Interim Report
April 23, 2008 at 1.00 p.m.
OUTOKUMPU'S FIRST QUARTER 2008 INTERIM REPORT - IMPROVED PROFITS IN
RECOVERING STAINLESS STEEL MARKETS
First quarter highlights
- Operating profit at EUR 100 million including nickel-related
inventory losses of some EUR 60 million, underlying operational
result about EUR 160 million.
- End-user demand for stainless steel healthy with improved demand
from the distributor sector, gradual base price increases achieved
during the quarter
- Production close to capacity, stainless deliveries up by 28% to 449
000 tons (IV/2007: 352 000 tons).
- Good net cash flow from operating activities of EUR 107 million.
- In line with strategy of selling more to end-users, Outokumpu
decided to acquire the Italian stainless steel distributor SoGePar
for EUR 335 million.
Group key figures
I/08 IV/07 I/07 2007
Sales EUR million 1 689 1 465 2 129 6 913
Operating profit EUR million 100 15 424 589
Non-recurring items
in operating profit EUR million - - - 14
Profit before taxes EUR million 80 7 416 798
Non-recurring items
in financial income
and expenses EUR million -12 - - 252
Net profit for the period
from continuing operations EUR million 61 7 311 660
Net profit for the period EUR million 63 -16 307 641
Earnings per share
from continuing operations EUR 0.34 0.04 1.71 3.63
Earnings per share EUR 0.35 -0.09 1.69 3.52
Return on capital employed % 10.0 1.4 38.8 13.9
Net cash generated from
operating activities EUR million 107 299 85 676
Capital expenditure,
continuing operations EUR million 41 43 25 190
Net interest-bearing debt
at end of period EUR million 737 788 1 189 788
Debt-to-equity ratio at
end of period % 23.3 23.6 37.3 23.6
Stainless steel deliveries 1 000 tons 449 352 430 1 419
Stainless steel
base price 1) EUR/ton 1 243 1 058 1 930 1 304
Personnel at the
end of period,
continuing operations 8 137 8 108 8 098 8 108
1) Stainless steel: CRU - German base price (2 mm cold rolled 304
sheet).
Please note: Between July - October 2007, European prices for some
stainless grades were quoted on a transaction price basis,
therefore
base prices are the calculated value of transaction price minus
alloy
surcharge for this time period (CRU).
SHORT-TERM OUTLOOK
Underlying demand for stainless steel remains healthy. End-user
demand, demand for special grades and projects and demand for
standard grades from the distribution sector are expected to continue
to be at a good level.
Uncertainty resulting from the global economic turmoil has increased
but has so far not had any major impact on stainless steel
fundamentals. There is however an increasing risk that the
uncertainty might affect both demand and price development of
stainless steel going forward.
Distributors' inventories for standard grades are currently at normal
level and Outokumpu is now selling for deliveries in June. Deliveries
are estimated to be slightly below capacity in the second quarter due
to short, additional maintenance breaks at Tornio Works in March.
Gradual base price increases have been achieved in the second quarter
and the German base price for 2mm cold rolled 304 stainless steel
sheet is targeted to reach a level of EUR 1 350 towards the end of
June.
Outokumpu's operating profit for the second quarter 2008 is expected
to be clearly better than in the first quarter. In addition to the
gradual base price increases achieved, significantly higher prices of
ferrochrome will improve Group operating profit in the second
quarter. The current estimate is that the timing differences between
raw material prices (nickel and ferrochrome) and alloy surcharge will
be slightly positive in the second quarter.
CEO Juha Rantanen:
"After a very volatile year, we are glad to see a quarter with
gradual and controlled development in positive direction. This we
also expect to continue in the second quarter.
More stability and predictability is what we aim for with our
strategy as well. One important part of the strategy is to sell more
to end-users and project customers. The acquisition of the Italian
stainless steel distributor, SoGePar, which we announced today, is a
major step ahead. It accelerates our end-user sales compared to our
own organic investment plan. Additionally, we get access to already
existing capacity, well-functioning organization and a solid customer
base."
The attachments present Management analysis of the first quarter
operating result and the Interim review by the Board of Directors for
January-March 2008, the accounts and notes to the interim accounts.
This interim report is unaudited.
For further information, please contact:
Päivi Lindqvist, SVP - Communications and IR
tel. +358 9 421 2432, mobile +358 40 708 5351
paivi.lindqvist@outokumpu.com
Ingela Ulfves, VP - Investor Relations and Financial Communications
tel. +358 9 421 2438, mobile +358 40 515 1531
ingela.ulfves@outokoumpu.com
Esa Lager, CFO
tel +358 9 421 2516
esa.lager@outokumpu.com
News conference and live web-cast today at 3.00 pm
A combined news conference, conference call and live webcast
concerning the first-quarter 2008 financial results will be held on
April 23, 2008 at 3.00 pm Finnish time (8.00 am US EST, 1.00 pm UK
time, 2.00 pm CET) at Hotel Kämp, conference room Mirror Room,
Pohjoisesplanadi 29, 00100 Helsinki, Finland.
To participate via a conference call, please dial in 5-10 minutes
before the beginning of the event:
UK +44 20 7162 0025
US & Canada +1 334 323 6201
Password: Outokumpu
The news conference can be viewed live via Internet at
www.outokumpu.com. Stock exchange release and presentation material
will be available before the news conference at www.outokumpu.com ->
Investors -> Downloads
An on-demand webcast of the news conference will be available at
www.outokumpu.com as of April 23, 2008 at around 8.00 pm.
An instant replay service of the conference call will be available
until Monday April 28, 2008 on the following numbers:
UK replay number +44 20 7031 4064, access code: 792027
US & Canada replay number +1 954 334 0342, access code: 792027
OUTOKUMPU OYJ
Corporate Management
Ingela Ulfves
Vice President - Investor Relations & Financial Communications
tel. + 358 9 421 2438, mobile +358 40 515 1531, fax +358 9 421 2125
e-mail: ingela.ulfves@outokumpu.com
www.outokumpu.com
MANAGEMENT ANALYSIS - FIRST QUARTER OPERATING RESULT
Group key figures
EUR million I/07 II/07 III/07 IV/07 2007
Sales
General Stainless 1 700 1 670 879 1 073 5 321
Specialty Stainless 1 003 1 028 687 738 3 456
Other operations 64 63 53 57 237
Intra-group sales -638 -669 -391 -403 -2 101
The Group 2 129 2 092 1 227 1 465 6 913
Operating profit
General Stainless 245 188 -224 11 220
Specialty Stainless 182 196 -51 9 337
Other operations 1 19 8 -6 21
Intra-group items -4 2 11 2 11
The Group 424 406 -256 15 589
EUR million I/08
Sales
General Stainless 1 304
Specialty Stainless 786
Other operations 64
Intra-group sales -465
The Group 1 689
Operating profit
General Stainless 81
Specialty Stainless 42
Other operations -20
Intra-group items -3
The Group 100
Stainless steel
deliveries
1 000 tons I/07 II/07 III/07 IV/07 2007
Cold rolled 220 186 117 180 703
White hot strip 94 94 49 78 314
Quarto plate 39 41 30 36 146
Tubular products 20 17 13 15 65
Long products 16 15 10 12 54
Semi-finished
products 40 46 21 31 137
Total deliveries 430 399 238 352 1 419
1 000 tons I/08
Cold rolled 228
White hot strip 120
Quarto plate 33
Tubular products 19
Long products 15
Semi-finished
products 34
Total deliveries 449
Market prices and
exchange rates
I/07 II/07 III/07 IV/07 2007
Market prices 1)
Stainless steel
Base price EUR/t 1 930 1 518 710 1 058 1 304
Alloy surcharge EUR/t 2 277 2 913 2 967 1 939 2 524
Transaction price EUR/t 4 207 4 432 3 677 2 997 3 828
Nickel USD/t 41 440 48 055 30 205 29 219 37 230
EUR/t 31 619 35 646 21 983 20 175 27 161
Ferrochrome
(Cr-content) USD/lb 0.77 0.82 1.00 1.05 0.91
EUR/kg 1.30 1.34 1.60 1.60 1.46
Molybdenum USD/lb 26.69 30.97 31.97 32.66 30.57
EUR/kg 44.90 50.65 51.30 49.71 49.17
Recycled steel USD/t 278 287 271 283 280
EUR/t 212 213 197 195 204
Exchange rates
EUR/USD 1.311 1.348 1.374 1.448 1.371
EUR/SEK 9.189 9.257 9.264 9.288 9.250
EUR/GBP 0.671 0.679 0.680 0.708 0.684
I/08
Market prices 1)
Stainless steel
Base price EUR/t 1 243
Alloy surcharge EUR/t 1 702
Transaction price EUR/t 2 945
Nickel USD/t 28 957
EUR/t 19 335
Ferrochrome
(Cr-content) USD/lb 1.21
EUR/kg 1.78
Molybdenum USD/lb 33.81
EUR/kg 49.77
Recycled steel USD/t 393
EUR/t 262
Exchange rates
EUR/USD 1.498
EUR/SEK 9.400
EUR/GBP 0.757
1) Sources of market prices:
Stainless steel: CRU - German base price, alloy surcharge and
transaction
price (2 mm cold rolled 304 sheet), estimates for deliveries during
the period.
