OUTOKUMPU OYJANNUAL ACCOUNTS BULLETIN February 13, 2014at 9.00 am EETHighlights in the fourth quarter 2013 Note: In the following report Terniremedy assets, the VDM business and certain service centers are reported as discontinued operations. All commentary in this report thus refers to Outokumpu’s continuing operations. Please find more information in the Notes to the condensed financial statements in this release. Outokumpuposted a fourth-quarter underlying EBIT loss of EUR 90 millionand operating cash flow was positive at EUR 223 million. Good progress in synergies, cost saving and the ongoing ramp-ups of the Ferrochrome and Calvertoperations were partially offset by lower deliveries. -- Stainless steel deliveries declined by 2.4% and were 620,000 tonnes1 (III 2013: 635,000 tonnes). -- The underlying EBITDA was EUR -1 millioncompared to EUR -34 millionin the third quarter and the underlying EBIT was EUR -90 million(III 2013: EUR -118 million). The operational performance was in line with the third quarter due to somewhat positive price and mix effect while the delivery volumes were down. The result also includes a EUR 20 millionrefund of the renewable energy charge for continuing operations in Germanyand about EUR 5 millionin gains on the sale of non-core assets and positive impact from derivatives. -- Including non-recurring items of EUR -29 million(III 2013: EUR -1 million) and raw material-related inventory gains of EUR 1 million(III 2013: EUR -15 million), the EBIT was EUR -118 millionfor the fourth quarter of 2013 (III 2013: EUR -134 million). -- Operating cash flow was positive at EUR 223 million(III 2013: EUR 43 million), mainly driven by a strong release of working capital. -- Net interest-bearing debt2 decreased to EUR 3,556 million( September 30, 2013: EUR 3,861 million), and gearing rose to 188.0% ( September 30, 2013: 170.7%). -- Comprehensive actions to significantly strengthen Outokumpu’s financial position: the sale of the Terniremedy assets, the VDM business and certain service centers has been agreed with ThyssenKrupp in exchange for the EUR 1.3 billionloan note. Additionally extensive financial package, including renewing the debt portfolio and a proposed rights issue of approximately EUR 650 million. Highlights of 2013 -- During 2013, global stainless steel demand increased by 5.6% compared to 2012. In the Americasand APAC regions, consumption rose by 4.0% and 7.9% respectively. Consumption in EMEA remained weak. The European stainless steel base price declined by 2.8% and nickel price came down by 18.2% during the year. -- Stainless steel deliveries for the full year declined by 5.3% to 2,585,000 tonnes (2012: 2,723,000). -- Sales were EUR 6,745 million, down by 15% (2012: EUR 7,961 million). Underlying EBITDA was EUR -32 million(2012 EUR -66 million) and underlying EBIT amounted to EUR -377 million(2012: EUR -412 million). -- Including non-recurring items of EUR -78 million(2012: EUR -308 million) and raw material-related inventory effects of EUR -56 million(2012: EUR -33 million), the EBIT was EUR -510 million(2012: EUR -754 million). -- Operating cash flow was positive at EUR 34 million. 1) metric ton = 1,000 kg, 2) Net interest-bearing debt as per new definition announced in January 2014: Long-term debt and current debt less cash and cash equivalents. Note: This report contains comparisons to both Outokumpustand alone as well as comparable figures for the combined entity based on management estimates for 2012. Tables that are marked with ‘comparable’ show the combined entity comparisons for 2012. In the text itself, only comparable numbers will be stated and analyzed. No verbal analysis is done based on the official financial statements 2012 since it presents Outokumpustand alone and such analysis would not be meaningful. Terniremedy assets, the VDM business and certain service centers are reported as discontinued operations. Quarterly 2013 profit or loss figures including related key figures have been restated for this reason. All comparable 2012 figures as well as restated quarterly 2013 figures are unaudited. Group key figures, comparable IV/13 III/13 IV/12 2013 2012 -------------------------------------------------------------------------------- Sales EUR 1531 1 609 1 742 6 745 7 961 million EBITDA EUR -29-50 -131 -165 -267 million Adjustments to EBITDA 1) EUR 29 16 58 133 201 million Underlying EBITDA EUR -1-34 -73 -32 -66 million EBIT EUR -118-134 -313 -510 -754 million Adjustments to EBIT 2) EUR 29 16 144 133 342 million Underlying EBIT EUR -90-118 -169 -377 -412 million Result before taxes EUR -232-207 n/a -822 n/a million Net result for the period from EUR -260-197 n/a -832 n/a continuing operations million excluding non-recurring items EUR -181-196 n/a -706 n/a million Net result for the period EUR -364-238 n/a -1 003 n/a million Earnings per share EUR -0,17-0,11 n/a -0,48 n/a excluding non-recurring items EUR -0,14-0,11 n/a -0,42 n/a Return on capital employed % -9,9 -9,8 n/a -10,3 n/a excluding non-recurring items % -7,4 -9,8 n/a -8,7 n/a Net cash generated from EUR 22343 n/a 34 n/a operating activities, million continuing oper. Net interest-bearing debt at EUR 3556 3 861 n/a 3 556 n/a the end of period million Debt-to-equity ratio at the end % 188,0 170,7 n/a 188,0 n/a of period Capital expenditure, continuing EUR 4540 231 183 763 operations 3) million Stainless steel deliveries, 1,000 620 635 631 2 585 2 723 continuing operations 4) tonnes Stainless steel base price 5) EUR/ton 1 057 1 043 1 167 1 103 1 172 ne Personnel at the end of period, 12 561 12 798 14 073 12 561 14 073 continuing operations -------------------------------------------------------------------------------- 1) Non-recurring items, other than impairments; and inventory gains/losses, unaudited. 2) Non-recurring items and inventory gains/losses, unaudited. 3) Oct 1–Dec 31 ,2012 and Jan 1–Dec 31, 2012 excludes Inoxum acquisition of EUR 2,720 million. 4) Excludes ferrochrome deliveries. 