Long-term financial targets
Connected to our vision to be the best value creator in stainless steel by 2020 through customer orientation and efficiency, defined measures of success include profitability as well as further deleveraging. Quantified financial targets for the timeframe are:
- Adjusted EBITDA of EUR 750 million
- ROCE of 12%
- Gearing of <35%
These group level targets are expected to be reached by the end of 2020 at the latest. While the global demand for stainless steel continues to grow, Outokumpu takes a conservative approach on the market growth and metal price assumptions, and expects the targeted profitability improvement to come primarily through efficiency and cost improvements in the current scope of business, supported by further strengthening of Outokumpu’s cost competitiveness and market position market presence and market share particularly in Americas.
Outlook for Q3/2020
Due to the global economic uncertainty caused by the COVID-19 pandemic, Outokumpu will not give quarterly guidance on adjusted EBITDA until further notice.
The COVID-19 pandemic and related measures are expected to have a significant impact on the stainless steel industry throughout 2020.
Due to seasonally low quarter, especially in Europe, combined with the continuing COVID-19 situation, Outokumpu expects its stainless steel deliveries to decrease in the third quarter for the whole Group by approximately 10% compared to the second quarter. The European stainless steel market remains challenging as a result of continuing import and price pressure.
The planned maintenance work at the Ferrochrome mill in Tornio, Finland is expected to have approximately EUR 15 million negative impact on the third-quarter result.
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.
Annual General Meeting 2020 and new dividend proposal
On March 18, Outokumpu announced that it will postpone the Annual General Meeting 2020 to be held on a later date. As announced on April 30, the Annual General meeting will convene on May 28, 2020.
On April 29, Outokumpu’s Board of Directors made a new dividend proposal to the Annual General Meeting that no dividend payment would be decided by the Annual General Meeting. Instead, the Board of Directors proposed that the Annual General Meeting would authorize the Board to decide at a later stage and in its discretion on a dividend payment in one or several instalments of a total maximum of EUR 0.10 per share. The authorization would be valid until the next Annual General Meeting, however, no longer than until May 31, 2021.
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.