Please note: Between July-October 2007, European prices for some
stainless
grades were quoted on a transaction price basis, therefore base
prices are the
calculated value of transaction price minus alloy surcharge
for this time period (CRU).
Nickel: London Metal Exchange (LME) cash quotation
Ferrochrome: Metal Bulletin - Ferrochrome lumpy chrome charge, basis
52% chrome
Molybdenum: Metal Bulletin - Molybdenum oxide - Europe
Recycled steel: Metal Bulletin - Steel scrap HMS 1&2 fob Rotterdam
Positive sentiment in the stainless steel market in Europe
In the first quarter, growth in the apparent consumption of stainless
steel flat products is estimated to have been 6% in Europe and 5%
globally compared with IV/2007. European stainless steel markets
continued to develop positively in the review period. Distributor
purchases of stainless steel returned to normal levels and nickel
price development became less volatile. In Europe, deliveries of cold
rolled stainless steel increased by 25% from the fourth quarter of
2007. According to CRU, distributors' inventories are at normal level
and lead times have increased.
The average base price for 2mm cold rolled 304 stainless steel sheet
in Germany was 1 243 EUR/ton in I/2008, up by 17% from IV/2007. In
March, the base price was 1 290 EUR/ton. The average alloy surcharge
for the quarter decreased by 12% to 1 702 EUR/ton primarily as a
result from the lower nickel price in December. From the beginning of
2008, producers have been applying a new calculation method for raw
materials in the alloy surcharge that uses a shorter reference period
than that employed earlier - the period for raw material prices is
closer to the delivery month, giving distributors less visibility on
future prices. The average transaction price in the first quarter was
2 945 EUR/ton, almost flat compared with IV/2007. (CRU) There has
been growing concerns that the gap between European and Asian prices
is widening, which may again attract imports from Asia.
Among the alloying elements, the price of nickel averaged 28 957
USD/ton in I/2008 (IV/2007: 29 219 USD/t). During the quarter, nickel
prices were fairly stable at around 26 400 - 33 300 USD/t. Shortages
of electrical power in South Africa resulted in a significant
tightening of ferrochrome markets and producers were forced to cut
production, which restricted supply. One consequence of the power
shortages is that ferrochrome producers have announced that they will
postpone some scheduled projects. In the quarter, demand for
ferrochrome was 5% higher than in IV/2007 but production was down by
1%. The average contract price was 1.21 USD/lb in I/2008, 15% up on
IV/2007. One result of the shortages of electricity in South Africa,
and to some extent increases in raw material and labor costs and a
higher ratio of non-nickel containing ferritic stainless steel, is
that spot prices for ferrochrome have risen to 2.35 - 3.00 USD/lb. As
a consequence, the quarterly contract price for II/2008 has so far
been settled in the range 1.92 - 2.05 USD/lb. Molybdenum markets
remained tight in the period mainly due to lower export quotas in
China, and the average price increased by 4% to 33.81 USD/lb. The
price of recycled steel increased to 393 USD/ton, 39% up on the
previous quarter.
Recovery in demand improved delivery volumes and operating profit
Group sales in the first quarter totaled EUR 1 689 million, 15% up on
IV/2007. Production was close to capacity and stainless steel
deliveries improved by 28% to 449 000 tons (IV/2007: 352 000 tons).
Short maintenance breaks in the melt shop and hot rolling mill at
Tornio Works resulted in slightly reduced delivery volumes. The main
reason for improvement in delivery volumes was the recovery in demand
for standard grades from the distribution sector.
Operating profit for the quarter totaled EUR 100 million and included
some EUR 60 million of nickel-related inventory losses. In IV/2007,
inventory losses were higher at some EUR 100 million. Outokumpu's
underlying operational result improved to some EUR 160 million
(IV/2007: EUR 115 million). Majority of the improvement in
profitability is attributable to increased delivery volumes and lower
nickel-related inventory losses. The gradual improvement in base
prices was to some extent offset by less favorable product and market
mix. The impact from the higher ferrochrome price was minor in the
quarter. Return on capital employed was 10.0% (IV/2007: 1.4%).
Earnings per share totaled EUR 0.35 (IV/2007: EUR -0.09) and earnings
per share from continuing operations totaled EUR 0.34 (IV/2007: EUR
0.04).
Sales by General Stainless totaled EUR 1 304 million (IV/2007: EUR 1
073 million) and deliveries increased by 31% to 398 000 tons.
Operating profit improved to EUR 81 million (IV/2007: EUR 11 million)
of which Tornio Works posted EUR 67 million (IV/2007: EUR 3 million).
Outokumpu's chromium mine in Kemi and the ferrochrome production
plant in Tornio cover some 60-65% of the Group's total ferrochrome
needs which corresponds to demand from Tornio Works. The remainder of
the ferrochrome required is purchased in the market, mostly in the
form of recycled stainless. As with all other raw materials, the
price of chrome is charged to the customer through the alloy
surcharge mechanism by using the quarterly contract price for
ferrochrome (Metal Bulletin). As the price of ferrochrome rises,
Outokumpu's operating profit improves. Every 5 USc/lb increase in the
quarterly contract price for ferrochrome improves Group operating
profit by some EUR 10 million on an annual basis. In 2008, part of
this benefit will be offset by the increase of energy prices from the
beginning of the year.
Sales by Specialty Stainless totaled EUR 786 million (IV/2007: EUR
738 million) and deliveries increased by 21% to 161 000 tons.
Operating profit rose to EUR 42 million (IV/2007: EUR 9 million).
Operating loss by Other operations was EUR 20 million (IV/2007: EUR 6
million loss) and included costs related to unrealized losses from
electricity derivatives.
