President & CEO Roeland Baan
“The breakout of the COVID-19 pandemic has cast a huge shadow over the world. It has led to a massive impact on individuals, companies and national economies around the globe. At Outokumpu, our priority is always to secure the health and safety of our employees and people around us. Thanks to our fast and decisive measures, the implications of COVID-19 on our operations, deliveries and customer service were limited during the first quarter. It goes without saying that the global economic impacts from the pandemic will have a negative effect also on Outokumpu’s performance.
Outokumpu’s first-quarter results were in line with our guidance with the Group adjusted EBITDA amounting to EUR 106 million.
Business area Americas had a strong start for the year with an adjusted EBITDA of EUR 20 million, which was almost EUR 40 million higher compared to the first quarter last year. This achievement demonstrates the effectiveness of the extensive measures the new management has implemented during the past year.
Business area Europe’s profitability remained on a good level despite high import penetration, low prices and weaker demand. Productivity continued to improve ahead of target as a result of rigorous execution of projects related to operational excellence. Tight cost control further added to a successful mitigation of the negative market dynamics.
The new provisional antidumping duties for hot-rolled products launched in April by the European Union are essential in protecting the European market from unfair trade practices. In the midst of the current COVID-19 crisis, it is extremely important that the European Union strengthens the safeguards in line with the new market reality. Demand will slow down into the second quarter while exporting countries will aggressively be looking for markets. Lowering of the import quotas in line with the reduced steel demand is needed to ward off diverted trade flows.
Weakening customer demand started to become apparent in April with some customers delaying deliveries and order intake trending down. The current uncertainty in the stainless steel market is expected to continue. Outokumpu has developed a range of scenarios with specific action plans linked to each one of them. These contingency plans will ensure continued customer service, mitigate operational risks and secure our financial position whichever of these potential scenarios will occur. Our liquidity is sufficient to take us through these exceptional times, and we have implemented the needed monitoring processes to trigger fast action in case we need to adjust our operations and reallocate our resources to even lower demand and further market deterioration.
I am extremely proud of the resilience of our people and operations during these difficult times. The transformation that Outokumpu has gone through during the past four years has made the company a much stronger entity, capable of surviving even the hardest of storms. We have a solid balance sheet, world class operations, a strong market position and a talented workforce. With these competitive advantages Outokumpu is not just able to tackle the current hurdles, but moreover recover swiftly from this crisis and is uniquely positioned to benefit from the following market opportunities.”