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Outokumpu flags 600 new job cuts, targets EBIT of €500M by 2020

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Outokumpu flags 600 new job cuts, targets EBIT of €500M by 2020

Finnishstainless steelmaker OutokumpuOyj on April 5 announced plans to improve the financial performanceof the company that will see up to 600 job cuts around the world, and istargeting earnings before interest and tax of €500 million by the end of 2020at the latest.

Thecompany will immediately start talks to cut 140 jobs in Finland and up to 90jobs in Sweden while it will outsource certain manufacturing support operationsin Tornio that will impact another about 100 employees.

"All in all, the plans announced today, with theefficiency measures that are already ongoing particularly in EMEA are expectedto reduce Outokumpu's personnel from the 11,000 at the end of 2015 to a levelof 9,300 in the coming years."

Bythe end of 2017, the company is targeting savings of €100 million in sales,general and administrative costs against the baseline of €400 million at2015-end, to take debt-to-equity ratio to below 35% and to reduce itsnet debt to €1.2 billion, driven mainly by the expected improvement inoperational performance as well as a significant uplift in net working capitalefficiency.

However,analyst Antti Kansanen at Evli brokerage said, "The cost cuts came as nosurprise. But the targets are very challenging and clearly above marketexpectations," Reuters reported.

Asreveled earlier in February, Outokumpu's full-year 2015 net earnings were €86million, reversingfrom a net loss of €439 million in 2014 despite sales dropping to €6.38 billionfrom €6.84 billion recorded in the previous year.

"Thetrue profitability potential of the company is far higher than the currentfinancial performance shows. To bridge that gap, we must significantly improveour competitiveness," CEO Roeland Baan said.