New investment decisions taken
In January 2008, a decision to invest EUR 370 million over three
years to broaden the product range of Tornio Works was made.
Outokumpu will start producing high-quality ultra-clean ferritic
stainless steel grades, as well as bright-annealed austenitic and
ferritic stainless products. This investment, together with the
on-going replacement of the No. 2 annealing and pickling line, will
increase Tornio Works' total installed capacity for finished products
by 100 000 tons to some 1.3 million tons by the end of 2010. The
investment also includes a service center (from 2010-) near Stuttgart
in Southern Germany which will have an annual processing capacity of
60 000 tons especially for bright-annealed austenitic and ferritic
products.
Outokumpu will expand and relocate its stock and processing
capability in central France by investing some EUR 14 million over a
two-years period. Combined annual coil and plate processing capacity
in standard and special stainless steel grades will be 40 000 tons
and is scheduled to be in place by the end of 2009.
Outokumpu and Al-Hejailan join forces in the Middle East
In February, Outokumpu OSTP and the Saudi Arabian tube manufacturer
Armetal, a company of Al-Hejailan Group, agreed to form Outokumpu
Armetal Stainless Pipe Co., Ltd., a 51/49 stainless steel tubular
joint venture, in Riyadh. The company's annual capacity will be some
10 000 tons in full operation.
Events after the period
Today, Outokumpu signed an agreement to acquire the SoGePar Group, an
Italian distributor of stainless steel. Outokumpu will pay EUR 195
million in cash and take on debt in the company in the amount of EUR
140 million. As a result of the transaction, the earlier announced
EUR 70 million investment to expand Group's current stock and
processing operations in Italy will not take place.
SoGePar operates stainless steel service centers in Castelleone in
Italy and in Rotherham in the UK. SoGePar also has stock operations
in Italy, the UK, Belgium, Ireland, Finland and France, as well as a
commercial office in Germany and a representative office in Turkey.
Sales by the SoGePar Group totaled EUR 560 million in 2007, with an
operating profit of EUR 44 million and deliveries of 134 000 tons.
As a result of this acquisition, Outokumpu's Stock & Processing
capacity in Italy and the UK will be in excess of 240 000 tons. In
total, with the SoGePar acquisition and the service center
investments announced recently, Outokumpu's global annual stock and
processing capacity will increase from the current 300 000 tons to
over 740 000 tons by 2010.
INTERIM REVIEW BY THE BOARD OF DIRECTORS - JANUARY-MARCH 2008
(Unaudited)
Demand for stainless steel at a healthy level
Demand for stainless steel continued to be healthy during the first
quarter of 2008. Growth in the apparent consumption of stainless
steel flat products in I/2008 is estimated to have been some 6% in
Europe and some 5% globally compared to the previous quarter. The
average German base price for 2mm 304 cold rolled sheet was EUR 1
243 EUR/t in the first quarter, 17% higher than at the end of 2007
but 36% lower than in I/2007. The transaction price of stainless
steel averaged 2 945 EUR/t in the first quarter, 30% lower than in
I/2007. (CRU)
The price of nickel, the main alloying material in stainless steel,
stabilized in the quarter and fluctuated in the range 26 400 - 33 300
USD/t. The average price in the first quarter was 28 957 USD/t.
Markets for ferrochrome, however, tightened significantly. The
average contract price for ferrochrome was 1.21 USD/lb, (I/2007: 0.77
USD/lb). Prices for recycled steel continued to rise in the period
and averaged 393 USD/t. The average price for molybdenum was 33.81
USD/lb.
Operating profit improved
Group sales in the quarter totaled EUR 1 689 million (I/2007: EUR 2
129 million), 21% lower than in I/2007. Stainless steel deliveries
increased to 449 000 tons (I/2007: 430 000 tons).
Operating profit totaled EUR 100 million (I/2007: EUR 424 million)
and included some EUR 60 million of nickel-related inventory losses.
Operating profit was higher than in the previous quarter (IV/2007:
EUR 15 million) as a result of improved deliveries and lower
nickel-related inventory losses. The gradual improvement in base
prices was to some extent offset by less favorable product and market
mix. The impact from the higher ferrochrome price was minor in the
quarter. Operating profit was however significantly lower than in
I/2007 (I/2007: EUR 424 million), when some EUR 50 million of
nickel-related inventory gains were recorded. Underlying operating
profit for I/2008 improved to some EUR 160 million (IV/2007 EUR 115
million). Profit before taxes totaled EUR 80 million (I/2007: EUR 416
million).
Net financial income and expenses was EUR 20 million negative
(I/2007: EUR 10 million negative). An impairment loss of EUR 12
million was booked in other financial expenses on the shares of
Belvedere Resources Ltd, classified as available-for-sale financial
asset, due to the decline in the company's share price. In June 2007,
the Hitura mine was sold to Belvedere and the payment was settled in
the shares of Belvedere. Net profit for the period from continuing
operations totaled EUR 61 million (I/2007: EUR 311 million). Earnings
per share totaled EUR 0.35 (I/2007: EUR 1.69) and earnings per share
from continuing operations EUR 0.34 (I/2007: EUR 1.71). Return on
capital employed for I/2008 was 10.0% (I/2007: 38.8%).
Net cash generated from operating activities totaled EUR 107 million
(I/2007: EUR 85 million). Some further EUR 21 million was tied up in
working capital in the first quarter of 2008. Net interest-bearing
debt fell by EUR 51 million compared to year-end and was EUR 737
million at the end of March (Dec. 31, 2007: EUR 788 million).
Outokumpu's balance sheet is strong with gearing at 23.3% (Dec. 31,
2007: 23.6%) providing good financial flexibility.
Major investment projects approved
Capital expenditure for I/2008 on continuing operations totaled EUR
41 million (I/2007: EUR 25 million). New investment projects approved
for 2008-2010 are detailed below.
In January 2008, a decision to invest EUR 370 million over three
years to broaden the product range of Tornio Works was made.
Outokumpu will start producing high-quality ultra-clean ferritic
stainless steel grades, as well as bright-annealed austenitic and
ferritic stainless products. This investment, together with the
on-going replacement of the No. 2 annealing and pickling line, will
increase Tornio Works' total installed capacity for finished products
by 100 000 tons to some 1.3 million tons by the end of 2010. The
investment also includes a service center (from 2010-) near Stuttgart
in Southern Germany which will have an annual processing capacity of
60 000 tons especially for bright-annealed austenitic and ferritic
products.
Outokumpu will expand and relocate its stock and processing
capability in central France by investing some EUR 14 million over a
two-years period. Combined annual coil and plate processing capacity
in standard and special stainless steel grades will be 40 000 tons
and is scheduled to be in place by the end of 2009.
In February, Outokumpu OSTP and the Saudi Arabian tube manufacturer
Armetal, a company of Al-Hejailan Group, agreed to form Outokumpu
Armetal Stainless Pipe Co., Ltd., a 51/49 stainless steel tubular
joint venture, in Riyadh. The company's annual capacity will be some
10 000 tons in full operation.
Outokumpu's corporate responsibility theme for 2008 has started
Within Outokumpu, 2008 has been named "Corporate responsibility theme
year". Concrete targets in the field of environmental and social
responsibility have been set, and the aim is for everyone in
Outokumpu to participate. Targets for environmental responsibility
include reducing landfill waste from production operations and
reducing energy consumption in both production plants and office
facitilites. Targets for social responsibility include reducing the
number of accidents by a third and improving well-being at work.
