Steelmaker Outokumpu's profit misses market view as Europe drags
Outokumpu's First-Quarter Financial Performance and Market Dynamics
By Jagoda Darlak
First-Quarter Results Overview
May 12 (Reuters) - Finland's Outokumpu reported a first-quarter core profit below market expectations on Tuesday, driven by weak profitability in its European business, though it said the stainless steel market dynamics had improved in the quarter.
The steelmaker's shares fell around 2% in early trading.
EBITDA Performance
Its adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 32% to 65 million euros ($76 million) in the January-March quarter, but missed analysts' forecast of 70 million euros in a Vara Research poll.
European Steel Market Context
Challenges Facing European Steelmakers
Long pressured by weak domestic demand, elevated energy costs and low-priced Asian imports, European steelmakers stand to gain from tighter EU protections such as a carbon levy on high-emission imports and a trade policy to halve import quotas, set to be implemented from July 1.
CEO Statement on Market Dynamics
"In the first quarter, stainless steel market dynamics improved, driven by seasonality and the Carbon Border Adjustment Mechanism (CBAM) impacts in Europe," CEO Kati ter Horst said in a statement.
Stainless Steel Deliveries and Outlook
Quarterly Deliveries and Expectations
Outokumpu's stainless steel deliveries rose by 27% quarter-on-quarter to 465,000 metric tons, and are expected to be at least flat or increase by up to 10% in the second quarter. Analysts had expected 457,100 tons for the first quarter.
Profitability in the European Business
While profitability in the European business, Outokumpu's largest, improved from the previous quarter's historically low levels thanks to higher delivery volumes, the region's adjusted EBITDA, a loss of 13 million euros, still ended well below analysts' expectations.
Impact of Supply Chain Issues
The result was negatively impacted by the backlog related to the implementation of a new supply chain solution, the company said.
Future Outlook
Outokumpu expects its adjusted EBITDA to be higher in the second quarter compared to the first.
($1 = 0.8502 euros)
(Reporting by Jagoda Darlak in Gdansk, editing by Milla Nissi-Prussak)
