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Weaker quarter for Outokumpu
Based on the first two months financial performance, Outokumpu's fourth quarter 2010 is expected to be weaker than indicated in the third quarter interim report. Fourth quarter underlying operational result is now expected to be clearly negative instead of around break-even.
Continued economic uncertainty and closeness of the year-end have increased hesitance among customers, which results in slightly lower than expected delivery volumes and softer base price development for the fourth quarter. Currently, prices have stabilised and there is potential to increase prices for deliveries in the first quarter 2011.
Additionally, Outokumpu's actions to reduce inventories have resulted in cost increases, which have had a negative impact on profitability. Currently, Outokumpu does not expect any material raw-material related timing gains or losses in the fourth quarter.
Outokumpu does not intend to re-start the postponed investments in Avesta, Sweden (e.g. the new annealing and pickling line) in the foreseeable future. The investments were originally decided in September 2007 and postponed in December 2008. Thus, Outokumpu will record a EUR 18 million write-down impacting the fourth-quarter operating profit as a non-recurring item.
Outokumpu's fourth-quarter financial income will benefit from a EUR 8.5 million non-recurring gain from the divestment of the shares in Okmetic Oyj in November.
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