Outlook for Q1 2025
Group stainless steel deliveries in the first quarter are expected to increase by 10–20% compared to the fourth quarter (including the impact of a one week's strike), while pressure on realized stainless steel prices is expected to continue during the first quarter.
Maintenance costs are forecasted to decrease by approximately EUR 10 million in the first quarter compared to the fourth quarter.
The one-week strike in Finland in January is expected to have an approximately EUR -15 million impact on adjusted EBITDA in the first quarter.
The risk of further strikes causes uncertainty for Outokumpu's earnings development in the first quarter. The impact of each additional week of strike is expected to be approximately EUR -15 million on adjusted EBITDA.
With the current raw material prices, some raw material-related inventory and metal derivative losses are forecasted to be realized in the first quarter.
Guidance for Q1 2025
Adjusted EBITDA in the first quarter of 2025 is expected to be higher compared to the fourth quarter. This guidance includes the impact of the one-week strike.
Short-term risks and uncertainties
Outokumpu is exposed to various risks and uncertainties that may have an adverse impact on its business and operations. However, the company has taken prompt measures to manage and control these risks.
The development of the global economy, geopolitical tensions, trade policies and the continued war in Ukraine all expose Outokumpu to risks and uncertainties within its operating environment. The main uncertainties in the global economy relate to the development of the trade defense measures, slow global economic growth, inflation, high interest rates, and continued uncertainties concerning China’s economy. Possible further escalation of geopolitical tensions and conflicts, especially in the Middle East, could increase disruptions in the global supply chains. The consequences of these disruptions could impact Outokumpu's operating environment, business, and stainless steel demand.
Outokumpu is exposed to continued high energy price risk sensitivity owing to adverse geopolitical events. Any severe disruption or events in the natural gas supply could affect the price or availability of Outokumpu’s operations in Europe.
For the year 2025, Outokumpu’s energy portfolio has been hedged for two thirds of the estimated consumption. Possible increases in the cost of electricity would mainly affect the Ferrochrome business area due to the high electricity consumption in ferrochrome production. The activities implemented in relation to electricity optimization enable the mitigation of peaks in spot market electricity prices.
Cyber security threats, trade disruptions with raw materials and dependencies on critical suppliers and machinery expose Outokumpu to the risk of operational disruption and additional costs.
Outokumpu does not purchase any scrap or nickel of Russian origin for its operations. At the end of 2024, the remaining indirect supply from Russia for a very limited amount of raw material was terminated.
The company remains exposed to risks related to volatile metal prices, especially nickel. Volatile metal prices may impact Outokumpu’s result, among other financial risks.
The outcome of the U.S. presidential elections has increased the likelihood of further trade defense measures, influencing possibly the global trade flows. In June 2024, the EU decided to extend the safeguard measures by two years until June 2026. The purpose of these measures is to mitigate the surge of imports. In May 2024, as a result of the anti-circumvention investigation on cold-rolled stainless steel from Indonesia, the EU imposed duties on some producers in Taiwan, Turkey, and Vietnam. In December 2024, the EU initiated a review of the safeguard measures, with the purpose of improving the functioning of the measures with some adjustments. This review will be completed by the end of March and possible changes imposed from 1 April 2025 onwards.
Outokumpu Corporation was joined in arbitration proceedings in 2023 over a dispute between Fennovoima Oy and Rosatom entities related to the termination of an EPC (Engineering, Procurement and Construction) contract for a nuclear power plant. Outokumpu disputes the existence of any liability grounds pertaining to the above matter, including the existence of any contractual relationship, obligation, or arbitration agreement between Outokumpu and any Rosatom entity. Outokumpu has not made a provision in this matter.
On July 16, 2018, a class of plaintiffs, eventually consisting of 278 former and current Outokumpu Calvert mill employees, brought a suit against Outokumpu Stainless USA, LLC in the U.S. federal district court. The plaintiffs alleged that Outokumpu failed to pay full wages for regular work and overtime work they performed. The district court entered a default judgment against Outokumpu in 2021 with respect to liability without Outokumpu having the opportunity to argue the merits of the allegations and subsequently found Outokumpu liable to the plaintiffs for approximately USD 13 million in the aggregate, plus attorney’s fees. Outokumpu appealed these decisions at the time. The Court of Appeals has on October 11, 2024 upheld the district court’s decisions. On November 1, 2024, Outokumpu filed a petition for a rehearing before the court of appeals which the court of appeals denied on December 6, 2024. The case has been returned to the district court for a final determination of the amount of Outokumpu’s liability. Outokumpu has a USD 18.9 million provision in respect of this matter.
For more information on Outokumpu’s risks, please refer to the Annual Report for 2023 and the Notes to the 2023 Financial Statements until the Annual Report for 2024 and the Notes to the 2024 Financial Statements are published during week 10.