Risks and uncertainties
Outokumpu operations are conducted in accordance with the
Board-approved risk management policy, which defines the objectives,
approaches and areas of responsibility in risk management. Outokumpu
categorizes risks as strategic/business, operational or financial.
Risks and uncertainties may, if materialized, substantially impact
earnings and cash flows in the current year.
Important strategic and business risks include overcapacity in
stainless steel production, product substitution and the cyclical
nature of stainless steel demand. New stainless steel production
capacity is being built in China and this may lead to overcapacity in
cold rolled stainless production. To mitigate risk related to the
cyclical nature of the stainless steel business and the risk of
product substitution, Outokumpu is aiming to increase sales to
end-users and to widen the Group's product offering.
Operational risks arise as a consequence of inadequate or failed
internal processes, employee actions, systems or other events such as
natural catastrophes, and misconduct or crime. Outokumpu currently
has a number of investment and change projects underway and failures
or delays in these projects may negatively impact strategy
implementation and achievement of financial targets. Outokumpu
manages these risks by having dedicated resources for overall project
support and for monitoring the whole project portfolio.
Property damage and business interruption caused by fire at some
major site is a key risk concern for the Group. Outokumpu has
systematic fire and security audit programs in place and part of
hazard risk is covered by insurances. The annual insurance renewal
process was successfully finalized in the first quarter.
Financial risks include exposure to market prices, the capability to
maintain adequate liquidity and exposure to risk of default. The most
important market risks for Outokumpu include variation in the nickel
price, variations in the exchange rate of the Swedish krona and the
euro and the value of the US dollar. Outokumpu also has significant
exposure to equity and loan security prices. Part of the Group's
market risks are mitigated through the use of financial derivative
contracts. Liquidity and refinancing risk are taken into account in
capital management decisions. It is Outokumpu's aim to mitigate
significant part of credit risk with insurances and other
arrangements.
Outokumpu has closely monitored the turbulence in global financial
markets and management has assessed that the current market situation
is not likely to impose significant restrictions on implementation of
the Group's current decisions and plans. The increases in credit
margins have not had any major impact on Outokumpu's funding costs.
However, the market spreads are part of the valuation models used to
estimate fair values for interest-bearing receivables and therefore
they have some impact on these assessments.
In the first quarter, the impact of the weaker dollar on Outokumpu's
earnings was offset by e.g. higher ferrochrome price. The new alloy
surcharge calculation method was applied in most markets from the
beginning of this year and as one consequence of this, is that the
Group's exposure to nickel price changes has increased somewhat. On
the other hand, changes negotiated in part of the raw material
purchase contracts have mitigated the increase in nickel exposure to
certain degree. Outokumpu is currently assessing the principles and
processes for managing nickel price and related currency risks.
Environment, health and safety
In the European Union, the governments finalized the carbon dioxide
allowance distribution for the Kyoto-period 2008-2012 in Sweden and
in Finland. The total amounts allocated to the installations in the
UK, Sweden and Finland are estimated as being sufficient for the
Group's planned production. In Finland and Sweden, in addition to the
melt shops, the emissions trading also covers heat treatment
installations, in the UK only melt shop operations are included.
Emissions to air and discharges to water remained mostly within
permitted limits and the breaches that occurred were temporary, were
identified quickly and caused only minimal environmental impact.
Outokumpu is not a party in any significant juridical or
administrative proceeding concerning environmental issues, nor is it
aware of any environmental risks that could have a material adverse
effect on the Group's financial position.
Environmental and energy savings targets for the Corporate
Responsibility theme year were published. For energy saving, the
target is a 2% reduction in energy consumed per ton of processed
steel. For materials efficiency, the target is a 10% reduction in
land fill waste per ton of processed steel.
Occupational safety is a major and continuing area of focus within
the Group. In I/2008, the lost-time injury rate (i.e. lost-time
accidents per million working hours) increased to 13 (I/2007: 11) and
was higher than the Group's target for 2008 of less than 8. Thus,
corrective actions within the Group are taken in order to reach the
targets. In 2009, the target will be less than five. No severe
accidents were reported during the review period.
Personnel
The Group's continuing operations employed an average of 8 140 people
during January-March 2008 (I/2007: 8 129) and there were 8 137
employees at the end of March (Dec. 31, 2007: 8 108).
Class actions regarding the sold fabricated copper products business
The fabricated copper products business sold in 2005, comprised among
others Outokumpu Copper (USA), Inc. This company has been served with
several complaints in cases filed in federal district courts and
state courts in the US by various plaintiffs. The complaints allege
claims and damages under US antitrust laws and purport to be class
actions on behalf of all direct and indirect purchasers of copper
plumbing tubes and ACR tubes in the US. Except for one individual ACR
Tube claim, all these class actions and claims have been now ended
and the latest dismissals in Outokumpu's favor remain final.
Outokumpu believes that the allegations in the remaining case are
groundless and will defend itself in any such proceeding. In
connection with the transaction to sell the fabricated copper
products business to Nordic Capital, Outokumpu has agreed to
indemnify and hold harmless Nordic Capital with respect to these
class actions.
Customs investigation of exports to Russia by Outokumpu Tornio Works
In March 2007, Finnish Customs authorities initiated a criminal
investigation into the Group's Tornio Works' export practices to
Russia. The preliminary investigation is connected with another
preliminary investigation concerning a forwarding agency based in
South-eastern Finland. It is suspected that defective and/or forged
invoices have been prepared at the forwarding agency as regards
export of stainless steel to Russia. The preliminary investigation is
focusing on possible complicity by Outokumpu Stainless Oy in the
preparation of defective and/or forged invoices by the forwarding
agency in question. The investigation is expected to last until the
summer of 2008. Directly after the Finnish Customs authorities
started their investigations, Outokumpu initiated its own
investigation into the trade practices connected with stainless steel
exports from Tornio to Russia. In June 2007, after carrying out its
investigation, the leading Finnish law firm Roschier Attorneys Ltd.,
concluded that it had not found evidence that any employees of Tornio
Works or the company had committed any of the crimes alleged by the
Finnish Customs.
Organizational change and appointments
To facilitate the new phase in the Group's strategy development
introduced in September 2007, Outokumpu has re-aligned its
organization using an integrated model. This new model was
implemented on January 1, 2008 and is designed to serve customers in
an optimal way. The new organizational structure became fully
operational on April 1, 2008.
Jamie Allan was appointed Executive Vice President - Supply Chain
Management and a member of Outokumpu's Group Executive Committee as
of January 1, 2008. Mr. Allan's responsibility includes supply chain
management operations, Production Excellence program and procurement.
Annual General Meeting of March 27, 2008
The Annual General Meeting (AGM) approved a dividend of EUR 1.20 per
share for 2007. Dividends totaling EUR 216 million were paid on April
8, 2008.
The AGM authorized the Board of Directors to decide to repurchase the
Company's own shares as follows. The maximum number of shares to be
repurchased is 18 000 000, currently representing 9.93% of the
Company's total number of registered shares. Based on earlier
authorizations the Company currently holds 1 218 603 of its own
shares. The AGM authorized the Board of Directors to decide to issue
shares and granting special rights entitling to shares. The maximum
number of new shares to be issued through the share issue and/or by
granting special rights entitling to shares is 18 000 000, and, in
addition, the maximum number of treasury shares to be transferred is
18 000 000. The authorization includes the right to resolve upon
directed share issue. These authorizations are valid until the next
Annual General Meeting, however no longer than May 31, 2009. To date
the authorizations have not been used.
