Outlook and risks

Outokumpu gives quarterly outlook and reviews short-term risks and uncertainties in its interim reports.
Page last updated: 09.05.2023

Outlook for Q2 2023

Group stainless steel deliveries in the second quarter are expected to remain stable compared to the first quarter.

Ferrochrome production will increase and return to normal levels in the second quarter; however, the business area is preparing for a maintenance break in the third quarter.

With current raw material prices, no significant raw material-related inventory and metal derivative impacts are expected to be realized in the second quarter.

Guidance for Q2 2023

Adjusted EBITDA in the second quarter of 2023 is expected to be at a similar or higher level compared to the first quarter

Short-term risks and uncertainties

Outokumpu is exposed to various risks and uncertainties that may have an adverse impact on its business and operations. The consequences of the continued war in Ukraine and the adverse development of economic and geopolitical tensions have increased the risks to which Outokumpu is exposed, but the company has taken prompt measures to manage and control these risks.

During the first quarter, energy risk decreased as a result of falling energy prices; however, some uncertainty remains as the average prices are still higher than before the war in Ukraine. Successful ramp up of new energy sector production assets, such as Olkiluoto nuclear power plant in Finland and wind power in Nordic countries further contribute in stabilizing electricity prices and availability. Possible increases in electricity prices would mainly affect business area Ferrochrome, due to the high amount of electricity needed in ferrochrome production.

Gas availability in Germany improved during the first quarter but some uncertainties remain related to the next winter period. Disruptions in gas availability could directly impact Outokumpu’s operations in Germany and indirectly through the company’s customers and suppliers. Further possible sanctions or disruptions in the natural gas supply could also affect the prices or availability of gas for Outokumpu’s operations in Europe. Outokumpu acquires energy gases from the European market, for which Russia is one of the indirect suppliers.

Raw material availability risks have been mainly related to sanctions imposed due to the Russia's invasion of Ukraine. As a result of the successful actions to sever Outokumpu's dependencies on raw materials of Russian origin, the exposure and risk of supply chain disruption due to sanctions was considered limited at the end of the first quarter. Outokumpu has been able to replace almost all its raw material supplies of Russian origin. The company does not buy any scrap or nickel of Russian origin for its operations. Indirect supply from Russia exists for a very limited amount of raw material, and the company is demanding its suppliers commit to finding alternative sources globally. Any potential changes in suppliers could expose Outokumpu to increased costs and risks related to raw material sourcing in high-risk countries, including environmental-social governance risks and dependencies on certain critical suppliers. Also, further potential sanctions against Russia could increase the uncertainties in the operating environment.

Global inflation has started to slow down in some markets, but may still constrain Outokumpu's competitiveness. Also, the recent instability events in the banking sector may accelerate the adverse development of the global economy. Uncertainty about the economic slowdown and reopening of China remains, and could impact stainless steel demand and Outokumpu's operating environment. There are also uncertainties related to the renewal of the trade defense measures by the European Commission as European safeguard measures are under review during the first half of the year.

The company is exposed to risks related to volatile metal prices, especially nickel and in the first quarter, also the molybdenum price. Volatile metal prices may impact Outokumpu’s result, among other financial risks. Also, the uncertainties related to the spread of COVID-19 and its variants, and cyber security risks remain and could impact Outokumpu’s business and operations


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