and CEO of Outokumpu and she started after the reporting period on October 1, 2024.
Highlights in Q1–Q3/2024
- Stainless steel deliveries were 1,371,000 tonnes (1,455,000 tonnes)*.
- Adjusted EBITDA amounted to EUR 180 million (EUR 445 million).
- EBITDA was EUR 174 million (EUR 401 million).
- ROCE amounted to -7.1% (5.3%).
- Free cash flow was EUR -105 million (EUR 134 million incl. discontinued operations).
- Earnings per share was EUR -0.02 (EUR 0.30)
- The impact of the political strike in Finland in the first half of 2024 was approximately EUR -60 million.
- The dividend of EUR 110 million from the year 2023 was paid in the second quarter
- The most recent share buyback program was completed on February 29, 2024, and Outokumpu repurchased 8,357,545 shares during 2024.
*Figures in parentheses refer to the corresponding period for 2023, unless otherwise stated.
| Key figures (EUR million, or as indicated) | Q3/24 | Q3/23 | Q2/24 | Q1-Q3/24 | Q1-Q3/23 | 2023 |
| Sales | 1,518 | 1,531 | 1,540 | 4,537 | 5,447 | 6,961 |
| EBITDA | 81 | 18 | 56 | 174 | 401 | 416 |
| Adjusted EBITDA 1) | 86 | 51 | 56 | 180 | 445 | 517 |
| EBIT | 32 | -45 | 1 | 14 | 214 | -100 |
| Adjusted EBIT 1) | 31 | -12 | 1 | 15 | 261 | 274 |
| Result before taxes | 22 | -60 | -7 | -14 | 187 | -133 |
| Net result for the period | 20 | -55 | -5 | -8 | 131 | -111 |
| Earnings per share | 0.05 | -0.13 | -0.01 | -0.02 | 0.30 | -0.26 |
| Return on capital employed, rolling 12 months (ROCE), % 2) | -7.1 | 5.3 | -8.7 | -7.1 | 5.3 | -2.1 |
| Capital expenditure | 37 | 31 | 37 | 133 | 84 | 170 |
| Free cash flow3) | -113 | -24 | 35 | -105 | 134 | 290 |
| Stainless steel deliveries, 1000 tonnes | 459 | 449 | 468 | 1,371 | 1,455 | 1,906 |
| Net result for the period from all operations incl discontinued operations | 20 | -56 | -5 | -8 | 136 | -106 |
1) Adjusted EBITDA or EBIT = EBITDA or EBIT – Items affecting comparability.
2) The balance sheet component in 2022 includes the equity component of discontinued operations.
3) The 2023 reference periods include discontinued operations.
During 2022, Outokumpu announced that it had signed an agreement to divest the majority of the Long Products business operations to Marcegaglia Steel Group and Outokumpu reclassified its Long Products businesses to be divested assets held for sale and discontinued operations. The divestment was completed on January 3, 2023, and the gain on sale of EUR 5 million was reported in discontinued operations. In this report, all the comparative numbers are reported as continued operations without the impact of the gain on sale, if not otherwise stated.
Outlook for Q4 2024
Group stainless steel deliveries in the fourth quarter are expected to decrease by 0–10% compared to the third quarter, driven by deteriorating markets for both business areas Europe and Americas.
The planned maintenance break in Tornio, Finland is expected to have approximately EUR -10 million impact on business area Europe’s adjusted EBITDA.
Energy costs for business area Europe are expected to increase by approximately EUR 5 million.
With the current raw material prices, some raw material-related inventory and metal derivative losses are forecasted to be realized in the fourth quarter.