The AGM decided on the number of the Board members, including
Chairman and Vice Chairman, to be eight. Evert Henkes, Ole Johansson,
Victoire de Margerie, Anna Nilsson-Ehle, Leo Oksanen and Leena
Saarinen were re-elected as members to the Board of Directors, and
Jarmo Kilpelä and Anssi Soila were elected as new members. The Annual
General Meeting elected Ole Johansson as Chairman and Anssi Soila as
Vice Chairman of the Board of Directors. The AGM also resolved to
form a Shareholders' Nomination Committee to prepare proposals on the
composition and remuneration of the Board of Directors for
presentation to the next AGM.
KPMG Oy Ab, Authorized Public Accountants, was re-elected as the
Company's auditor for the term ending at the close of the next AGM.
The Board of Directors of Outokumpu appointed at its first meeting
two permanent committees consisting of Board members. Leena Saarinen
(Chairman), Jarmo Kilpelä, Victoire de Margerie and Anssi Soila were
elected as members of the Board Audit Committee. Ole Johansson
(Chairman), Evert Henkes and Anna Nilsson-Ehle were elected as
members of the Board Nomination and Compensation Committee.
Shares and shareholders
According to the Nordic Central Securities Depository, Outokumpu's
shareholders by group at the end of I/2008 were the Finnish State
(31.1%), foreign investors (42.9%), Finnish public sector
institutions (14.1%), Finnish private households (6.9%), Finnish
financial and insurance institutions (1.8%), Finnish corporations
(1.7%) and Finnish non-profit organizations (1.5%). The list of
largest shareholders is updated regularly on Outokumpu's internet
pages www.outokumpu.com.
At the end of March, Outokumpu's closing share price was EUR 28.81.
The average share price during I/2008 was EUR 23.45 (I/2007: EUR
28.54). At the end of I/2008, the market capitalization of Outokumpu
Oyj shares totaled EUR 5 225 million (I/2007: EUR 4 665 million).
During the quarter, 141.6 (I/2007: 120.0) million shares were traded
on the OMX Nordic Exchange Helsinki. At the end of March, Outokumpu's
fully paid share capital totaled EUR 308 287 074.60 and consisted of
181 345 338 shares. The average number of shares outstanding during
I/2008 was 180 112 135.
Events after the review period
Today, Outokumpu signed an agreement to acquire the SoGePar Group, an
Italian distributor of stainless steel. Outokumpu will pay EUR 195
million in cash and take on debt in the company in the amount of EUR
140 million As a result of the transaction, the earlier announced EUR
70 million investment to expand Group's current stock and processing
operations in Italy will not take place.
SoGePar operates stainless steel service centers in Castelleone in
Italy and in Rotherham in the UK. SoGePar also has stock operations
in Italy, the UK, Belgium, Ireland, Finland and France, as well as a
commercial office in Germany and a representative office in Turkey.
Sales by the SoGePar Group totaled EUR 560 million in 2007, with an
operating profit of EUR 44 million and deliveries of 134 000 tons.
As a result of this acquisition, Outokumpu's Stock & Processing
capacity in Italy and the UK will be in excess of 240 000 tons. In
total, with the SoGePar acquisition and the service center
investments announced recently, Outokumpu's global annual stock and
processing capacity will increase from the current 300 000 tons to
over 740 000 tons by 2010.
Short-term outlook
Underlying demand for stainless steel remains healthy. End-user
demand, demand for special grades and projects and demand for
standard grades from the distribution sector are expected to continue
to be at a good level.
Uncertainty resulting from the global economic turmoil has increased
but has so far not had any impact on stainless steel fundamentals.
There is however an increasing risk that the uncertainty might affect
both demand and price development of stainless steel going forward.
Distributors' inventories for standard grades are currently at normal
level and Outokumpu is now selling for deliveries in June. Deliveries
are estimated to be slightly below capacity in the second quarter due
to short, additional maintenance breaks at Tornio Works in March.
Gradual base price increases have been achieved in the second quarter
and the German base price for cold rolled 304 2mm stainless steel
sheet is targeted to reach a level of EUR 1 350 towards the end of
June.
Outokumpu's operating profit for the second quarter 2008 is expected
to be clearly better than in the first quarter. In addition to the
gradual base price increases achieved, significantly higher prices of
ferrochrome will improve Group operating profit in the second
quarter. The current estimate is that the timing differences between
raw material prices (nickel and ferrochrome) and alloy surcharge will
be slightly positive in the second quarter.
In Espoo, April 23, 2008
Board of Directors
CONSOLIDATED FINANCIAL
STATEMENTS (unaudited)
Condensed income statement
Jan- Jan- Jan-
March March Dec
EUR million 2008 2007 2007
Continuing operations:
Sales 1 689 2 129 6 913
Other operating income 1 11 82
Costs and expenses -1 583 -1 714 -6 364
Other operating expenses -7 -2 -43
Operating profit 100 424 589
Share of results in
associated companies 0 2 4
Financial income and expenses
Interest income 5 6 25
Interest expenses -16 -21 -82
Market price gains and losses -7 -2 0
Other financial income 10 10 268
Other financial expenses -13 -3 -5
Profit before taxes 80 416 798
Income taxes -19 -105 -138
Net profit for the period
from continuing operations 61 311 660
Discontinued operations:
Net profit for the period
from discontinued operations 2 -4 -18
Net profit for the period 63 307 641
Attributable to:
Equity holders of the Company 63 305 638
Minority interest - 2 4
Earnings per share
for profit attributable
to the equity
holders of the Company:
Earnings per share, EUR 0.35 1.69 3.52
Diluted earnings per share, EUR 0.35 1.68 3.50
Earnings per share from
continuing operations
attributable to the equity
holders of the Company:
Earnings per share, EUR 0.34 1.71 3.63
Earnings per share from
discontinued operations
attributable to the equity
holders of the Company:
Earnings per share, EUR 0.01 -0.02 -0.10
Condensed balance sheet
March 31 March 31 Dec 31
EUR million 2008 2007 2007
ASSETS
Non-current assets
Intangible assets 472 487 475
Property, plant and equipment 1 966 2 030 1 980
Non-current financial assets
Interest-bearing 436 400 453
Non interest-bearing 78 84 77
2 953 3 001 2 986
Current assets
Inventories 1 511 1 858 1 630
Current financial assets
Interest-bearing 52 74 50
Non interest-bearing 1 126 1 461 975
Cash and cash equivalents 107 140 86
2 796 3 533 2 740
Assets held for sale 198 222 184
Total assets 5 947 6 756 5 910
EQUITY AND LIABILITIES
Equity
Equity attributable to the
equity holders of the Company 3 162 3 170 3 337
Minority interest - 18 -
3 162 3 188 3 337
Non-current liabilities
Interest-bearing 1 030 1 271 1 046
Non interest-bearing 336 344 337
1 366 1 615 1 382
Current liabilities
Interest-bearing 434 687 464
Non interest-bearing 919 1 199 675
1 353 1 886 1 139
Liabilities related to
assets held for sale 66 67 52
