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Outokumpu announces significant improvement in 2017result

Steel News - Published on Fri, 02 Feb 2018

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Outokumpu announced its fourth-quarter adjusted EBITDA amounted to EUR 82 million, compared to EUR 98 million in the fourth quarter of 2016. Profitability declined due to maintenance work and lower deliveries in Europe and higher costs in the Americas, whereas the result was supported by higher ferrochrome volume and prices, as well as improved overall efficiency. Raw material-related inventory and metal derivative gains were EUR 6 million (EUR 0 million)1.

Stainless steel deliveries were 561,000 tonnes (596,000 tonnes).
Adjusted EBITDA2 was EUR 82 million (EUR 98 million).
EBITDA was EUR 82 million (EUR 128 million).
Adjusted EBIT3 was EUR 30 million (EUR 38 million).
EBIT was EUR 30 million (EUR 69 million).
Operating cash flow was EUR 104 million (EUR 199 million).

Highlights of 2017

Stainless steel deliveries were 2,448,000 tonnes (2,444,000 tonnes).
Adjusted EBITDA was EUR 631 million (EUR 309 million).
EBITDA was EUR 663 million (EUR 355 million).
Adjusted EBIT was EUR 414 million (EUR 57 million).
EBIT was EUR 445 million (EUR 103 million).
Net result was EUR 392 million (EUR 144 million)
Operating cash flow was EUR 328 million (EUR 389 million).
Net debt decreased to EUR 1,091 million (EUR 1,242 million).
Gearing was 40.1% (51.4%).
Return on capital employed (ROCE) was 11.3% (2.6%).
The Board of Directors proposes a dividend of EUR 0.25 per share for 2017

Driven by healthy underlying stainless steel demand both in Europe and the US, as well as a seasonally strong market, Outokumpu expects higher stainless steel deliveries in the first quarter compared to the fourth quarter of 2017.

However, increased graphite electrode, ferrosilicon and energy costs, as well as weakening US dollar and lower ferrochrome price are expected to have a significant negative impact on profitability.

Outokumpu expects its first-quarter adjusted EBITDA to be higher compared to the previous quarter (IV/17: EUR 82 million).

Mr Roeland Baan CEO said that “2017 was a successful year for Outokumpu both financially and operationally. I want to start with safety and organizational development. We made tremendous progress on safety and reduced our total recordable incident frequency rate from 8.7 to 4.4 which is well below the industry average. Based on our annual survey, our Organizational Health Index improved by one quartile indicating that we are steadily becoming a high-performing organization.”

“Outokumpu’s full year adjusted EBITDA more than doubled from EUR 309 million to EUR 631 million on sales of EUR 6.4 billion. While the strong results were supported by higher ferrochrome and base prices, a big portion of the value creation can be tracked back to our relentless focus on cost control and productivity measures. As an example, we achieved our target to reduce SG&A costs by 25 per cent since 2015 to an annual run rate of EUR 300 million.

I am especially pleased with the substantial progress made in improving the financial position of the company. We met our ambitious target of net debt below EUR 1.1 billion thanks to the solid operating cash flow of EUR 328 million. The profile of our debt also improved with the renewal of our EUR 650 million syndicated credit facility and the redemption of the 2019 bonds. In light of all these positive developments, Outokumpu’s corporate family and senior secured notes ratings were upgraded during the final quarter of the year.

Rigorous execution of our six must-win battles continued in all business areas leading to higher earnings, efficiency improvements and continuously strong market position. Business area Europe’s profitability nearly doubled thanks to our stainless business delivering record high results. The financial performance of our ferrochrome operations was also on a good level despite production volumes being lower due to operational issues. After a tough 2016, Long Products’ profitability recovered to healthy levels as a result of decisive cost control, and the business area is well positioned for further growth.

In 2017, the Americas team continued to drive improvement measures based on the strong progress achieved the year before. Record-high delivery volumes and tight cost control form a sound basis for further development. Despite some unexpected external factors straining the Americas’ profitability in the second half of the year, the business area’s full-year adjusted EBITDA of EUR 21 million marked a substantial positive swing of almost EUR 50 million over 2016.

As a result of the relentless strategy execution by the whole Outokumpu team during the past two years, we have strengthened our financial position, as well as our status as the leading stainless steel provider on the market. To further lever these strengths, one of our key targets for 2018 is to enhance the reliability of all our operations throughout the whole value chain. Having the best delivery performance of the industry is essential to become the best value creator in stainless steel by 2020.”

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Posted By : Nanda Koijam on Fri, 02 Feb 2018
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