Outokumpu Oyj, a Finnish steelmaker, climbed in Helsinki trading following a smaller-than-expected operating loss and after announcing plans to cut as many as 2,500 jobs by 2017.
The shares gained 14 percent to 52.60 euro cents in their biggest daily gain since Sept. 14. The volume of shares traded was 31 percent above the three-month daily average.
Outokumpu plans to fire as many as 2,500 workers to “significantly” cut costs and return the Espoo, Finland-based company to profitability, according to a statement today. Its first-quarter loss before interest and tax of 82 million euros ($107 million) compared with the 97.9 million-euro loss forecast by 11 analysts in a Bloomberg survey.
The company said it expects to eliminate 770 jobs this year, mostly related to the previously announced shutdown of the Krefeld meltshop in Germany. Outokumpu started a cost-cutting program on Feb. 14 that targeted 150 million euros in savings. That’s in addition to the 200 million euros in savings it plans to achieve through last year’s purchase of ThyssenKrupp AG’s Inoxum stainless-steel unit.
As part of the Inoxum deal, Outokumpu announced the closure of two German meltshops. The company will also reduce its workforce in sales, production, supply chain and support roles.
A 250 million-euro revolving credit line agreed in December includes a financial covenant that requires Outokumpu to maintain a level of net gearing equal to or lower than 115 percent before June 2013, according to the company. The steelmaker’s net interest-bearing debt compared to equity rose to 103.3 percent from 88.8 percent in the fourth quarter.
“Gearing still below 115 percent is a positive,” Alessandro Abate, an analyst at JPMorgan Chase & Co., said in a note. The result was “better than expected,” even as the market remains challenging, he said.