Total equity and liabilities 5 947 6 756 5 910
Consolidated
statement
of changes in equity
Attributable to the equity holders of the
Company
Share Unregister- Share Other Fair
value
capital ed share premium reserves reserves
EUR million capital fund
Equity on December
31, 2006 308 0 701 11 144
Cash flow hedges - - - - -1
Fair value changes on
available-for-sale
financial assets - - - - 29
Net investment hedges - - - - -
Change in translation
differences - - - - -1
Items recognised
directly in equity - - - - 28
Net profit for the
period - - - - -
Total recognised
income and expenses - - - - 28
Transfers within
equity 0 -0 - - -
Dividend distribution - - - - -
Shares subscribed
with options 0 - 0 - -
Management stock
option program:
value of received
services - - - - -
Equity on March 31,
2007 308 - 701 11 171
Equity on December
31, 2007 308 - 701 16 57
Cash flow hedges - - - - -4
Fair value changes on
available-for-sale
financial assets - - - - 20
Available-for-sale
financial assets
recognized through
P&L - - - - -5
Net investment hedges - - - - -
Change in translation
differences - - - - -0
Items recognised
directly in equity - - - - 11
Net profit for the
period - - - - -
Total recognised
income and expenses - - - - 11
Dividend distribution - - - - -
Shares subscribed
with options 0 - 0 - -
Management stock
option program:
value of received
services - - - - -
Equity on March 31,
2008 308 - 702 16 68
Attributable to the equity holders of the
Company
Treasury Cumulative Retained Minority Total
shares translation earnings interest equity
EUR million differences
Equity on December
31, 2006 -2 -35 1 927 17 3 071
Cash flow hedges - - - - -1
Fair value changes on
available-for-sale
financial assets - - - - 29
Net investment hedges - 3 - - 3
Change in translation
differences - -22 - 0 -23
Items recognised
directly in equity - -19 - 0 9
Net profit for the
period - - 305 2 307
Total recognised
income and expenses - -19 305 2 316
Tranfers within
equity - - - - -
Dividend distribution - - -199 - -199
Management stock
option program:
value of received
services - - 1 - 1
Equity on March 31,
2007 -2 -53 2 034 18 3 188
Equity on December
31, 2007 -27 -82 2 364 - 3 337
Cash flow hedges - - - - -4
Fair value changes on
available-for-sale
financial assets - - - - 20
Available-for-sale
financial assets
recognized through
P&L - - - - -5
Net investment hedges - 0 - - 0
Change in translation
differences - -33 - - -33
Items recognised
directly in equity - -33 - - -22
Net profit for the
period - - 63 - 63
Total recognised
income and expenses - -33 63 - 41
Dividend distribution - - -216 - -216
Shares subscribed
with options - - - - 0
Management stock
option program:
value of received
services - - 0 - 0
Equity on March 31,
2008 -27 -115 2 211 - 3 162
Condensed statement of cash flows
Jan-March Jan-March Jan-Dec
EUR million 2008 2007 2007
Net profit for the period 63 307 641
Adjustments
Depreciation and amortization 50 51 204
Impairments 16 2 1
Gain on the sale
of Outotec shares - - -142
Gain on the Talvivaara
transaction - - -110
Other adjustments 1 128 199
Change in working capital -21 -349 181
Dividends received 10 9 13
Interests received 2 2 10
Interests paid -15 -15 -83
Income taxes paid 2 -51 -239
Net cash from
operating activities 107 85 676
Purchases of assets -47 -32 -163
Purchase of Talvivaara shares - - -32Acquisition of the minority in OSTP - - -22
Proceeds from the sale
of subsidiaries - 4 1
Proceeds from the sale
of other assets 1 2 15
Net cash from other
investing activities -0 2 4
Net cash from
investing activities -46 -24 -197
Cash flow before
financing activities 61 61 479
Purchase of treasury shares - - -25
Borrowings of long-term debt - - 151
Repayment of long-term debt -8 -3 -388
Change in current debt -30 -1 -180
Dividends paid - - -199
Proceeds from the sale of Outotec shares - - 158
Proceeds from the sale
of other financial assets - - 6
Other financing cash flow -0 0 1
Net cash from
financing activities -38 -4 -477
Net change in cash
and cash equivalents 22 56 2
Cash and cash equivalents at
the beginning of the period 86 85 85
Foreign exchange rate effect -1 -1 -1
Net change in cash
and cash equivalents 22 56 2
Cash and cash equivalents
at the end of the period 107 140 86
Key figures
Jan-March Jan-March Jan-Dec
EUR million 2008 2007 2007
Operating profit margin, % 5.9 19.9 8.5
Return on capital employed, % 10.0 38.8 13.9
Return on equity, % 7.7 39.3 20.0
Return on equity from
continuing operations, % 7.5 39.8 20.6
Capital employed at end of period 3 899 4 377 4 125
Net interest-bearing
debt at end of period 737 1 189 788
Equity-to-assets ratio
at end of period, % 53.2 47.2 56.5
Debt-to-equity ratio
at end of period, % 23.3 37.3 23.6
Earnings per share, EUR 0.35 1.69 3.52
Earnings per share from
continuing operations, EUR 0.34 1.71 3.63
Earnings per share from
discontinued operations, EUR 0.01 -0.02 -0.10
Average number of shares
outstanding, in thousands 1) 180 112 181 061 180 922
Fully diluted earnings
per share, EUR 0.35 1.68 3.50
Fully diluted average number
of shares, in thousands 1) 181 050 182 087 181 920
Equity per share at end
of period, EUR 17.56 17.51 18.53
Number of shares outstanding
at end of period,
in thousands 1) 180 127 181 082 180 103
Capital expenditure,
continuing operations 41 25 190
Depreciation,
continuing operations 50 51 204
Average personnel for the
period, continuing operations 8 140 8 129 8 270
1) The number of own shares repurchased is
excluded.
NOTES TO THE INCOME STATEMENT AND BALANCE SHEET
This interim financial report is prepared in accordance with IAS 34
(Interim Financial Reporting). Mainly the same accounting policies
and methods of computation have been followed in the interim
financial statements as in the annual financial statements for 2007.
Inventories are stated at the lower of cost or net realizable value.
Outokumpu changed its calculation method for the cost of inventories
from first-in, first-out (FIFO) method to weighted average method in
2008. Also Outokumpu adopted amended standard IAS 23 Borrowing Costs
in 2008. These changes have not had any material impact on the
interim financial statements.
Use of estimates
The preparation of the financial statements in accordance with IFRS
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, as well as the disclosure
of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income and expenses during
the reporting period. Accounting estimates are employed in the
financial statements to determine reported amounts, including the
realizability of certain assets, the useful lives of tangible and
intangible assets, income taxes, provisions, pension obligations,
impairment of goodwill and other items. Although these estimates are
based on management's best knowledge of current events and actions,
actual results may differ from the estimates.
Shares and share capital
The total number of Outokumpu Oyj shares was 181 345 338 and the
share capital amounted to EUR 308.3 million on March 31, 2008.
Outokumpu Oyj held 1 218 603 treasury shares on March 31, 2008. This
corresponded to 0.7% of the share capital and the total voting rights
of the Company on March 31, 2008.
