(Recasts with Terni sale, adds details on reactor project)
By Ritsuko Ando
HELSINKI Nov 1 Finnish stainless steel maker
Outokumpu reported bigger than expected losses on
Friday and said it will have to sell its Terni plant in Italy
after failing to persuade European regulators otherwise.
Outokumpu had agreed to sell Terni to get regulatory
approval to buy ThyssenKrupp's unit Inoxum but
analysts say a subsequent slump in global steel demand means a
sale may well yield a fraction of Terni's original value.
Outokumpu now faces a massive writedown on the plant and
said on Friday it hopes to complete the sale this year.
Third-quarter underlying operating losses widened to 126
million euros ($171 million) from 93 million a year earlier and
below the average forecast for 114 million in a Reuters poll.
Its shares briefly rose nearly 7 percent as investors
welcomed positive quarterly cash flow of 124 million euros ($169
million) compared with a negative 160 million in the previous
quarter, but lost momentum as a close look showed the
improvement was mainly driven by a release of working capital.
They were trading down 1 percent at 0.41 euros by 1437 GMT.
"Overall, it's a clear disappointment. I must cut my
estimates for the company," said analyst Antti Viljakainen at
Inderes equity research. He said he was likely to maintain a
"reduce" recommendation on the shares.
In an attempt to improve its finances, Outokumpu has also
been in talks to sell its high-performance alloy unit VDM. It
said it was in discussions with several potential buyers and
expects to finalise plans by the end of the year.
It declined to comment on the level of bids, although
sources have said they were likely to come in at around half of
Outokumpu's initial price expectation of about 1 billion euros.
For the fourth quarter, Outokumpu forecast underlying
operating results to be around the same level or slightly worse
than in the third quarter. It said it expects no major
improvement in market demand for the rest of the year.
Steel prices have fallen 24 percent since March 2011.
Despite the gloomy forecast, however, it said it was still
planning to take part in nuclear consortium Fennovoima's nuclear
reactor project, settling speculation it may pull out due to a
weak business outlook.
Outokumpu has a 15-percent stake in the project for a
1,200-megawatt reactor, scheduled to be built by Rosatom, and
said it would make a final decision on the matter after details
are negotiated and agreed upon with the Russian firm.
($1 = 0.7356 euros)
(Editing by Louise Ireland)