By Jagoda Darlak

(Reuters) -Finnish stainless steel maker Outokumpu expects global uncertainties related to U.S. tariffs to impact its operating environment in the second quarter, after its core earnings met market expectations in the first.

European steelmakers, already struggling with weak demand, costs and competition from cheaper Chinese imports, now face the additional challenge of recently increased tariffs on their exports to the United States.

"Geopolitics and other significant uncertainties related to tariffs, might impact the global economy and consequently, Outokumpu's operating environment, deliveries, metal prices, and foreign exchange rates," the company said in a press release.

Its adjusted profit before interest, taxes, depreciation and amortisation (EBITDA) was 49 million euros ($55.4 million) in the January-March quarter, while analysts had expected 48.9 million euros on average.

"Throughout the quarter, stainless steel demand remained muted, and tariffs caused further uncertainty," CEO Kati ter Horst said in the statement.

Outokumpu's stainless steel deliveries rose 11.4% quarter-on-quarter, despite being impacted by a strike in Finland. They are expected to be at least level or grow by up to 10% in the second quarter.

The one-week strike resulted in a negative adjusted EBITDA impact of about 15 million euros, the group said, confirming its earlier estimate.

Core earnings in the Americas region, where Outokumpu generated nearly a third of its sales last year, grew 22% from the prior quarter, while in Europe they turned to a profit of 6 million euros from a loss in the last three months of 2024.

However, the "wait and see" mode prevailed in its key European market despite an uptick in order intake at the beginning of the year, Outokumpu said.

In the United States, where Outokumpu is the second largest stainless steel producer, economic outlook is uncertain with low consumer confidence and higher inflation expectations, it said.

Outokumpu forecast second-quarter adjusted EBITDA "at a similar or higher level" than in the first.

During the quarter, the group also achieved 11 million euros of its targeted 50 million euros of short-term cost savings for the full year, it said.

($1 = 0.8845 euros)

(Reporting by Jagoda Darlak in Gdansk; editing by Milla Nissi-Prussak)