The Annual General Meeting held in 2003 passed a resolution on a
stock option program for management (2003 option program). The stock
options have been allocated as part of the Group's incentive programs
to key personnel of Outokumpu. Trading with Outokumpu Oyj's stock
options 2003A has commenced on the Main List of the OMX Nordic
Exchange Helsinki as of September 1, 2006. On March 31, 2008 a total
of 69 217 Outokumpu Oyj shares had been subscribed for on the basis
of 2003A stock option program. An aggregate maximum of 590 085
Outokumpu Oyj shares can be subscribed for with the remaining 2003A
stock options. In accordance with the terms and conditions of the
option program, the dividend adjusted share price for a stock option
was EUR 8.45 on March 31, 2008. The share subscription period for the
2003A stock options is September 1, 2006 - March 1, 2009. Trading
with Outokumpu Oyj's stock options 2003B has commenced on the Main
List of the OMX Nordic Exchange Helsinki as of September 3, 2007. On
March 31, 2008 a total of 25 566 Outokumpu Oyj shares had been
subscribed for on the basis of 2003B stock option program. An
aggregate maximum of 1 003 254 Outokumpu Oyj shares can be subscribed
for with the remaining 2003B stock options. In accordance with the
terms and conditions of the option program, the dividend adjusted
share price for a stock option was EUR 11.51 on March 31, 2008. The
share subscription period for the 2003B stock options is September 3,
2007 - March 1, 2010. The current amount that Outokumpu Oyj shares
could be subscribed for with the 2003C stock options is 102 500
shares. The subscription period for shares with stock option 2003C is
from September 1, 2008 to March 1, 2011. As a result of the share
subscriptions with the 2003 stock options, Outokumpu Oyj's share
capital may be increased by a maximum of EUR 2 882 926 and the number
of shares by a maximum of 1 695 839 shares. This corresponds to 0.9%
of the Company's shares and voting rights. Outokumpu's Board of
Directors confirmed on February 2, 2006 a share-based incentive
program for years 2006-2010 as part of the key employee incentive and
commitment system of the Company. If persons covered by the program
were to receive the number of shares in accordance with the maximum
reward, currently a total of 858 525 shares, their shareholding
obtained via the program would amount to 0.5% of the Company's shares
and voting rights.
The detailed information of the 2003 option program and of the
share-based incentive program for 2006-2010 can be found in the
annual report 2007.
Non-current assets held for sale and discontinued operations
Outokumpu Copper Tube and Brass
The assets and liabilities of Outokumpu Copper Tube and Brass are
presented as held for sale. Outokumpu Copper Tube and Brass business
comprises European sanitary and industrial tubes, including
air-conditioning and refrigeration tubes in Europe, as well as brass
rod. Outokumpu is implementing a vigorous improvement project in this
business and it is Outokumpu's intention to divest the tube and brass
business.
Specification of non-current
assets held for sale
and discontinued operations
Income statement
Jan-March Jan-March Jan-Dec
EUR million 2008 2007 2007
Sales 145 175 599
Expenses -138 -176 -607
Operating profit 7 -1 -8
Net financial items -1 -2 -6
Profit before taxes 6 -3 -15
Taxes -1 -1 -1
Profit after taxes 5 -4 -15
Impairment loss recognized
on the fair valuation of
the Tube and Brass division's
assets and liabilities -3 -0 -3
Taxes - - -
After-tax result from the
disposal and impairment loss 2 -4 -18
Minority interest - - -
Net profit for the period
from discontinued operations 2 -4 -18
Balance sheet
March 31 March 31 Dec 31
EUR million 2008 2007 2007
Assets
Intangible and tangible assets 6 6 6
Other non-current assets 4 4 4
Inventories 97 100 91
Other current non
interest-bearing assets 92 113 83
198 222 184
Liabilities
Provisions 5 3 4
Other non-current non
interest-bearing liabilities 4 4 5
Trade payables 45 46 32
Other current non
interest-bearing liabilities 12 15 11
66 67 52
Cash flows
Jan-March Jan-March Jan-Dec
EUR million 2008 2007 2007
Operating cash flows 0 1 18
Investing cash flows -3 -1 -3
Financing cash flows 6 -1 -19
Total cash flows 2 -1 -4
Major non-recurring items
in operating profit
Jan-March Jan-March Jan-Dec
EUR million 2008 2007 2007
Gain on the sale of
Hitura mine in Finland - - 25
Thin Strip restructuring in the UK - - -11
- - 14
Major non-recurring
items in financial income
and expenses
Jan-March Jan-March Jan-Dec
EUR million 2008 2007 2007
Impairment loss on
Belvedere shares -12 - -
Gain on the sale
of Outotec shares - - 142
Gain on the Talvivaara transaction - - 110
-12 - 252
Income taxes
Jan-March Jan-March Jan-Dec
EUR million 2008 2007 2007
Current taxes -19 -99 -107
Deferred taxes 0 -6 -31
-19 -105 -138
Property, plant
and equipment
Jan 1, Jan 1, Jan 1,
2008 - 2007 - 2007 -
March 31, March 31, Dec 31,
EUR million 2008 2007 2007
Historical cost at the
beginning of the period 3 984 4 009 4 009
Translation differences -22 -38 -76
Additions 40 26 137
Disposal of subsidiaries - -6 -20
Disposals -4 -2 -67
Reclassifications -1 -0 0
Historical cost at
the end of the period 3 997 3 989 3 984
Accumulated depreciation at
the beginning of the period -2 004 -1 939 -1 939
Translation differences 16 21 47
Disposal of subsidiaries - 5 19
Disposals 4 0 56
Reclassifications 0 0 -0
Depreciation -47 -47 -190
Impairments - - 3
Accumulated depreciation at
the end of the period -2 030 -1 959 -2 004
Carrying value at
the end of the period 1 966 2 030 1 980
Carrying value at the
beginning of the period 1 980 2 069 2 069
Commitments
March 31 March 31 Dec 31
EUR million 2008 2007 2007
Mortgages and pledges
Mortgages on land 121 132 122
Other pledges 0 0 0
Guarantees
On behalf of subsidiaries
For commercial commitments 36 90 41
On behalf of associated companies
For financing 4 5 5
Other commitments 63 58 64
Minimum future lease
payments on
operating leases 53 66 56
Group's major off-balance sheet investment commitments totaled
EUR 48 million on March 31, 2008 (Dec 31, 2007: EUR 37 million).
