Outokumpu CEO's review

Outokumpu's President and CEO Heikki Malinen commented company's results in Q1 2024 interim report:
Page last updated: 13.05.2024
"After a weak second half of the year 2023, the new year started off relatively well. However, a wave of unexpected political strikes in Finland impacted Outokumpu. Most of our operations and port in Tornio, Finland were shut down for four weeks. We regret any inconvenience this caused our customers. We have done everything under our control to mitigate the situation in order to limit the negative impacts of the fourweek strike to EUR 60 million from the earlier estimated EUR 80 million.

In the first quarter of 2024, Outokumpu’s adjusted EBITDA amounted to EUR 38 million. The political strike had negative impact of approximately EUR 30 million and we expect a similar impact in the second quarter. Compared to the previous quarter, our stainless steel deliveries slightly decreased in the first quarter. Our profitability was also burdened by the tightened scrap market, which is due to lower supply of recycled material, resulting from weaker industrial activity and high interest rates.

From a market perspective, we have seen positive signals. Gradual recovery in Europe has continued. The third quarter of 2023 was the lowest point in the cycle. Our realized stainless prices reflect this development.

Due to the above-mentioned challenges, business area Europe’s adjusted EBITDA was weak and amounted to EUR 4 million. Stainless steel deliveries were 7% lower compared to the previous quarter, but higher realized stainless steel prices supported our profitability.

In business area Americas, our adjusted EBITDA amounted to EUR 24 million. Stainless steel deliveries seasonally increased by 15%. However, tight scrap supply and weak stainless steel pricing, especially in Mexico burdened the financial result. Americas' situation remains fundamentally strong, and we confirm the normalized annual EBITDA of USD 170 million.

Business area Ferrochrome generated a solid adjusted EBITDA of EUR 22 million. One of the ferrochrome furnaces has been shut down since January as market demand remained modest.

We are now in the midst of the second phase of our strategy. We have met the targets we set for ourselves, but the overall market environment is tough. I want to emphasize that we are determined to push forward and therefore we are now raising our EBITDA run-rate improvement target from EUR 200 million to EUR 350 million. This is also necessary to recover from the losses of the four-week strike.

In April, our Chief Financial Officer, Pia Aaltonen-Forsell announced her decision to leave Outokumpu to pursue a career opportunity outside the company. I want to thank her for the past five years – Outokumpu has truly changed during that time and is today financially much stronger than ever before.

I am pleased that we have found an excellent successor internally. Our new Chief Financial Officer, Marc-Simon Schaar will start in his new position on June 1, 2024. With his strong background in finance, business, and procurement, I am confident that Outokumpu continues to create long-term value.

After 12 years at Outokumpu with four years as Chief Executive Officer following eight years on the Board, I have decided to pursue another opportunity outside the company. During the past four years, we have transformed the company into a leader in sustainable stainless steel with the strongest balance sheet in the industry. I look forward to a smooth transition to my successor.

In the first quarter, we completed our second share buyback program and the Annual General Meeting also decided that a dividend of EUR 0.26 per share was paid for the year 2023. Strong shareholder returns and longterm value creation remain at the center of our strategy."