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Outokumpu Announces Q3 Results

Steel News - Published on Fri, 01 Nov 2019

Image Source: SteelGuru
Outokumpu’s sales decreased to EUR 1,590 million (EUR 1,733 million) and adjusted EBITDA to EUR 45 million (EUR 128 million). Profitability decreased significantly primarily due to 8% lower stainless steel deliveries reflecting a weak stainless steel market particularly in Europe, as well as raw material-related inventory and metal derivative losses of EUR 31 million (gains of EUR 3 million) caused by a sharp rise of the nickel price. Ferrochrome profitability was negatively impacted by the lower benchmark price. Raw material mix, on the other hand, improved in both business area Europe and the Americas. Other operations and intra-group items’ adjusted EBITDA was EUR 14 million (EUR -4 million), positively impacted by gains from derivatives and the sale of emission allowances.

Highlights in Q3 2019
Stainless steel deliveries were 533,000 tonnes (582,000 tonnes).
Adjusted EBITDA was EUR 45 million (EUR 128 million).
EBITDA was EUR 45 million (EUR 128 million).
Operating cash flow was EUR 12 million (EUR 61 million).
Net debt was EUR 1,336 million (June 30, 2019: EUR 1,307 million).
Gearing was 51.4% (June 30, 2019: 49.8%).
Return on capital employed (ROCE) was 1.0% (June 30, 2019: 2.9%).

During the first nine months of 2019, Outokumpu’s sales decreased to EUR 5,006 million (EUR 5,286 million). Adjusted EBITDA decreased to EUR 190 million (EUR 397 million). Weak stainless steel market has led to significantly lower base prices. On the other hand, pricing has been supported by improved product and raw material mix. Deliveries during the first nine months of the year were 8% lower compared to the same period last year. Ferrochrome profitability was suffering from lower ferrochrome benchmark price, but part of this impact was compensated by record-high production. Raw material-related inventory and metal derivative losses during January-September were EUR 60 million, significantly higher than the losses of EUR 1 million during the first nine months of 2018. Other operations and intra-group items’ adjusted EBITDA amounted to EUR 4 million (EUR 11 million).EBIT was EUR 3 million (EUR 241 million) and net result amounted to EUR -60 million (EUR 103 million).

Highlights in Q1–Q3 2019
Stainless steel deliveries were 1,738,000 tonnes (1,894,000 tonnes).
Adjusted EBITDA was EUR 190 million (EUR 397 million).
EBITDA was EUR 176 million (EUR 404 million).
Operating cash flow was EUR 228 million (EUR 171 million).
Net result was EUR -60 million (EUR 103 million).

Group key figuresUnitQ3/19Q3/18YoYQ2/19Q1-Q3/19Q1-Q3/18YoY
SalesEUR million1,5901,733-8.3%1,7015,0065,286-5.3%
EBITDAEUR million45128-64.8%91176404-56.4%
Adjusted EBITDA1)EUR million45128-64.8%91190397-52.1%
EBITEUR million-1365-120.0%333241-98.8%
Adjusted EBIT1)EUR million-1375-117.3%3317244-93.0%
Result before taxesEUR million-3036-183.3%17-47155-130.3%
Net result for the periodEUR million-2729-193.1%6-60103-158.3%
Stainless steel deliveries1,000 tonnes533582-8.4%5841,7381,894-8.2%
 


Outlook for Q4 2019
The stainless steel market is expected to remain subdued. The European market is suffering from continued import pressure from Asia and low underlying demand whereas in the US, we expect to see the normal fourth-quarter seasonality. Consequently, Outokumpu expects its fourth-quarter stainless steel deliveries to be lower than in the third quarter of 2019.
The planned annual maintenance work at the Tornio stainless steel mill is expected to have up to EUR 15 million negative impact on business area Europe’s profitability.
Assuming the current raw material prices, the losses from raw material-related inventories and metal derivatives from the third quarter are not expected to be repeated in the fourth quarter.
Outokumpu expects its fourth-quarter adjusted EBITDA to be at a similar level to the third quarter of 2019 (Q3/19: EUR 45 million).

Source :

Posted By : Rabi Wangkhem on Fri, 01 Nov 2019
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