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Outokumpu announced Q1 ressult

Steel News - Published on Mon, 30 Apr 2018

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Outokumpu’s first quarter adjusted EBITDA of EUR 133 million was significantly lower compared to EUR 294 million in the first quarter of 2017. Profitability declined primarily due to the lower ferrochrome price and lower realized base prices in both Europe and the Americas. In addition, higher graphite electrode and other input costs of approximately EUR 20 million had a negative impact on profitability. The large negative impacts were partly offset by better cost efficiency, particularly lower SG&A costs. Other operations and intra-group items’ adjusted EBITDA of EUR 10 million (EUR -9 million) includes a EUR 12 million gain from emission allowance derivatives. Raw material-related inventory and metal derivative losses were EUR 5 million (gains of EUR 33 million).

Mr Roeland Baan President & CEO said that “Our operational performance in the first quarter was solid delivery volumes were healthy, order intake was strong, and our adjusted EBITDA amounted to EUR 133 million. In Europe, our operational performance was robust, whereas development in the Americas was disappointing due to low realized pricing. Despite a seasonal increase in working capital, we maintained our net debt level below EUR 1.1 billion in the first quarter.”

“The US steel tariffs are expected to come into force in the beginning of May. As negotiations around the effective implementation are still underway, markets have been roiled by the uncertainty this brings. One of the tangible effects has been an 8% increase of steel imports into Europe year on year. Consequently, the European Commission has started investigations on safeguard measures to protect the European steel market. In the US, steel tariffs have already led to higher base prices benefitting our business in the Americas going forward.”

“In 2018, we are continuing to execute on our six must-win battles with a special focus on improving our delivery performance and efficiency. Despite the current uncertainty in the markets, the demand for stainless steel is expected to stay at healthy levels. With our strong product portfolio, solid balance sheet and dedicated workforce, we are confident that we will reach our 2020 vision.”
Outlook for Q2 2018
Underlying stainless steel demand is expected to remain healthy. Base prices are trending upward in the US, supported by steel import tariffs, whereas in Europe, higher Asian imports are expected to result in further pressure on base prices.

The benefits from the higher ferrochrome price will be partly offset by a planned maintenance shutdown of one ferrochrome furnace.
Stainless steel deliveries are expected to be relatively flat compared to the first quarter in all business areas. Outokumpu expects its second-quarter adjusted EBITDA to be at a similar level to the first quarter (Q1/18: EUR 133 million).

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Posted By : Nanda Koijam on Mon, 30 Apr 2018
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