Outokumpu financial statements release 2021: 2021 adjusted EBITDA reached over EUR 1 billion, while net debt decreased to EUR 408 million

Outokumpu Oyj
Financial statements release
February 8, 2022 at 9.00 am EET

Outokumpu financial statements release 2021: 2021 adjusted EBITDA reached over EUR 1 billion, while net debt decreased to EUR 408 million

Highlights in Q4 2021                      

• Stainless steel deliveries were 586,000 tonnes (523,000 tonnes)¹.
• Adjusted EBITDA increased to EUR 326 million (EUR 78 million).
• EBITDA was EUR 314 million (EUR 30 million).
• Operating cash flow amounted to EUR 384 million (EUR 112 million).
• Net debt decreased to EUR 408 million (September 30, 2021: EUR 749 million).
• Gearing decreased to 13.1% (September 30, 2021: 24.6%).

Highlights in 2021

• Stainless steel deliveries were 2,395,000 tonnes (2,121,000 tonnes).
• Adjusted EBITDA amounted to EUR 1,021 million (EUR 250 million).
• EBITDA was EUR 1,009 million (EUR 191 million).
• Operating cash flow amounted to EUR 597 million (EUR 322 million).
• Net result was EUR 553 million (EUR -116 million).
• The Board of Directors proposes that a dividend of EUR 0.15 per share will be paid for year 2021.

¹⁾ Figures in parentheses refer to the corresponding period for 2020, unless otherwise stated.

Q4 2021 compared to Q4 2020

Outokumpu's fourth-quarter sales increased to EUR 2,215 million in 2021 (EUR 1,350 million). Adjusted EBITDA amounted to EUR 326 million (EUR 78 million), while total stainless steel deliveries grew by 12% compared to the reference period. Realized prices for stainless steel were at a higher level in both Europe and Americas, and the ferrochrome sales price increased from the previous year. However, profitability was impacted by significantly increased energy and consumable prices as well as higher fixed costs. In the fourth quarter of 2021, raw material-related inventory and metal derivative gains amounted to EUR 6 million (gains of EUR 15 million) and adjustment items in EBITDA EUR -12 million (EUR -48 million). Other operations and intra-group items' adjusted EBITDA amounted to EUR -18 million (EUR -10 million) due to higher intra-group inventory eliminations.

Q4 2021 compared to Q3 2021

Outokumpu's sales increased to EUR 2,215 million in the fourth quarter (Q3/2021: EUR 1,949 million) and adjusted EBITDA reached EUR 326 million (Q3/2021: EUR 295 million). Total stainless steel deliveries grew by 2% and remained at a similar level compared to the third quarter, while the product mix improved. Realized prices for stainless steel continued to increase in both Europe and Americas, and the ferrochrome sales price was also at a higher level. The positive impact from higher prices on profitability was partly offset by significantly increased energy and consumables prices and higher fixed costs. In the fourth quarter, raw material-related inventory and metal derivative gains amounted to EUR 6 million (Q3/2021: gains of EUR 22 million) and adjustment items in EBITDA EUR -12 million (Q3/2021: none). Other operations and intra-group items' adjusted EBITDA totaled EUR -18 million (Q3/2021: EUR -10 million).

2021 compared to 2020

Outokumpu's sales grew by 37% compared to the previous year and amounted to EUR 7,709 million in 2021 (EUR 5,639 million). In the exceptionally strong market environment, adjusted EBITDA reached EUR 1,021 million (EUR 250 million). Total stainless steel deliveries grew by 13% and profitability was supported by higher realized prices for stainless steel in Europe and Americas, and a higher ferrochrome sales price. Fixed and variable costs increased from the previous year and profitability was especially impacted by significantly higher energy and consumable prices. In 2021, raw material-related inventory and metal derivative gains increased to EUR 76 million (losses of EUR 16 million), mainly due to positive timing impacts. Adjustment items in EBITDA totaled EUR -12 million (EUR -59 million). Other operations and intra-group items' adjusted EBITDA amounted to EUR -55 million (EUR -29 million).

EBITDA amounted to EUR 1,009 million in 2021 (EUR 191 million) and EBIT increased to EUR 705 million (EUR -55 million). Adjustment items in EBIT totaled EUR -54 million (EUR -59 million), and included a gain from property sales in Germany, an increase in litigation provisions and environmental provision related to closed mines in Finland as well as single asset impairments. In 2021, net result increased to EUR 553 million (EUR -116 million).

Group key figures		Q4/21	Q4/20	Q3/21	2021	2020
Sales	EUR million	2,215	1,350	1,949	7,709	5,639
EBITDA	EUR million	314	30	295	1,009	191
Adjusted EBITDA 1)	EUR million	326	78	295	1,021	250
EBIT	EUR million	191	-33	234	705	-55
Adjusted EBIT 1)	EUR million	245	15	234	758	4
Result before taxes	EUR million	178	-57	217	640	-151
Net result for the period	EUR million	159	-39	182	553	-116
Earnings per share 2)	EUR	0.35	-0.09	0.40	1.26	-0.28
Diluted earnings per share 2)	EUR	0.33	-0.09	0.37	1.17	-0.28
Return on capital employed	%	18.8	-1.4	12.9	18.8	-1.4
Net cash generated from operating activities	EUR million	384	112	180	597	322
Net debt at the end of period	EUR million	408	1,028	749	408	1,028
Debt-to-equity ratio at the end of period	%	13.1	43.6	24.6	13.1	43.6
Capital expenditure	EUR million	59	35	32	175	180
Stainless steel deliveries	1,000 tonnes	586	523	575	2,395	2,121
Personnel at the end of period, full-time equivalent 3)		9,096	9,602	9,137	9,096	9,602

