First phase of the strategy: Successfully completed ahead of time in 2022
Outokumpu has successfully completed the first phase of the strategy with a strong focus on de-risking the company and strengthening the balance sheet. The first phase of the strategy started in 2021 and focused on three key priorities: Commercial Excellence, Cost and Capital Discipline and Lean and Agile Organization. The company made significant progress in all the areas, succeeded in de-risking the company and strategy execution proceeded ahead of plans. Outokumpu achieved both its financial targets, EUR 250 million EBITDA run-rate improvement and net debt to EBITDA ratio to below 3.0. As a result, Outokumpu’s resilience improved significantly, which provides a strong foundation going forward in all market conditions.
Second phase of the strategy: 2023-2025
In the second phase the focus is to strengthen the core. We will continue our strong emphasis on sustainability to further improve Outokumpu’s position as the sustainability leader in the stainless steel sector. We are targeting a significant CO2 emission reduction, and there will also be a strong focus on shareholder returns and sustainable sourcing. In the second phase, we will also make targeted investments on productivity and sustainability and focus on customer-focused steering.
Updated financial targets for the second phase
Outokumpu has updated its financial targets for the second phase of the strategy to reflect capital allocation priorities as well as increased its original EBITDA run-rate improvement target. The focus will be increasingly on strong shareholder returns.
- Net debt to EBITDA <1.0 in normal market conditions
- EBITDA run-rate improvement of EUR 350 million
- EUR 600 million of capital expenditure for the coming three years
- Stable and growing dividend
Good progress against the targets
At the end of 2024, Outokumpu's net debt to adjusted EBITDA ratio was 1.1 in a challenging market environment, against the target of below 1.0 in normal market conditions. Our cumulative EBITDA run-rate improvement in 2023–2024 was EUR 287million, against the target of EUR 350 million. Our capital expenditure has been EUR 386 million capital expenditure in 2023–2024, and our Board of Directors proposed a dividend of EUR 0.26 per share for 2024.
Read more about strategy progress in our latest Annual report and interim reports.
Key strategic priorities for the second phase
While in the first phase of the strategy the aim was to de-risk the company, the second phase will be about strengthening the core. The second phase will focus on three key priorities:
- sustainability,
- growth from productivity and
- customer-focused steering.
As part of the company’s ambitious sustainability journey, Outokumpu aims to reduce its CO2 emissions by 42% by 2030 compared to the 2016 baseline, in line with its SBTi 1.5- degree climate target. Also, capital discipline and strong shareholder returns will be at the core of the company’s long-term strategy going forwards.
Two differentiated strategies for business area Europe
For the second phase of the strategy, Outokumpu has launched two customer differentiated strategies for business area Europe. The company aims to strengthen cost leadership in high-volume stainless steel products and a global market leadership in advanced products. Business area Europe will strengthen its position as the customer’s first choice in sustainable stainless steel, while in business area Americas the focus will be on sustaining the high profitability levels. At the core of business area Ferrochrome’s strategy is carbon neutrality.
Third phase of the strategy: 2026–
On August 3, 2023 Outokumpu announced it has made solid progress in the second phase of its strategy and simultaneously begun preparations for the third phase, which will start in 2026 and most likely require new investments.
The company’s focus in this phase will be to strengthen its market position further and develop more globally diversified operations including Americas expansion, European competitiveness, value-chain integration, and sustainability leadership along with the possible biocoke investment.