Outokumpu 3rd quarter results
Outokumpu’s underlying operational result in the third quarter was EUR -57 million. The positive effects resulting from lower production costs and a better product mix compared to the second quarter were offset by lower delivery volumes and lower prices. Certain maintenance break related issues at the Group’s ferrochrome operations in Tornio resulted in some short production stoppages in the third quarter. Outokumpu’s operating loss in the third quarter totalled EUR 89 million and included some EUR 18 million of raw material-related inventory losses resulting from lower metal prices as well as EUR -14 million of non-recurring items.
Net cash from operating activities in the third quarter totalled EUR 83 million and remained positive for the fifth consecutive quarter. The main contributor to the Group’s good cash flow was further reductions in levels of working capital. A total of EUR 156 million was released from working capital in the third quarter. The Group’s net loss in the third quarter totalled EUR 116 million and earnings per share totalled EUR -0.08. Return on capital employed in the third quarter was -9.8%. Excluding proceeds from the rights offering, Outokumpu’s gearing was 90.8% at the end of the third quarter, above Outokumpu’s maximum target level of 75%. Excluding proceeds from the rights offering, net interest-bearing debt increased to EUR 1 714 million.
Demand for stainless steel is expected to grow slightly in the fourth quarter as a result of normal seasonality. No visible recovery among investment-driven end-use segments has taken place and distributor inventories are currently estimated to be below normal levels.
Outokumpu’s average base prices for stainless steel in the fourth quarter are expected to be approximately at the same level as in third quarter. Outokumpu’s fourth-quarter external delivery volumes (stainless and ferrochrome) are expected to be at the same level or slightly higher than in the third quarter.
Outokumpu’s underlying operational result is expected to be approximately at the same level as or slightly weaker than in the third-quarter. At current metal prices, no significant raw material related timing impact is expected. Outokumpu’s operating result in the fourth quarter could be impacted by non-recurring items associated with the Inoxum transaction and the Group’s on-going cost-cutting programmes.
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