Outokumpu financial statements release 2020 – Outokumpu navigated successfully through the pandemic in 2020

Outokumpu financial statements release 2020 – Outokumpu navigated successfully through the pandemic in 2020

Highlights in Q4 2020               

• Stainless steel deliveries were 523,000 tonnes (458,000 tonnes)¹.
• Adjusted EBITDA was EUR 78 million (EUR 73 million).
• EBITDA was EUR 30 million (EUR 90 million).
• Operating cash flow was EUR 112 million (EUR 143 million).
• Net debt decreased to EUR 1,028 million (September 30, 2020: EUR 1,105 million).
• Gearing was at 43.6% (September 30, 2020: 45.1%).

Highlights in 2020

• Stainless steel deliveries were 2,121,000 tonnes (2,196,000 tonnes).
• Adjusted EBITDA was EUR 250 million (EUR 263 million).
• EBITDA was EUR 191 million (EUR 266 million).
• Net result was EUR -116 million (EUR -75 million).
• Operating cash flow was EUR 322 million (EUR 371 million).
• Net debt was reduced by EUR 127 million (EUR 85 million).
• Return on capital employed (ROCE) was -1.4% (0.8%).

¹⁾ Figures in parentheses refer to the corresponding period for 2019, unless otherwise stated.

Q4 2020 compared to Q4 2019

Outokumpu’s sales decreased to EUR 1,350 million in the fourth quarter of 2020 (EUR 1,398 million), while adjusted EBITDA increased to EUR 78 million (EUR 73 million). Total stainless steel deliveries were 14% higher compared to the fourth quarter of the previous year. However, the positive impact from higher volumes was offset by weaker prices, especially in Europe but also to a lesser extent in the Americas. Cost-saving measures supported profitability and both input costs and fixed costs were at a lower level compared to the previous year. Raw material-related inventory and metal derivative gains amounted to EUR 15 million in the fourth quarter of 2020, while the raw material-related inventory and metal derivative losses were EUR 9 million in the reference period. Other operations and intra-group items’ adjusted EBITDA amounted to EUR -10 million (EUR -19 million).

Q4 2020 compared to Q3 2020

Outokumpu’s sales increased to EUR 1,350 million in the last quarter of 2020 (Q3/20: EUR 1,254 million). Adjusted EBITDA increased to EUR 78 million (Q3/20: EUR 22 million) and total stainless steel deliveries were 7% higher compared to the third quarter. Prices continued to decline in Europe but remained relatively stable in Americas. The planned maintenance work in Tornio had a EUR 7 million negative impact on the fourth quarter result compared to the previous quarter but was offset by the positive raw material impacts and reduced costs. Ferrochrome profitability improved significantly as the planned maintenance work-related and other one-off costs had a EUR 15 million negative impact on the third quarter result. Raw material-related inventory and metal derivative gains amounted to EUR 15 million in the fourth quarter compared to the EUR 3 million gains in the previous quarter.

2020 compared to 2019

In 2020, Outokumpu’s sales decreased to EUR 5,639 million (EUR 6,403 million) and adjusted EBITDA to EUR 250 million (EUR 263 million). Stainless steel deliveries declined by 3% compared to the previous year as a result of weaker demand. Prices were significantly lower in Europe but declined also in Americas. Various cost-saving measures supported profitability and both input costs as well as fixed costs were at a lower level compared to the previous year. Raw material-related inventory and metal derivative losses amounted to EUR 16 million in 2020 compared to the losses of EUR 64 million in 2019. Other operations and intra-group items’ adjusted EBITDA amounted to EUR -29 million (EUR -15 million). In 2020, Outokumpu recognized EUR 59 million restructuring costs related to personnel measures, reported as adjustments to EBITDA. Most of these costs are provisions where the cash impact will take place mainly in 2021. The adjustments to EBITDA in 2019 included restructuring provisions of EUR 53 million and a gain on a real estate sale of EUR 70 million.

EBIT decreased to EUR -55 million (EUR 33 million) and the net result to EUR -116 million (EUR -75 million) in 2020.

Group key figures		Q4/20	Q4/19	Q3/20	2020	2019
Sales	EUR million	1,350	1,398	1,254	5,639	6,403
EBITDA	EUR million	30	90	10	191	266
Adjusted EBITDA 1)	EUR million	78	73	22	250	263
EBIT	EUR million	-33	30	-51	-55	33
Adjusted EBIT 1)	EUR million	15	13	-39	4	30
Result before taxes	EUR million	-57	6	-77	-151	-41
Net result for the period	EUR million	-39	-15	-63	-116	-75
Earnings per share	EUR	-0.09	-0.04	-0.15	-0.28	-0.18
Diluted earnings per share	EUR	-0.09	-0.04	-0.15	-0.28	-0.18
Return on capital employed	%	-1.4	0.8	0.2	-1.4	0.8
Net cash generated from operating activities	EUR million	112	143	170	322	371
Net debt at the end of period	EUR million	1,028	1,155	1,105	1,028	1,155
Debt-to-equity ratio at the end of period	%	43.6	45.1	45.1	43.6	45.1
Capital expenditure 2)	EUR million	35	58	35	180	193
Stainless steel deliveries	1,000 tonnes	523	458	488	2,121	2,196
Personnel at the end of period		9,915	10,390	10,118	9,915	10,390

