First phase of the strategy: Successfully completed ahead of time in 2022
Outokumpu has successfully completed the first phase of the strategy with a strong focus on de-risking the company and strengthening the balance sheet. The first phase of the strategy started in 2021 and focused on three key priorities: Commercial Excellence, Cost and Capital Discipline and Lean and Agile Organization. The company made significant progress in all the areas, succeeded in de-risking the company and strategy execution proceeded ahead of plans. Outokumpu achieved both its financial targets, EUR 250 million EBITDA run-rate improvement and net debt to EBITDA ratio to below 3.0. As a result, Outokumpu’s resilience improved significantly, which provides a strong foundation going forward in all market conditions.
Second phase of the strategy: 2023-2025
In the second phase the focus is to strengthen the core. We will continue our strong emphasis on sustainability to further improve Outokumpu’s position as the sustainability leader in the stainless steel sector. We are targeting a significant CO2 emission reduction, and there will be a strong focus on sustainable sourcing as well as diversity, equity, and inclusion, to name some of the focus areas. In the second phase, we will also make targeted investments on productivity and sustainability and focus on customer-focused steering.
Updated financial targets for the second phase
Outokumpu has updated its financial targets for the second phase of the strategy to reflect capital allocation priorities. The focus will be increasingly on strong shareholder returns.
- Net debt to EBITDA <1.0 in normal market conditions
- EBITDA run-rate improvement of EUR 200 million
- EUR 600 million of capital expenditure for the coming three years
- Stable and growing dividend
Good progress against the targets in 2023
At the end of the year, Outokumpu's net debt to adjusted EBITDA ratio was -0.1, and we had completed a total of 475 projects towards the EBITDA run-rate improvement, achieving a cumulative improvement of EUR 186 million, and the target has almost been achieved. Our capital expenditure has been EUR 328 million capital expenditure in 2022–2023, and our Board of Directors proposed a dividend of EUR 0.26 per share for 2023.
Read more about strategy progress in our latest Annual report and interim reports.
Key strategic priorities for the second phase
While in the first phase of the strategy the aim was to de-risk the company, the second phase will be about strengthening the core. The second phase will focus on three key priorities:
- sustainability,
- growth from productivity and
- customer-focused steering.
As part of the company’s ambitious sustainability journey, Outokumpu aims to reduce its CO2 emissions by 14% by the end of 2025 compared to the 2021 level, in line with its SBTi 1.5- degree climate target. Also, capital discipline and strong shareholder returns will be at the core of the company’s long-term strategy going forwards.
Two differentiated strategies for business area Europe
For the second phase of the strategy, Outokumpu has launched two customer differentiated strategies for business area Europe. The company aims to strengthen cost leadership in high-volume stainless steel products and a global market leadership in advanced products. Business area Europe will strengthen its position as the customer’s first choice in sustainable stainless steel, while in business area Americas the focus will be on sustaining the high profitability levels. At the core of business area Ferrochrome’s strategy is carbon neutrality.
“We have been putting a lot of effort into our strategy work throughout the organization. The hard work has paid off and now we have a firm and sustainable strategic plan in place to take this company forward following the successful first phase of de-risking. We have a strong performance culture, and this really is a company of great people – I am fully convinced that our talented and hard-working teams will continue to deliver good value to our customers and strong results to our shareholders going forward.” CEO Heikki Malinen
Third phase of the strategy: 2026–
On August 3, 2023 Outokumpu announced it has made solid progress in the second phase of its strategy and simultaneously begun preparations for the third phase, which will start in 2026 and most likely require new investments.
The company’s focus in this phase will be to strengthen its market position further and develop more globally diversified operations including Americas expansion, European competitiveness, value-chain integration, and sustainability leadership along with the possible biocoke investment.