Outokumpu reports negative results amid record shipments

Sales volumes in the second quarter of 2016 were higher than last year and than in the first quarter of this year, amounting to 629 thousand tonnes. In the Americas segment, shipments reached an all-time high of 177 kt and costs were down 14 percent. “In total, this resulted in an EBIT loss of € 5 billion in the second quarter,” said Roeland Baan, CEO of Outokumpu, commenting on the results.

The situation is worse in Europe. It also managed to achieve € 15 million in savings, but falling ferrochromium prices, higher raw material costs and lower sales of stainless steel drove EBIT down from € 42 million to € 29 million. Steel product deliveries amounted to 413 thousand tons, which is 1.9 percent lower than in the first quarter. Nevertheless, this volume remained at the level of the previous year. Its value was 1.14 billion euros, and this year the price cut has reduced it to 958 million euros. Underlying EBIT of 41 million euros in the previous year and 42 million in the first quarter of 2016 in the second fell to 29 million euros.

“In the third quarter, we expect the major groups to have positive EBIT, mainly due to further improvements in South America. In Europe, we anticipate the negative impact of typical seasonal effects. In addition, scheduled maintenance for the largest ferrochrome furnace will reduce ferrochromium production by about 30 percent in the third quarter, ”said Roeland Baan.

In the third quarter, Europe has seen a traditional recession. With an average level of stocks at the company's distributors, relatively strong demand outside the oil and gas sector is expected to continue. The Americas are also in a downturn in the third quarter, but Outokumpu predicts that this year the situation could improve as stocks are sustained below average and new anti-dumping duties will push prices higher.