Outokumpu Drops in Helsinki After Quarterly Losses Almost Triple
Outokumpu Oyj, the Finnish steelmaker that agreed to buy ThyssenKrupp AG’s Inoxum unit last year, fell the most in four months in Helsinki trading after fourth-quarter losses almost tripled.
Outokumpu slid as much as 6.7 percent, the biggest decline since Oct. 1 and the most among Finnish benchmark stocks. It was down 3.6 percent at 71.8 euro cents as of 4:05 p.m. local time.
“It’s clear that our balance sheet is not as strong as we’d like it to be,” Chief Executive Officer Mika Seitovirta said today at a briefing in the Finnish capital. “We can’t avoid further headcount reduction.”
Outokumpu has cut 1,275 jobs since the second quarter of 2011. Today it said its net loss widened to 309 million euros ($412 million) last quarter from 116 million euros a year earlier and forecast weaker operating results this quarter.
Diminishing demand for steel from the auto and construction industries in Europe, as well as more Chinese competition, have weighed on prices and narrowed producers’ profit margins as they suffer from a capacity glut. ThyssenKrupp, Germany’s biggest steelmaker, reported a 38 percent slump in profit this week.
Outokumpu announced two new cost-cutting programs on the heels of previous programs completed in 2012. The Espoo-based company is seeking to reduce annual expenses by 150 million euros and curtail net working capital by 300 million euros before the end of 2014, it said today.
Chief Financial Officer Esa Lager will step down at the end of the year, the company said. It proposed Jorma Ollila, former Nokia Oyj CEO and chairman of Royal Dutch Shell Plc, as chairman of the board.
Outokumpu agreed a year ago to buy Inoxum in a deal valuing the German business at about 2.7 billion euros. It subsequently offered to sell Inoxum’s Italian stainless-steel plant at Terni and several European service centers to win approval.
Negotiations on the Terni mill are under way and the company expects to sign off on the necessary divestments by May, Seitovirta said today. Outokumpu expects the Inoxum purchase to result in cost savings of 50 million euros this year and 150 million euros in 2014.
Outokumpu’s performance will pick up in the second half as production accelerates at a steel mill in Calvert, Alabama, Seitovirta said.
About 8.9 million shares have traded so far today, almost 70 percent above the three-month daily average.
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