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Outokumpu CEO has grim outlook on stainless steel despite lower Q1 loss

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Outokumpu CEO has grim outlook on stainless steel despite lower Q1 loss

OutokumpuOyj on April 27 posted a net loss of €41 million, or 10 cents pershare for the first quarter of 2016, with CEO Roeland Baan saying theperformance was in line with expectations.

The company recorded a net loss of €45 million in the samequarter a year ago, and booked a profit of €308 million in the of 2015.

"However, our financial results were impacted by theactions we took to prudently manage our business, including a write-down of alarge customer receivable in Europe and aged inventories in Calvert," Baansaid. Together, these had anegative impact of €15 million.

EBITDA totaled €46 million, tumbling from €65 million a yearago, while sales dropped to €1.39 billion from €1.77 billion over the period.

During the quarter, net cash generated from operatingactivities was €74 million, compared to losses of €62 million a year earlier.

Outokumpu's first-quarter stainless steel deliveriesdeclined to 610,000 tonnes from 620,000 tonnes on a yearly basis, but werehigher than the 574,000 tonnes booked in the fourth quarter of last year.

CapEx during the three-month period totaled €32 million, upfrom €26 million a year earlier.

The company is finalizing plans for its of €100 million insales, general and administrative costs this year and will book about €40million of redundancy provisions in the second quarter, out of which about €5million is expected to be cash effective during the quarter.

"While we expect steady progress in stainless businessin the second quarter, our results will be burdened by weaker performance ofthe ferrochrome business driven by low ferrochrome price and US dollar. Withsequentially flat delivery volumes, we expect the underlying EBIT to remain ata similar level as in the first quarter," Baan added.

In early April, the company announced plans to cut 600 jobsaround the world, targeting EBIT of €500 million by the end of 2020 at thelatest. The Finnish stainless steelmaker is also looking to take debt-to-equityto under 35% and to reduce its net debt to €1.2 billion.