Targets and outlook
Long-term financial targets
Connected to our vision to be the best value creator in stainless steel by 2020 through customer orientation and efficiency, defined measures of success include profitability as well as further deleveraging. Quantified financial targets for the timeframe are:
- Adjusted EBITDA of EUR 750 million
- ROCE of 12%
- Gearing of <35%
These group level targets are expected to be reached by the end of 2020 at the latest. While the global demand for stainless steel continues to grow, Outokumpu takes a conservative approach on the market growth and metal price assumptions, and expects the targeted profitability improvement to come primarily through efficiency and cost improvements in the current scope of business, supported by further strengthening of Outokumpu’s cost competitiveness and market position market presence and market share particularly in Americas.
Business and financial outlook for the first quarter 2018
Driven by healthy underlying stainless steel demand both in Europe and the US, as well as a seasonally strong market, Outokumpu expects higher stainless steel deliveries in the first quarter compared to the fourth quarter of 2017.
However, increased graphite electrode, ferrosilicon and energy costs, as well as weakening US dollar and lower ferrochrome price are expected to have a significant negative impact on profitability.
Outokumpu expects its first-quarter adjusted EBITDA to be higher compared to the previous quarter (IV/17: EUR 82 million).
The Board of Directors updated Outokumpu's dividend policy on January 31, 2018. According to the new policy, dividend pay-out ratio throughout a business cycle shall be in a range of 30-50 per cent of net income.
The Annual General Meeting 2018 decided on a dividend of 0.25 euros per share based on the balance sheet adopted for the account period ending December 31, 2017.
Short-term risks and uncertainties
Outokumpu is exposed to the following risks and uncertainties in the short-term: risks and uncertainties in implementing the announced vision, including measures to drive competitiveness and further improve the financial performance; risks and uncertainties related to market development in stainless steel and in ferrochrome as well as competitor actions; vulnerability to business interruptions due to high capacity utilization and increased price levels; risk of material changes in metal prices impacting cash flow and availability of financing; risks and uncertainties in implementing the new organizational structure, and the loss of key personnel; changes in the prices of electrical power, fuels, nickel and molybdenum; currency developments affecting the euro, US dollar, Swedish krona and British pound; counterparty risk related to customers and other business partners, including financial institutions. Possible changes in the global political and economic environment, including trade and fiscal policies could have an adverse impact on Outokumpu’s overall business and access to financial markets.