Fair values and nominal
amounts of
derivative instruments
March 31 March 31 March 31 Dec 31 March 31 Dec 31
2008 2008 2008 2007 2008 2007
Positive Negative Net Net
fair fair fair fair Nominal Nominal
EUR million value value value value amounts amounts
Currency and
interest
rate derivatives
Currency
forwards 24 23 2 8 2 176 1 992
Interest rate
swaps 7 - 7 10 282 282
Number Number
of of
shares, shares,
million million
Stock options
Belvedere
Resources Ltd. 1 - 1 3 3.7 3.7
Tons Tons
Metal derivatives
Forward and
futures
copper contracts 2 0 1 -2 6 275 11 775
Forward and
futures
nickel contracts 2 1 1 0 2 510 3 114
Forward and
futures
zinc contracts 0 0 0 -0 1 275 1 100
Forward
molybdenum
contracts - - - -0 - 5
Nickel options - - - 0 - 24
Emission allowance
derivatives - 0 -0 0 80 000 80 000
TWh TWh
Electricity
derivatives 11 6 5 16 1.7 2.3
47 30 17 35
Segment information
General Stainless
EUR million I/07 II/07 III/07 IV/07 2007
Sales 1 700 1 670 879 1 073 5 321
of which Tornio Works 1 206 1 038 516 708 3 468
Operating profit 245 188 -224 11 220
of which Tornio Works 227 143 -195 3 178
Operating capital at
the end of period 3 047 3 007 2 789 2 607 2 607
Average personnel
for the period 3 506 3 794 3 807 3 549 3 682
Deliveries of main
products (1 000 tons)
Cold rolled 187 151 94 155 587
White hot strip 81 82 41 66 270
Semi-finished products 117 118 64 85 383
Total deliveries
of the division 386 350 198 305 1 240
EUR million I/08
Sales 1 304
of which Tornio Works 905
Operating profit 81
of which Tornio Works 67
Operating capital at
the end of period 2 722
Average personnel
for the period 3 578
Deliveries of main
products (1 000 tons)
Cold rolled 196
White hot strip 102
Semi-finished products 100
Total deliveries
of the division 398
Specialty Stainless
EUR million I/07 II/07 III/07 IV/07 2007
Sales 1 003 1 028 687 738 3 456
Operating profit 182 196 -51 9 337
Operating capital at
the end of period 1 668 1 871 1 657 1 513 1 513
Average personnel
for the period 4 146 4 188 4 185 4 107 4 135
Deliveries of main
products (1 000 tons)
Cold rolled 51 52 33 38 174
White hot strip 43 38 23 31 135
Quarto plate 41 43 30 38 151
Tubular products 20 17 12 15 63
Long products 16 15 11 11 52
Total deliveries
of the division 170 164 109 133 574
EUR million I/08
Sales 786
Operating profit 42
Operating capital at
the end of period 1 430
Average personnel
for the period 4 115
Deliveries of main
products (1 000 tons)
Cold rolled 46
White hot strip 45
Quarto plate 35
Tubular products 19
Long products 14
Total deliveries
of the division 161
Other operations
EUR million I/07 II/07 III/07 IV/07 2007
Sales 64 63 53 57 237
Operating profit 1 19 8 -6 21
Operating capital at
the end of period -125 101 184 236 236
Average personnel
for the period 477 459 424 431 453
EUR million I/08
Sales 64
Operating profit -20
Operating capital at
the end of period -20
Average personnel
for the period 447
Income statement by quarter
EUR million I/07 II/07 III/07 IV/07 2007
Continuing operations:
Sales
General Stainless 1 700 1 670 879 1 073 5 321
of which intersegment sales 421 430 230 234 1 315
Specialty Stainless 1 003 1 028 687 738 3 456
of which intersegment sales 169 193 119 124 605
Other operations 64 63 53 57 237
of which intersegment sales 48 45 43 45 181
Intra-group sales -638 -669 -391 -403 -2 101
Total sales 2 129 2 092 1 227 1 465 6 913
Operating profit
General Stainless 245 188 -224 11 220
Specialty Stainless 182 196 -51 9 337
Other operations 1 19 8 -6 21
Intra-group items -4 2 11 2 11
Total operating profit 424 406 -256 15 589
Share of results
in associated companies 2 4 -2 -1 4
Financial income and expenses -10 242 -19 -7 206
Profit before taxes 416 652 -277 7 798
Income taxes -105 -100 67 -0 -138
Net profit for the period
from continuing operations 311 553 -210 7 660
Net profit for the period
from discontinued
operations -4 12 -4 -23 -18
Net profit for the period 307 565 -214 -16 641
Attributable to:
Equity holders of the Company 305 563 -214 -16 638
Minority interest 2 2 -0 -0 4
EUR million I/08
Continuing operations:
Sales
General Stainless 1 304
of which intersegment sales 284
Specialty Stainless 786
of which intersegment sales 124
Other operations 64
of which intersegment sales 57
Intra-group sales -465
Total sales 1 689
Operating profit
General Stainless 81
Specialty Stainless 42
Other operations -20
Intra-group items -3
Total operating profit 100
Share of results
in associated companies 0
Financial income and expenses -20
Profit before taxes 80
Income taxes -19
Net profit for the period
from continuing operations 61
Net profit for the period
from discontinued
operations 2
Net profit for the period 63
Attributable to:
Equity holders of the Company 63
Minority interest -
Major non-recurring
items in operating profit
EUR million I/07 II/07 III/07 IV/07 2007
Specialty Stainless
Thin Strip restructuring
in the UK - - -11 - -11
Other operations
Gain on sale of
Hitura mine in Finland - 25 - - 25
- 25 -11 - 14
EUR million I/08
Specialty Stainless
Thin Strip restructuring
in the UK -
Other operations
Gain on sale of -
Hitura mine in Finland -
Major non-recurring
items in financial income and expenses
EUR million I/07 II/07 III/07 IV/07 2007
Impairment loss on
Belvedere shares - - - - -
Gain on the sale of
Outotec shares - 142 - - 142
Gain on the Talvivaara
transaction - 110 - - 110
- 252 - - 252
EUR million I/08
Impairment loss on of Belvedere
shares -12
Gain on the sale of
Outotec shares -
Gain on the Talvivaara
transaction -
-12
Key figures by quarter
EUR million I/07 II/07 III/07 IV/07
Operating profit margin, % 19.9 19.4 -20.9 1.0
Return on capital employed, % 38.8 35.5 -22.3 1.4
Return on equity, % 39.3 66.2 -24.3 -2.0
Return on equity,
continuing operations, % 39.8 64.8 -23.9 0.8
Capital employed at end of
period 4 377 4 753 4 421 4 125
Net interest-bearing
debt at end of period 1 189 1 119 1 016 788
Equity-to-assets ratio
at end of period, % 47.2 50.9 54.6 56.5
Debt-to-equity ratio
at end of period, % 37.3 30.8 29.8 23.6
Earnings per share, EUR 1.69 3.11 -1.19 -0.09
Earnings per share from
continuing operations, EUR 1.71 3.04 -1.17 0.04
Earnings per share from
discontinued operations, EUR -0.02 0.07 -0.02 -0.13
Average number of shares
outstanding, in thousands 1) 181 067 181 082 181 084 180 680
Equity per share
at end of period, EUR 17.51 20.07 18.81 18.53
Number of shares outstanding
at end of period, in thousands
1) 181 082 181 082 181 084 180 103
Capital expenditure,
continuing operations 25 75 47 43
Depreciation, continuing
operations 51 50 51 52
Average personnel for the
period,
continuing operations 8 129 8 441 8 416 8 086
EUR million I/08
Operating profit margin, % 5.9
Return on capital employed, % 10.0
Return on equity, % 7.7
Return on equity,
continuing operations, % 7.5
Capital employed at end of
period 3 899
Net interest-bearing
debt at end of period 737
Equity-to-assets ratio
at end of period, % 53.2
Debt-to-equity ratio
at end of period, % 23.3
Earnings per share, EUR 0.35
Earnings per share from
continuing operations, EUR 0.34
Earnings per share from
discontinued operations, EUR 0.01
Average number of shares
outstanding, in thousands 1) 180 112
Equity per share
at end of period, EUR 17.56
Number of shares outstanding
at end of period, in thousands
1) 180 127
Capital expenditure,
continuing operations 41
Depreciation, continuing
operations 50
Average personnel for the
period,
continuing operations 8 140
1) The number of own shares repurchased is
excluded.
Definitions of key
figures
Total equity + net interest-bearing
Capital employed = debt
Capital employed + net tax
Operating capital = liability
Return on equity = Net profit for the financial year × 100
Total equity (average for the
period)
Return on capital = Operating profit × 100
employed (ROCE) Capital employed (average for the period)
Net interest- Total interest-bearing debt
bearing debt = - total interest-bearing assets
Equity-to-assets ratio = Total equity × 100
Total assets - advances received
Debt-to-equity ratio = Net interest-bearing debt × 100
Total equity
Net profit for the financial year
Earnings per share = attributable to the equity holders
Adjusted average number
of shares during the period
Equity attributable to
Equity per share = the equity holders
Adjusted number of shares
at the end of the period
Outokumpu's first quarter 2008 interim report - improved profits in recovering stainless steel markets
| Source: Outokumpu Oyj
Attachments