 

¹⁾ Adjusted EBITDA or EBIT = EBITDA or EBIT – Items classified as adjustments.
²⁾ In Q4/2020, Outokumpu changed its capital expenditure definition from accrual-based to cash-based capital expenditure.
Comparative information has been restated accordingly.                                           

President & CEO Heikki Malinen

“Throughout 2020 Outokumpu has continued with rigorous measures to mitigate the negative impacts of the ongoing COVID-19 pandemic on our employees, operations, and business. Our actions have been effective, and we concluded the year without any pandemic-related production losses. In terms of overall safety, the year was the strongest on record, with the total recordable injury frequency rate of 2.4 surpassing our target of below 3.0.

In the fourth quarter, Outokumpu’s adjusted EBITDA increased to EUR 78 million due to a stronger than expected market recovery. Stainless steel deliveries increased by 7% and effective cost-saving actions supported profitability. The full-year 2020 adjusted EBITDA was EUR 250 million. We reduced our net debt to EUR 1,028 million, the lowest level in recent history. I want to thank the whole Outokumpu team for all their efforts during a challenging year.

While we were able to return our financial performance in the year shaped by COVID-19 back to near 2019 levels, the financial performance needs further strengthening. Hence, we will continue to execute the announced strategic measures to improve our results.

Business area Europe’s deliveries increased from the third quarter, but lower prices weighed down fourth quarter adjusted EBITDA to EUR 36 million. Import penetration into Europe remains high despite a decrease to 24% in the fourth quarter. We continue to call for available trade enforcement tools to be applied in full to restore a level playing field and secure a sustainable future for the European stainless industry.

Business area Americas continues its successful turnaround with full-year adjusted EBITDA reaching EUR 55 million, an improvement of over EUR 80 million from 2019. We are now accelerating the commercial turnaround in the Americas supported by our investment in ferritics capabilities in Calvert.

As the industry leader in sustainability, we constantly strive to improve our sustainability performance. In 2020, we succeeded in increasing the already high share of recycled content in our production to over 90%, and with that further decreasing our CO2 footprint, which is already the lowest in the industry. We are well on track to meet our sustainability targets.

We are decisively executing our new strategy. With the three-phase strategy, we will strengthen our balance sheet and create strong returns. During 2021–2022, we will focus on strict cost and capital discipline, strong customer engagement, and a lean and delayered organization. The employee negotiations initiated in November were concluded in December, resulting in headcount reductions as planned and we target to have a headcount of below 9,000 during 2022. This was a difficult decision to make, but necessary to improve our cost structure in this competitive industry. We remain committed to our strategic plan to reach our financial targets of EUR 200 million EBITDA run-rate improvement, and net debt to EBITDA of below 3.0x by the end of 2022.”

Outlook for Q1 2021

The stainless steel market has begun to recover after the global downturn caused by the COVID-19 pandemic.

The demand for stainless steel is strengthening and both business areas Europe and Americas are expected to see a seasonal increase in volumes.

Consequently, Outokumpu expects its stainless steel deliveries for the whole Group to increase in the first quarter by 10-20% compared to the fourth quarter.

Adjusted EBITDA for the first quarter of 2021 is expected to be higher compared to the fourth quarter of 2020.

Webcast and conference call on February 4, 2021 at 3.00 pm EET

Later today, Outokumpu will arrange a live webcast and a conference call for investors and analysts at 3.00 pm EET (8.00 am US EST, 1.00 pm UK, 2.00 pm CET). The event will be hosted by Outokumpu’s CEO Heikki Malinen and CFO Pia Aaltonen-Forsell.

Please follow the live event at https://outokumpu.videosync.fi/2021-02-04-q4/.

To participate via a conference call, please dial in 10−15 minutes before the beginning of the event:

Finland: +358 9 817 103 10
United Kingdom: +44 333 300 0804
United States: +1 631 913 1422
Confirmation code: 28730175#

The stock exchange release and the presentation material will be available before the event at www.outokumpu.com/investors.

A recording of the event will be available at www.outokumpu.com/webcasts, at the latest on Monday, February 8, 2021.

For more information:

Media: Corporate Communications, tel. +358 9 421 3840

Investors: Linda Häkkilä, Manager, Investor Relations, tel. +358 400 719 669

Outokumpu Oyj