Outokumpu to cut German jobs as weak steel markets hit earnings
Reuters
Published Nov 07, 2023 07:41
Updated Nov 07, 2023 13:46
By Jagoda Darlak and Anne Kauranen
HELSINKI (Reuters) -Finnish stainless steelmaker Outokumpu said on Tuesday it would cut around 200 of its 1,900 jobs in Germany as it reported an 83% fall in third-quarter core profit.
Weak European steel markets and low prices have been weighing on the profits of steelmakers for the past year, after hitting record levels in 2021 and 2022.
Sweden's SSAB in October posted a 34% drop in quarterly operating income, while Spain's Acerinox last week said its net income dropped by half in the third quarter.
Outokumpu, which produces stainless steel from recycled scrap, said it would restructure its German operations by centralising advanced materials production from Dahlerbruck to its Dillenburg plant by the end of 2024.
Shares in Outokumpu, which also plans to close a coil service centre in Hockenheim by the end of the second quarter, were down 5.4% at 1300 GMT.
"The fact that the German economy is not doing well at the moment has had an impact," Outokumpu's Chief Financial Officer Pia Aaltonen-Forsell told Reuters.
The planned measures would result in annual savings of about 15 million euros and were expected to be completed in 2024 at the earliest, Outokumpu said.
Europe's sluggish growth has led it to eye investment opportunities in the U.S., where it is planning to expand production with a new hot rolling mill in Calvert, Alabama.
It is awaiting an air permit from local authorities to finalise its investment decision, Aaltonen-Forsell said, adding that this could come in November.
Outokumpu's adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 83% to 51 million euros ($54.55 million) in the July-September period, below a 86.6 million forecast in a company-provided poll of analysts.
CEO Heikki Malinen said in a statement that the negative trend seemed to have bottomed out and Outokumpu had seen some positive signals, although a market recovery would take time.
The group forecast fourth-quarter adjusted EBITDA at a similar or higher level than in the third.
($1 = 0.9348 euros)
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Written By: Reuters
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