Outokumpu has announced financial results for third quarter of 2009. Highlights are as follows:
1. Operating loss EUR 65 million
2. Profitability improved due to higher prices, deliveries declined
3. No major improvement in underlying demand for stainless
4. CRU: German base price (2mm cold rolled 304 sheet)
5. CRU: German transaction price (2mm cold rolled 304 sheet)
| | Q3 '09 | Q2 '09 | Q3 '08 |
| Sales | 587 | 617 | 1,270 |
| Operating profit | -65 | -94 | -66 |
| Profit before taxes | -81 | -105 | -82 |
| Net profit for the period | -56 | -87 | -74 |
| Earnings per share, EUR | -0.31 | -0.48 | -0.41 |
| Net cash | -12 | 23 | 242 |
| Stainless steel deliveries, 1000 tons | 238 | 268 | 323 |
| Stainless steel base price (EUR/t) | 1,307 | 1,117 | 1,143 |
| Stainless steel transaction price (EUR/t) | 2,229 | 1,751 | 2,725 |
Uncertainty in stainless steel markets continued and there is no major improvement in the underlying demand. Inventories held by steel distributors increased slightly in the third quarter, but they are hesitant to build up inventories and short term purchasing behavior is impacted by the changes in the nickel price.
Outokumpu continued to cut back production during the third quarter. Additionally, annual maintenance breaks and seasonality of demand reduced deliveries for the period. Capacity utilization was 50% to 55% with total deliveries of stainless steel at 238 000 tons, 26% lower than a year ago. Base prices have continuously improved this year and the average in the third quarter was higher than in 2008. Transaction prices, which also include raw material costs, were still below 2008 levels. Average nickel price was 7% lower than a year ago and ferrochrome price 57% lower. Due to lower deliveries and lower transaction prices Outokumpu's sales declined 54% to EUR 587 million compared to the third quarter of 2008.
Outokumpu's operating loss totaled EUR 65 million. The operating loss includes EUR 32 million of raw material related inventory gains and EUR 15 million of non-recurring write downs. The underlying operational result was negative at EUR 82 million. The underlying profitability improved from the second quarter due to higher base prices and continued cost control. It was, however, weaker than in the third quarter of 2008 due to lower delivery volumes. Operating profit in the third quarter of 2008 included nickel related inventory losses of EUR 60 million and non recurring provisions and write downs of EUR 66 million.
Mr Juha Rantanen CEO of Outokumpu said that "Stainless steel markets have not seen any major improvement. Underlying demand continues to be weak and the purchasing behavior of steel distributors is very much driven by short-term developments in nickel price. Outokumpu's delivery volumes in the third quarter were low. On a positive note, our financial performance is on an improving trend and both prices and volumes are expected to increase in the fourth quarter. Our priorities in the current market are to balance short-term cost and cash flow management with longer term strategy implementation. We have not given up our ambition of reaching break-even operating profit towards the end of the year."
