Outokumpu's Annual Accounts 2009 - exceptional year with heavy losses but strong cash flow
(Thomson Reuters ONE) - PRESS RELEASEFebruary 3, 2010 at 9.10 am EETYear 2009 highlights- Operating loss EUR 438 million, underlying operational result some EUR -340million- Delivery volumes down 28%, cost savings totalled EUR 185 million- Operative cash flow EUR 198 million- Dividend proposal EUR 0.35 per share (2008: EUR 0.50)Fourth quarter highlights- Operating loss EUR 29 million- Recovery of prices and deliveries Group key figures, EUR million IV/09 IV/08 2009 2008------------------------------------------------------------------ Sales 728 966 2 611 5 474 Operating profit -29 -271 -438 -63 Profit before taxes -36 -298 -474 -134 Net profit for the period -6 -233 -336 -189 Earnings per share, EUR -0,04 -1,30 -1,86 -1,05 Net cash generated from operating activities 1) -108 205 198 664 Stainless steel deliveries, 1000 tons 277 261 1 030 1 423 Stainless steel base price, EUR/t 2) 1 297 1 045 1 161 1 185 Stainless steel transaction price, EUR/t 3) 2 346 2 338 2 036 2 801 1) Cash flow presented for continuing operations 2) CRU: German base price (2mm cold rolled 304 sheet) 3) CRU: German transaction price (2mm cold rolled 304 sheet)2009 was a historically difficult year for the stainless steel producers. Theglobal recession had a significant impact on the industry, especially in Europe.During the first part of 2009, demand was extremely weak and markets werecharacterized by heavy reduction of inventories in the whole value chain. Somerecovery occurred in the summer but markets softened again towards the end ofthe year.To adjust to the weak demand, Outokumpu implemented heavy production cuts, theaverage capacity utilization was very low at about 60% in 2009. Stainless steeldeliveries totalled 1.03 million tons, 28% down from 2008. Average referencebase prices were slightly down but transaction prices, which also include rawmaterial costs dropped 27%. The average nickel price went down by 31% and theferrochrome price by 52%. Due to heavy decline in both volumes and prices,Outokumpu's sales totalled only EUR 2.6 billion, down 52%.Outokumpu's cost-saving actions during the year delivered good results withabout EUR 185 million of savings. The negative impact from the historically lowdelivery volumes was, however, clearly bigger, resulting in heavy losses for2009. Operating loss totalled EUR 438 million. The underlying operationalresult, which excludes raw material-related inventory losses and non-recurringcosts, was negative at EUR 340 million. In 2008 the operating loss was clearlysmaller at EUR 63 million though heavily burdened by massive raw-materialrelated inventory losses and higher non-recurring costs. The underlyingoperational result was still positive at EUR 305 million in 2008.In the fourth quarter of 2009, Outokumpu recorded the first profit improvementcompared with the previous year. Operating loss was EUR 29 million compared witha loss of EUR 271 million in the fourth quarter of 2008. The underlyingoperational loss improved to EUR 29 million from the EUR 69 million in thefourth quarter of 2008. The 2008 underlying loss excludes EUR 185 million ofraw-material related inventory losses. Deliveries were 6% higher at 277 000 tonsbut due to poorer product-mix, sales declined to EUR 728 million.Despite the losses, Outokumpu continued to generate positive cash flow in 2009.Cash flow from operations totalled EUR 198 million as working capital wasreduced as a result of lower inventory levels and metal prices. The company'sbalance sheet remained relatively healthy with gearing at 48%. The Board ofDirectors proposes a dividend of EUR 0.35 per share for 2009 (2008: EUR 0.50).No major improvement in the underlying demand for stainless steel is yetvisible. Steel distributors' cautious buying behaviour continued over theyear-end. During the past few weeks, order intake has however been moreencouraging. Outokumpu's underlying operational result in the first quarter of2010 is expected to be at the same level or somewhat weaker than in the fourthquarter of 2009.CEO Juha Rantanen:"Year 2009 was a very difficult one for the stainless steel industry. Dramaticdrop of end demand, representing an estimated 26% decline in Europe, had a majornegative impact on Outokumpu. We were successful in reducing our costs, however,this effort was not sufficient to compensate for the volume decline. In spite ofexternal uncertainties, we stay firm with our plans. Priorities for 2010 areclear; restoring profitability, continued safety improvement, strategyimplementation and delivering of the Excellence Programmes. These longer terminitiatives build the foundation for our future results."This press release is a summary of Outokumpu's official annual accounts bulletin2009.For further information, please contact:P?i Lindqvist, SVP - Communications and IRtel. +358 9 421 2432, mobile +358 40 708 5351paivi.lindqvist(at)outokumpu.comIngela Ulfves, VP - Investor Relations and Financial Communicationstel. +358 9 421 2438, mobile +358 40 515 1531ingela.ulfves(at)outokumpu.comEsa Lager, CFOtel +358 9 421 2516esa.lager(at)outokumpu.comOUTOKUMPU OYJOutokumpu is a global leader in stainless steel. Our vision is to be theundisputed number one in stainless, with success based on operationalexcellence. Customers in a wide range of industries use our stainless steel andservices worldwide. Being fully recyclable, maintenance-free, as well as verystrong and durable material, stainless steel is one of the key building blocksfor sustainable future. Outokumpu operates in some 30 countries and employs some8 000 people. The Group's head office is located in Espoo, Finland. Outokumpuhas been listed on the NASDAQ OMX Helsinki since 1988.www.outokumpu.com[HUG#1379822] ENG Media release Annual Accounts 2009: http://hugin.info/3010/R/1379822/339689.pdf
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