Financial targetsIn 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 Q3 2021
Update in October 2021
Outokumpu announced on October 12, 2021 that realized prices for stainless steel have increased more than expected and consequently Outokumpu’s adjusted EBITDA is expected to be higher compared to the second quarter. The company is in line with its volume guidance as stainless steel deliveries decreased by 8% compared to the second quarter. Outokumpu had earlier expected its third-quarter adjusted EBITDA to be at a similar level compared to the second quarter of 2021 (Q2/21: EUR 223 million).
Guidance published in the Q2 report
Group stainless steel deliveries in the third quarter are expected to decrease by 0–10% compared to the second quarter, in line with the seasonal pattern.
The European ferrochrome benchmark price remained stable at USD 1.56/lb for the third quarter.
Planned maintenance costs in the third quarter are expected to increase by approximately EUR 10 million compared to the second quarter.
With current raw material prices and exchange rates, significant raw material-related inventory and metal derivative gains or losses are not expected in the third quarter.
Adjusted EBITDA in the third quarter of 2021 is expected to be at a similar level compared to the second quarter.
The Annual General Meeting decided on March 31, 2021 that no dividend will be paid for the financial year that ended December 31, 2020.
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.