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 Q1 2021
The stainless steel market has begun to recover after the global downturn caused by the COVID-19 pandemic.
The demand for stainless steel is strengthening and both business areas Europe and Americas are expected to see a seasonal increase in volumes.
Consequently, Outokumpu expects its stainless steel deliveries for the whole Group to increase in the first quarter by 10-20% compared to the fourth quarter.
Adjusted EBITDA for the first quarter of 2021 is expected to be higher compared to the fourth quarter of 2020.
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.
Board of Directors’ proposal for profit distribution to the Annual General Meeting to be held on March 31, 2021The Board of Directors is proposing to the Annual General Meeting to be held on March 31, 2021 that no dividend will be paid for 2020 as in the challenging market environment improving the Company's financial position continues 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.