July 24 (Bloomberg) -- Outokumpu Oyj, the Finnish maker of stainless steel, fell the most in 10 months in Helsinki trading after scaling back forecasts that profit will improve.
The stock declined as much as 11 percent, the biggest intraday slump since Sept. 24. The Espoo-based company today said underlying earnings before interest and taxes would weaken in the third quarter from the three months ended June, after earlier this year predicting an improvement in the second half.
Outokumpu completed a 2.7 billion-euro ($3.6 billion) purchase of ThyssenKrupp AG’s Inoxum stainless-steel unit in December. Waning demand from Europe’s automakers and construction companies has eroded margins, and Outokumpu said in April it plans to cut as many as 2,500 jobs by 2017.
“We are only six months into operations of new Outokumpu and the headwinds of the market are not making it easier to execute the transformation of the company,” Chief Executive Officer Mika Seitovirta said in a statement. “Our ongoing strategic restructuring and growth initiatives will bear fruit in the coming 18 months.”
Outokumpu today said the second-quarter net loss widened to 249 million euros from 122 million euros a year earlier, before the Inoxum deal. The loss was almost double the 128 million-euro estimate of six analysts in a Bloomberg survey.
Profitability prospects have been weakened by a low nickel price, weak demand -- especially because of Europe’s economic crisis -- and a lackluster performance in the Americas, the company said.
The metals producer has said it is seeking 300 million euros in annual savings from its cost-cutting programs and synergies by the end of next year. It named Reinhard Florey chief financial officer starting Nov. 1.
Outokumpu will continue talks with “several interested parties” on selling its steel mill in Terni, Italy, it said today. It expects to complete the divestment, required by the European Commission as a condition for approving the Inoxum transaction, during the second half of the year.
It has started cost-cutting and capital management programs at Terni, each of which it values at 70 million euros, the company said today.
The shares dropped 8.4 percent to 49.3 euro cents by 12:49 p.m. in Helsinki trading. Volume was more than 5 million shares, exceeding the three-month daily average.
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