President & CEO Heikki Malinen
“In the COVID-19 world, securing the health and safety of our employees and people around us has been a top priority at Outokumpu. Thanks to our proactive actions, the COVID-19 impact on our people and operations has been limited, and consequently our customer service and deliveries have continued largely uninterrupted. I am proud of our employees’ hard work and ability to adjust to the new ways of working under these exceptional circumstances.
The pandemic started to impact Outokumpu in April with lower demand and declining order intake. As a result, Outokumpu’s deliveries decreased by 11% in the second quarter and adjusted EBITDA declined to EUR 45 million. The EUR 125 million convertible bond that was successfully launched in July is an important funding element that improves our debt maturity profile in these harsh times.
In business area Americas, deliveries were down by 20% from the first quarter due to continued distributor destocking and COVID-19. By improving operational efficiency, we have been able to bring down the break-even point significantly enabling positive results even with lower production volumes.
Business area Europe’s result was burdened by lower deliveries, continued price pressure and high import penetration. As a response to lower demand, production has been adjusted with temporary shutdowns and shorter working hours in all operating countries. On the positive side, productivity has continued to improve, and we have maintained our market position.
The European Commission’s decision in June to increase the import quotas by 3% was a major disappointment for the European steel industry. As the import pressure from Asia continues, there is an urgent need to create a long-term solution beyond the current safeguard quota period ending in June 2021 to secure the viability of the European steel industry.
Since starting as the CEO of Outokumpu in mid-May, I have taken a deep dive into Outokumpu’s operations and discussed with a large group of employees globally to build a good understanding of the company. I am impressed by our operations and the knowledge and expertise of our people which together provide a good foundation for our future.
Despite some signs of gradual market recovery, the operating environment continues to be difficult. The normal third-quarter seasonality will prevail, now further challenged by COVID-19. Therefore, our short-term focus will be on cash generation, securing liquidity and tight cost control. We have also decided to accelerate the Long Products’ strategic review with new management. For the longer term, we are currently in the process of formulating a new vision, strategy and targets for Outokumpu for the coming years. These will be communicated before the announcement of the third quarter results.”