Outokumpu announce big loss
Finish st
ainless steel maker Outokumpu have announced big losses in the first quater of 2009 see below for full details:-
ainless steel maker Outokumpu have announced big losses in the first quater of 2009 see below for full details:-Operating profit EUR -249 million, underlying operational result some EUR -134 million
Low deliveries and prices due to very weak demand for stainless steel
Very strong operating cash flow EUR 301 million, gearing 32%
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Group key figures, EUR million
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I/09
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I/08
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IV/08
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Sales
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679
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1 689
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966
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Operating profit
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-249
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100
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-271
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Profit before taxes
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-252
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80
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-298
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Net profit for the period
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-187
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63
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-233
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Earnings per share, EUR
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-1.04
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0.35
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-1.30
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Net cash generated from operating activities
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301
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107
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205
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Stainless steel deliveries, 1000 tons
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247
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449
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261
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Stainless steel base price, EUR/t 1)
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925
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1 243
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1 045
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Stainless steel transaction price, EUR/t
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1 818
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2 945
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2 338
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1) CRU: German base price (2mm cold rolled 304 sheet)
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During the first quarter of 2009 Outokumpu continued to suffer severely from the global economic downturn. Low investment and construction activity and cautious consumer spending have weakened the underlying demand for stainless steel. The distributors and end-users of stainless as well as the entire value chain reduced their inventories heavily. Stainless markets remained oversupplied and all producers continued to cut production.
Outokumpu’s deliveries of stainless steel declined by 45% to 247 000 tons in the first quarter compared to the rather normal first quarter of 2008. Prices were under pressure during the whole quarter. Base prices declined on average by 26% and transaction prices, which also include raw material costs, dropped by 38%. All raw material prices were significantly below their year-ago levels, nickel by 64% and ferrochrome by 25% for example. As a result, Outokumpu’s sales fell by a remarkable 60% to EUR 679 million in the first quarter.
Due to the very low delivery volumes and low base prices, Outokumpu’s underlying operational result was negative at EUR 134 million. Additionally, there were raw material related inventory losses of some EUR 110 million resulting in an operating loss of EUR 249 million. Due to the efficient decrease in inventory levels throughout Outokumpu’s whole supply chain and due to lower metal prices, net working capital declined by EUR 555 million. Consequently, operating cash flow was very strong at EUR 301 million and despite heavy losses, gearing improved further to 32%.
Outokumpu’s cost saving programmes are proceeding according to plan. Including also the latest actions Outokumpu estimates that total fixed cost savings will be in excess of EUR 100 million in 2009.
Visibility concerning the stainless steel market continues to be short. Outokumpu expects its second-quarter underlying operational loss to be at the same level or slightly smaller than in the first quarter.
source Outokumpu
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It would be good to see an update to the performance of Outokumpu and how it compares to the performance of the stainless steel industry.