Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Outokumpu Oyj (OUTFF, Financial) reported a significant improvement in profitability with an adjusted EBITDA of EUR56 million for Q2 2024, recovering from a challenging Q1.
- The company successfully procured all necessary scrap materials at competitive prices, leveraging its large scale as a buyer.
- Outokumpu Oyj (OUTFF) maintained a strong liquidity position despite a EUR110 million dividend payment, showcasing robust financial management.
- The company achieved an all-time high recycled materials content of 95%, reinforcing its leadership in sustainability.
- Outokumpu Oyj (OUTFF) has the strongest balance sheet in the industry, providing a solid foundation for future growth and shareholder returns.
Negative Points
- Operational challenges in the Americas, particularly at the Calvert facility, negatively impacted performance, though measures are being taken to address these issues.
- The US market showed signs of softening towards the end of Q2, affecting overall market stability.
- A political strike in Finland had a significant financial impact, costing the company EUR60 million, with EUR30 million affecting Q2 results.
- The Chinese market remains weak, with no material improvement in pricing, posing a challenge for global market dynamics.
- The company faces ongoing inflationary pressures and geopolitical uncertainties, which could impact future profitability and market conditions.
Q & A Highlights
Q: Are you planning to ramp up your third furnace during September this year, and do you think there's enough demand for your full capacity in the latter half of this year?
A: We have customers already asking for 2026 delivery, indicating a solid demand trend for our ferrochrome and low-carbon products. However, there's uncertainty as many customers are on vacation, and we need to wait until September to assess the demand for the second half of the year.
Q: What was burdening ferrochrome profitability in Q2, and should we expect this to continue in coming quarters?
A: We faced temporary operational challenges and strike-related impacts in our ferrochrome setup, which affected profitability. These issues are temporary and not expected to continue into the third quarter.
Q: What was the impact of the maintenance break related to operational challenges in BA Americas, and will this affect Q3 numbers?
A: The impact in Q2 was around EUR10 million. Some temporary issues may continue into Q3, but we are working hard to resolve them.
Q: Given the various positive factors, why is the guidance for Q3 EBITDA only stable or slightly higher than Q2?
A: While there are improvements expected from the strike impact and operational challenges, we are cautious due to a softening market environment in the US and prefer to be conservative until we have more data post-vacation period.
Q: Can you provide more color on the US versus Mexico market dynamics and potential for sending material from Mexico to the US?
A: The US market has shown some demand issues, while Mexico remains stable but faces import pressure. We have limited material flow from Mexico to the US, and the situation in Mexico does not currently impact our US business significantly.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
