July 24, 2018 / 11:47 AM / 3 months ago

Outokumpu meets profit forecasts, posts record high deliveries

HELSINKI (Reuters) - Finland’s Outokumpu (OUT1V.HE) on Tuesday reported record high second-quarter stainless steel deliveries while meeting profit forecasts, sending its shares sharply higher.

Its adjusted earnings before interest, taxes, depreciation and amortization of 136 million euros ($159 million), though down 32 percent, was in line with market expectations.

It attributed the fall to lower prices in Europe and higher costs in the United States.

However, its record-high stainless deliveries encouraged investors and shares in the company were up 6 percent by 1132 GMT.

The stock is down 30 percent this year.

“Europe was able to maintain its good performance in a challenging market environment with unprecedented price pressure,” CEO Roeland Baan said in a statement.

The impact of the U.S. tariffs implemented in May have been two-fold for Outokumpu, he said.

“On the downside, we have witnessed surging imports in Europe resulting in heavy price pressure while in the Americas, base prices have risen throughout the spring benefiting local manufacturers including us.”

Baan added that higher costs in the United States as well as lower ferrochrome prices also had a negative effect on quarterly profit.

The company has had trouble ramping up its new mill in Calvert, Alabama. The Americas unit made a core profit of 10 million euros in the second quarter, compared to a loss of 6 million in previous quarter.

“Operatively, Q2 figures were largely in line with expectations, but Americas remains a concern. Considering the market environment, the unit’s ability to generate profits is weak,” research firm Inderes, with a “reduce” rating on the stock, said on its Twitter account.

Outokumpu’s largest competitors include China’s Tsingshan and TISCO, Spain’s Acerinox (ACX.MC) and Luxembourg-based Aperam (APAM.AS).

Reporting by Jussi Rosendahl; editing by Jason Neely

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