¹⁾ Adjusted EBITDA or EBIT = EBITDA or EBIT - Items classified as adjustments.
²⁾ Calculated based on the share-issue-adjusted weighted average number of shares. Comparative information is presented accordingly.
³⁾ In Q1/2021, Outokumpu changed its main personnel amount measure from headcount to full-time equivalent personnel. Comparative information is presented accordingly.              
 

President & CEO Heikki Malinen

The year 2021 was a great success for Outokumpu. In an exceptionally strong market environment, we delivered our best annual financial results in recent history. I am very pleased that Outokumpu's adjusted EBITDA exceeded the remarkable EUR 1.0 billion milestone and amounted to EUR 1,021 million, while net debt decreased to EUR 408 million. Our strong earnings per share was also a highlight of the past year.

I am proud to say that in 2021 we had the strongest safety performance on record. Our annual total recordable injury frequency rate improved to 2.0. I want to thank all our employees for their continuous efforts.

During 2021, our focus has been on our strategic aim of de-risking. As a result of the various actions taken throughout the year, we have reduced our net debt to EBITDA ratio to 0.4. Also, credit rating agency Moody's recognized our good development and upgraded Outokumpu's credit rating twice last year. In November, we increased our EBITDA run-rate improvement target to EUR 250 million and have now reached a cumulative impact of EUR 198 million. De-risking also continues through the first phase of the strategy until the end of 2022.

In the fourth quarter, we increased our adjusted EBITDA to EUR 326 million, while deliveries remained at a similar level compared to the previous quarter. Throughout the year, our mills have been running at full capacity, and we increased our annual deliveries by 13% compared to the previous year. All business areas provided solid results in 2021 and development in realized stainless steel prices has been favorable. We have had logistical challenges throughout the year as the global supply chains have been under pressure. Our teams have worked very hard to overcome the difficult situation.

In 2021, business area Europe's adjusted EBITDA reached EUR 485 million and deliveries increased by 7% compared to the previous year. In the exceptionally strong market, business area Americas' adjusted EBITDA rose to its highest level ever, EUR 297 million, and deliveries increased by 26%. Also, business area Ferrochrome increased its adjusted EBITDA to EUR 246 million.

Sustainability has been our key focus area in 2021. We are committed to the United Nations' Guiding Principles on Business and Human Rights. In particular, we have invested time and resources to better understand and manage our supply chain. We are assessing our raw material suppliers, starting with Brazil and followed by Guatemala, where the work continues. The results so far demonstrate the importance of this ongoing work. In 2022, we aim to conduct several supplier assessments in high-risk countries.

Outokumpu's updated and more ambitious climate targets have been approved by the Science Based Targets initiative (SBTi). Our targets are now aligned with keeping global warming below 1.5° degrees. Outokumpu is currently the only stainless steel producer to have its ambitious climate targets approved by the SBTi. We are firmly progressing on our path towards our vision of being the customer's first choice in sustainable stainless steel.

Following Outokumpu's strong financial performance and strengthened financial position, Board of Directors has today proposed a dividend of EUR 0.15 per share for year 2021.

Outlook for Q1 2022

Group stainless steel deliveries in the first quarter are expected to increase compared to the fourth quarter.

The European ferrochrome benchmark price remained stable at USD 1.80/lb for the first quarter.

Higher stainless steel prices are reflected in the already received orders and more than offset the increase in energy and consumable prices.

COVID-19 remains a risk and could potentially impact operations and logistics.

Adjusted EBITDA in the first quarter of 2022 is expected to be on a similar or higher level compared to the fourth quarter.

Webcast today on February 8, 2022 at 3.00 pm EET

A combined live webcast/conference call for investors, analysts and media will be arranged online on the same day at 3.00 pm EET at https://outokumpu.videosync.fi/2022-02-08-q4, hosted by President and CEO Heikki Malinen and CFO Pia Aaltonen-Forsell.

To participate via conference call and to ask questions, please dial in the call 5-10 minutes before the beginning of the event:

Finland: [phone]
United Kingdom: [phone]
United States: [phone]
PIN: 46423952#

The webcast materials, a link to the event, and later the recording of the event are all available at www.outokumpu.com/en/investors.

For more information: 

Investors: Linda Häkkilä, Head of Investor Relations, tel. [phone]

Media: Päivi Allenius, VP - Communications, tel. [phone]

Outokumpu is the global leader in stainless steel. The foundation of our business is our ability to tailor stainless steel into any form and for almost any purpose. Stainless steel is sustainable, durable and designed to last forever. Our customers use it to create civilization's basic structures and its most famous landmarks as well as products for households and various industries. Outokumpu employs some 9,000 professionals in more than 30 countries, with headquarters in Helsinki, Finland and shares listed in Nasdaq Helsinki. www.outokumpu.com

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