Outokumpu announces new strategy and financial targets with focus on strengthening the balance sheet

Outokumpu announces new strategy and financial targets with focus on strengthening the balance sheet

Outokumpu announces today its new long-term strategy, financial targets for 2022 and key measures to competitively position itself for the future by strengthening its balance sheet in the shorter term and by de-risking the company for strong returns in the long run.

Says CEO Heikki Malinen: “Outokumpu’s new strategy is built on clear timebound initiatives and targets. The implementation of the strategy calls for diligent, decisive execution and continuous controlling of impact. During the past years, Outokumpu has made great progress with efficiency and productivity improvements, but due to the ongoing global market uncertainty, the impacts of COVID-19 pandemic and market disruption from Asian imports, further measures are needed to improve the company’s overall performance, cost structure, operational efficiency and customer engagement. Our new strategy addresses all these topics to increase the value for all our stakeholders: customers, employees and shareholders. Ultimately our vision is to be customer’s first choice in sustainable stainless steel.”

Strategic initiatives focus on de-risking the company for strong returns through deleveraging the balance sheet and improving efficiency

The new strategy includes three phases with each phase requiring strong and diligent execution and focus, creating the foundation for the next phase. Deleveraging the balance sheet will continue throughout all three phases.

In the first phase of the strategy, during 2021-2022, Outokumpu will prioritize de-risking the company through margin improvement, cash flow management and deleveraging the balance sheet. The new financial targets, EUR 200 million EBITDA run-rate improvement and net debt to EBITDA of below 3.0x by the end of 2022, are fully based on self-help improvement actions.

To reach these targets, the strategy is centered on strict cost and capital discipline, strong customer engagement and a lean, delayered organization. As part of the strategy, Outokumpu will increase raw material efficiency and operational cost savings while limiting annual capital expenditure to EUR 180 million in 2021 and 2022 through maintenance optimization and strict asset management. As announced earlier today, Outokumpu is also starting employee negotiation processes in selected operating countries with the plan to create cost savings by restructuring and reducing total employee headcount by up to approximately 1,000 (10% of the Group total) mostly by the end of 2021. Long products business is undergoing an accelerated turnaround to develop the business internally.

In Outokumpu’s core businesses stainless steel and ferrochrome, the strategic focus will be on increased market penetration, enhancing the product mix, growing in selected segments and leveraging the company’s leadership in specialty grades.

Efficient strategy execution is ensured through a new steering model with concrete initiatives and plans for each business area to deliver impact. The new leadership team appointed as of October 1, 2020, is set up to drive the change supported by the new company steering model and CFO-led Transformation Office. Progress will be reported externally on a quarterly basis starting with reporting on Q1/2021.

The following two phases of the strategy will focus on targeted investments in productivity, sustainability and value-adding growth, and the targets will be communicated at a later stage.

Says CEO Heikki Malinen: “There is great value in the company, and we will unlock it with a clear strategy and determined implementation. Outokumpu has a solid foundation and is the industry leader in sustainability as well as in specialty grades. Our customers see us as their preferred partner. We have an experienced team and world-class, stable operations with a strong culture for continuous improvement. Outokumpu’s leadership is fully committed to the strategy.”

Webcast and conference call today at 3.00 pm EET (2.00 pm CET)

Outokumpu will arrange a webcast and conference call for analysts and investors today at 3.00 pm EET (8.00 am US EST, 1.00 pm UK, 2.00 pm CET) to discuss the Q3/2020 results and the new strategy. The call will be hosted by CEO Heikki Malinen and CFO Pia Aaltonen-Forsell. The Q3 results webcast and call will start at 3.00 pm EET and continue at approximately 4.00 pm EET with the strategy presentation, leadership interview and a Q&A.

Please follow the live event at https://outokumpu.videosync.fi/2020-q3-results.

To participate via a conference call, please dial in 10−15 minutes before the beginning of the event:

Finland: +358 9 817 103 10
Sweden: +46 856 642 651
UK / International +44 333 300 0804
USA: +1 631 913 1422
Confirmation code: 58057600#

The stock exchange release and the presentation material will be available before the event at www.outokumpu.com/en/investors.

A recording of the event will be available at www.outokumpu.com/webcasts at the latest on Monday, November 9, 2020.

For more information:

Investors: Linda Häkkilä, Manager, Investor Relations, tel. +358 40 071 9669

Media: Corporate Communications, tel. +358 9 421 3840

Outokumpu Oyj