Outokumpu reports bigger than expected Q4 loss

Fourth-quarter 2011 highlights:
Underlying operational result some EUR -34 million (III/2011: EUR -15 million).

Operating loss EUR 71 million (III/2011: EUR -53 million) including raw material-related inventory losses of some EUR 24 million (III/2011: some EUR -38 million) and net non-recurring items of EUR -13 million (III/2011: none).

Financial income and expenses include EUR -33 million expenses from the fair valuation of the Group's stake in Talvivaara Sotkamo and the sale of Nordic Brass.

Strong cash flow at EUR 132 million (III/2011: EUR 282 million). Stainless steel deliveries at 323 000 tonnes (III/2011: 340 000 tonnes).

The Group's underlying operational result in the fourth quarter weakened to some EUR -34 million primarily as a result of lower delivery volumes and slightly lower base prices.

The positive impact of an improved mix was offset by costs being somewhat higher. Operating loss in the fourth quarter was EUR 71 million. Net cash from operating activities in the fourth quarter remained strong and
totalled EUR 132 million.

The main contributor to this strong cash flow was further reductions in working capital which resulted in the main from reduced inventories and lower metal prices.

Year 2011 highlights
- Underlying operational result some EUR -66 million (2010: some EUR -91 million)

- Operating loss EUR 260 million (2010: EUR -83 million) including raw material-related inventory losses of some EUR 43 million (2010: gains of some EUR 26 million) and net non-recurring items of EUR -151 million (2010: EUR -17 million).

- Strong cash flow at EUR 338 million (2010: EUR -497 million).

- Stainless steel deliveries increased by 6% and totalled 1 391 000 tonnes (2010: 1 315 000 tonnes).

- Significant restructuring actions taken to improve cash flow, profitability and strengthen the balance sheet.

- The Board is proposing that no dividend be paid for 2011 (2010: EUR 0.25).

Short-term outlook
Following a softening in demand for stainless steel in the fourth quarter of 2011, demand for standard grades began to show signs of improvement in the new-year with distributor purchasing supported by a slight increase in the nickel price. However, no significant change has been seen in underlying demand.

Outokumpu's order intake has been encouraging in the beginning of the year. Based on current levels of order intake, Outokumpu's delivery volumes in the first quarter of 2012 are expected to be clearly above levels seen in the fourth quarter of 2011.

Higher delivery volumes and slightly higher base prices are expected to lead to Outokumpu's underlying operational result being around break-even or slightly positive in the first quarter of 2012.

At current metal prices, marginal raw-material related inventory gains are expected. Outokumpu's operating result in the first quarter of 2012 might be impacted by non-recurring items associated with the Group's ongoing efficiency improvement programmes.

CEO Mika Seitovirta commented on the results: "Outokumpu's business results continued to be unsatisfactory in the last quarter of 2011. The challenging economic environment continued to limit market demand. I am however pleased with the progress we have made in improving our cash flow and restructuring our organisation to enable sustainable profitability. The new management team and organisational structure now in place will accelerate the transformation of Outokumpu during 2012. Our two major investment projects - capacity expansions of ferrochrome and quarto plate are both on time and budget - and will prove the Group with a platform for long term growth."