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Outokumpu announces Q2 and H1 results

Steel News - Published on Thu, 26 Jul 2018

Image Source: steelguru.com
Outokumpu’s sales increased to EUR 1,883 million (EUR 1,657 million). The second-quarter adjusted EBITDA of EUR 136 million was significantly weaker than EUR 199 million in the second quarter of 2017. Lower European base prices, higher input costs and steep increases in the cost of truck freight in the Americas led to decreased profitability. The result was further negatively impacted by lower ferrochrome price. The record-high stainless steel deliveries had a positive impact on profitability supported by improved cost efficiency in all business areas. Raw material-related inventory and metal derivative gains were EUR 1 million (losses of EUR 9 million). Other operations and intra-group items’ adjusted EBITDA increased to EUR 5 million (EUR -11 million) mainly due to gains from currency and other derivatives.

Highlights in the second quarter of 2018
Stainless steel deliveries were 668,000 tonnes (625,000 tonnes)1.
Adjusted EBITDA was EUR 136 million (EUR 199 million).
EBITDA was EUR 136 million (EUR 209 million).
Operating cash flow was EUR 71 million (EUR 150 million).
Net debt increased to EUR 1,211 million (March 31, 2018: EUR 1,086 million).
Gearing was 45.1% (March 31, 2018: 40.9%).
Return on capital employed (ROCE) was 5.5% (March 31, 2018: 7.2%).

During the first half of 2018, Outokumpu’s sales increased to EUR 3,553 million (H1/17: EUR 3,413 million). Adjusted EBITDA declined to EUR 269 million (H1/17: EUR 493 million) primarily driven by significantly lower ferrochrome price, as well as lower base prices in Europe. In addition, the input cost pressure has increased substantially compared to the previous year. These large negative impacts were partly offset by improved cost efficiency and higher stainless steel deliveries. Raw material-related inventory and metal derivative gains were EUR 25 million compared to losses of EUR 4 million in the first half of 2017. EBIT was EUR 176 million (H1/17: EUR 407 million) and net result amounted to EUR 74 million (H1/17: EUR 291 million).

Highlights in the first half of 2018
Stainless steel deliveries were 1,312,000 tonnes (1,264,000 tonnes).
Adjusted EBITDA was EUR 269 million (EUR 493 million).
EBITDA was EUR 276 million (EUR 518 million).
Operating cash flow was EUR 110 million (EUR 97 million).
Net result was EUR 74 million (EUR 291 million).
1 Figures in parentheses refer to the corresponding period for 2017, unless otherwise stated.

Outokumpu President & CEO Roeland Baan said “Despite market volatility and the global uncertainty created by the US steel tariffs, we maintained our market position and financial performance during the second quarter. Our adjusted EBITDA amounted to EUR 136 million supported by record-high stainless steel deliveries. Business area Americas’ result improved as expected, and business area Europe was able to maintain its good performance in a challenging market environment with unprecedented price pressure.

The impacts of the US steel tariffs implemented in early May have been two-fold. On the downside, we have witnessed surging imports to Europe resulting in heavy price pressure while in the Americas, base prices have risen throughout the spring benefiting local manufacturers including us. The provisional safeguard measures imposed by the European Commission as of July 19 are a logical reaction to restore balance in the European steel markets and stem the flow of low-priced steel imports. We expect the provisional safeguards to be commuted into permanent safeguards within the next 200 days.

We are halfway through our journey to become the best value creator in stainless steel. Despite substantial market headwinds during the past months, we delivered one of our strongest quarters in our history. This development highlights the significant progress we have made to achieve our 2020 targets.”

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Posted By : Nanda Koijam on Thu, 26 Jul 2018
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