Our strategy comprises three phases, each of which forms a basis for the next phase. Reducing debt continues throughout all three phases. Our strategy execution is disciplined and determined, and we are continuously following up the achievements.
First phase of the strategy 2021–2022
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 three-phase strategy was focused on three key priorities: Commercial Excellence, Cost and Capital Discipline and Lean and Agile Organization. The company has made significant progress in all areas and strategy execution has proceeded ahead of plans. Outokumpu has already achieved both its financial targets, EUR 250 million EBITDA run-rate improvement and net debt to EBITDA ratio to below 3.0. Strong performance and diligent strategy execution in the first phase provide a solid foundation for the second phase until 2025.
Second phase of the strategy 2023-2025
Outokumpu has made such strong progress with our strategy execution in the first phase and succeeded in de-risking the company. As a result, Outokumpu’s resilience has improved significantly, which provides a strong foundation going forward in all market conditions. 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.
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.
President and CEO Heikki Malinen continues to lead the business area Europe. To ensure the execution of the differentiated strategies in Europe, Outokumpu appoints Niklas Wass as President – business line, Stainless Europe to lead high-volume stainless steel products and Thomas Anstots as President – business line, Advanced Materials to lead advanced products. Otherwise, the responsibilities in the Outokumpu leadership team remain unchanged.
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
“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 2025–
Beyond 2025, our strategy is to invest in growth and sustainability, which will bring us towards our vision to be the customer's first choice in sustainable stainless steel.
Updated on June 16, 2022.