May 6, 2020 / 6:27 AM / 24 days ago

Outokumpu first-quarter profit up on cost cuts, Americas turnaround

FILE PHOTO: Outokumpu logo is seen at the company's head office in Helsinki, Finland May 22, 2018. REUTERS/Jussi Rosendahl

HELSINKI (Reuters) - Finland’s Outokumpu (OUT1V.HE) warned of weakening recent demand after it almost doubled its first-quarter core operating profit as the stainless steel maker cut costs and saw a turnaround in its Americas business.

Adjusted earnings before interest, taxation, depreciation and amortisation rose to 106 million euros ($115 million) from 54 million, meeting analysts’ expectations, Refinitiv Eikon data showed.

Its business in the Americas posted an underlying profit of 20 million euros versus a loss of 18 million a year earlier boosted by lower input costs and better management of raw material inventories.

However, the company forecast a fall in second-quarter stainless steel deliveries of 10-20% versus the first quarter.

“Weakening customer demand started to become apparent in April with some customers delaying deliveries and order intake trending down,” CEO Roeland Baan said in a statement.

The coronavirus pandemic has battered the steel sector as industrial users shut plants.

In response, Outokumpu said it would cut costs, tightly manage inventory, and reduce its net working capital by 100 million euros and its capital expenditure by 40 million euros this year.

It also expects to book 40 million euros from divestments.

Reporting by Tarmo Virki; additional reporting by Anne Kauranen; editing by Louise Heavens and Jason Neely

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