In the first phase of our strategy, during 2021–2022, Outokumpu will prioritize de-risking the company through margin improvement, cash flow management and deleveraging the balance sheet. The new financial targets, EUR 200 million EBITDA run-rate improvement and net debt to EBITDA of below 3.0x by the end of 2022, are fully based on self-help improvement actions.
To reach these targets, the strategy is centered on strict cost and capital discipline, strong customer engagement and a lean, delayered organization. As part of the strategy, Outokumpu will increase raw material efficiency and operational cost savings while limiting annual capital expenditure to EUR 180 million in 2021 and 2022 through maintenance optimization and strict asset management.
Outlook for Q4/2020Outokumpu upgraded its guidance for the fourth quarter of 2020 on December 15. The adjusted EBITDA is expected to be higher compared to the third quarter. Stainless steel deliveries are estimated to increase by approximately 5-10% due to stronger than expected market recovery. The result is also expected to be supported by improved cost efficiency and positive raw material impacts. The company had earlier expected its fourth-quarter adjusted EBITDA to remain at the same level compared to the third quarter of 2020 (Q3/20: EUR 22 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.
Outokumpu Board of Directors decided not to pay dividends for the financial year 2019
Outokumpu’s Annual General Meeting on May 28, 2020 authorized the Board of Directors to decide at a later stage and at its discretion, on a dividend payment in one or several instalments of a total maximum of EUR 0.10 per share.
Following a review of the January-September 2020 financial results, Outokumpu's Board of Directors has decided that owing to the importance of strengthening the Company's balance sheet no dividend will be paid for the financial year 2019.
The Board confirms that in the challenging market environment improving the Company's financial position will continue to be of highest priority.
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 implement new IT systems and processes, improve operational reliability, drive competitiveness and further improve financial performance; risks and uncertainties related to market development in stainless steel, ferrochrome and competitor actions; availability and price of certain critical supplies; dependencies on certain critical suppliers; the risk of changes in metal prices impacting cash tied up in working capital; changes in the prices of electrical power, fuels, ferrochrome, nickel, ferrosilicon, iron and molybdenum; currency developments affecting the euro, the US dollar, the Swedish krona, and the British pound; fair value of shareholdings; project implementation risks; IT dependency and cyber security risks; risks due to a fragmented system environment; counterparty risks related to customers and other business partners, including suppliers and financial institutions. Possible adverse changes in the global political and economic environment may have a significant adverse impact on Outokumpu’s overall business and access to financial markets.