Outokumpu sees strong demand for stainless steel continue

The Outokumpu logo can be seen at the company’s headquarters in Helsinki, Finland on May 22, 2018. REUTERS / Jussi Rosendahl / File Photo

HELSINKI, Aug.5 (Reuters) – Shares of Finnish stainless steel maker Outokumpu fell 5.6% to 5.46 euros on Thursday after the company beat expectations for second-quarter baseline earnings, but dropped warned that shipments are expected to fall by as much as 10% in the third quarter. .

Instead of a drop in demand in the second half of the year due to the seasonal nature of the Outokumpu industry, General Manager Heikki Malinen sees demand for stainless steel and ferrochrome continue to be strong and delivery volumes drop only due to scheduled maintenance.

“The 0-10% drop in volumes comes down to what our need for closings will be,†Malinen told Reuters and added that Outokumpu had already seen customers start negotiations on deliveries for 2022.

Inderes analyst Petri Gostowski said the drop in the share price could mean shareholders are responding to the expected seasonal change in the company.

“Some investors are winning and believe that market drivers will not be as favorable in the second half of the year,†Gostowski said.

Outokumpu reported April-June operating profit of 163 million euros ($ 193 million) from a loss of 16 million a year earlier and topped the 143.4 million expected by seven analysts, according to the data from Refinitiv Eikon.

The good result was helped by rising prices for stainless steel and ferrochrome, the company said.

Stainless steel shipments reached 626,000 tonnes, up from 523,000 tonnes a year earlier, as demand recovered from the coronavirus pandemic.

Sales increased 31.9% to 1.87 billion euros.

Malinen said Outokumpu was producing as much ferrochrome as possible in its three smelter furnaces in northern Finland, but added that “we are at about full capacity.”

Ferrochrome production has been stable since the first quarter at 131,000 tonnes but sold at higher prices and sales increased 28% to 155 million euros.

Outokumpu has focused on reducing costs and risks since the release of a new strategy last November.

The company said it would cut costs to increase earnings before interest, taxes, depreciation and amortization by € 200 million by the end of 2022.

Malinen said Outokumpu hit € 123 million of that goal in the first half of 2021.

($ 1 = 0.8449 euros)

Report by Essi Lehto; edited by Jason Neely and David Evans

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