5) Stainless steel: CRU - German base price (2 mm cold rolled 304 sheet). Raw material-related inventory gains or losses The realized timing gain or loss per tonne of stainless steel is estimated based on the difference between the purchase price and invoice price of each metal in EUR per tonne times the average metal content in stainless steel. The unrealized timing impact consists of the change in net realizable value - NRV during each quarter. If there is a significant negative change in metal prices during the quarter, inventories are written down to NRV at the end of the period to reflect lower expected transaction prices for stainless steel in the future. As this timing impact is expected to be realized in the cash flow of Outokumpuonly after the raw material has been sold, it is referred to as being unrealized at the time of the booking. Business and financial outlook for the first quarter of 2014 Outokumpuexpects modest improvement in the underlying market demand for the first quarter. The company estimates sequentially higher delivery volumes and some improvement in base prices. The progress in the cost efficiency initiatives and synergies is estimated to be steady. For the first quarter of 2014, Outokumpuestimates that the underlying EBIT will be better than in the fourth quarter, but still a loss. Operating cash flow is expected to be negative during the first quarter of 2014, driven by an increase in inventories related to anticipated higher deliveries. At current metal prices, marginal raw material-related timing gains are expected, if any. Outokumpu’s operating result in the first quarter 2014 could be impacted by non-recurring items associated with the Group’s ongoing restructuring programs. This outlook reflects the current scope of continuing operations of Outokumpu. CEO Mika Seitovirta: ”The year 2013 marked the beginning of the new Outokumpuafter the acquisition of Inoxum at the end of 2012. Through the acquisition we gained not only significant cost savings potential and a stronger market share in all the key markets, but also a truly global position with a more diverse and balanced customer base and the broadest range of products in the industry. However, our journey started in strong headwinds. The demand for stainless steel remained even weaker than expected, particularly in Europe. Nickel price declined by over 18% from beginning of 2013 till year end, which negatively affected our financial performance. Furthermore, we were burdened by the remedy requirement of the European Commissionthat dictated the divestiture of the stainless steel operations in Terni, Italyand additional European service centers. The Terniremedy requirement did not only tie our time and resources, but also significantly hampered the ramp-up of the Calvertstainless steel mill in Alabama, USA. Despite these obstacles, we took decisive action to restructure our business back to profitability and to strengthen our balance sheet. We made good progress with synergy and cost savings measures, and the combined savings for 2013 reached EUR 199 million. We were also able to release EUR 351 millioncash from our working capital during 2013 mostly due to inventory reductions. All in all, our losses got smaller last year but financial performance remained clearly unsatisfactory. During the fourth quarter, our sales developed slightly better than planned, especially in Europe. The ramp-up of the Calvertmill in the US progressed in line with expectations, and we were able to continue reducing the losses. End of November, we also announced comprehensive measures to strengthen our financial position: the divestment of the Terniremedy assets, the VDM business and certain service centers to ThyssenKrupp, the renewal of our debt portfolio and a planned rights issue of about EUR 650 millionto strengthen our financial position. This year has started with an expectation of a gradual economic improvement and this has also meant somewhat higher stainless steel demand compared to the slow fourth quarter of last year. The coming months will show whether this is driven by the typical industry seasonality or whether there is a more fundamental improvement under way. We have clear operational priorities for this year which include implementation of the savings programs, finalization of the Calvertramp-up and improvement in customer satisfaction through enhanced delivery reliability. I am confident that we will continue to make significant progress in all key areas to return Outokumputo sustainable profitability.” News conference and live webcast today at 1.00 pm EETA combined news conference, conference call and live webcast concerning the Annual Accounts 2013 will be held on Thursday, February 13, 2014at 1.00 pm EET( 6.00 amUS EST, 11.00 pm UKtime, 12.00 pm CET) at the hotel KÄmp, in the Mirror Room(2nd floor), Kluuvikatu 2, 00100 Helsinki, Finland. To participate via a conference call, please dial in 5-10 minutes before the beginning of the event: UK/Europe: +44 203 364 5374 US & Canada: +1 855 753 2230 Participant code: OutokumpuThe news conference can be viewed live via Internet. At the end of this release, please find a direct link to the webcast. The stock exchange release and the presentation material will be available before the news conference at www.outokumpu.com/Investors. An on-demand webcast of the news conference will be available as of February 13, 2014at around 4.00 pm EETat www.outokumpu.com/en/investors/webcasts/. Link to the webcast For more information: Investors: Johanna Henttonen, el. +358 9 421 3804, mob. +358 40 5300 778 Media: Saara Tahvanainen, mob. + 358 40 589 0223 Outokumpu Group Outokumpuis the global leader in stainless steel and high performance alloys. We create advanced materials that are efficient, long lasting and recyclable – thus building a world that lasts forever. Stainless steel, invented a century ago, is an ideal material to create lasting solutions in demanding applications from cutlery to bridges, energy and medical equipment: it is 100% recyclable, corrosion-resistant, maintenance-free, durable and hygienic. Outokumpuemploys more than 12 500 professionals in more than 40 countries, with headquarters in Espoo, Finlandand shares listed in the NASDAQ OMX Helsinki. www.outokumpu.com Copyright © 2014 OMX AB (publ).