Outokumpu has started employee and union consultations as part of its fixed cost reduction program.

The fixed cost reduction program was announced on September 26, 2005 with the target to reduce the Group’s fixed costs by 10% in the Group’s stainless business unit, its Corporate Management and its Group functions. The Group-level reduction target is some EUR 100 million annually, and the plan is for reduced fixed-cost running rates to be in place during the second half of 2006, with full effect achieved in 2007.

The business units, Corporate Management and Group functions have now submitted their plans. Final approval of each individual plan will be made only after the appropriate local employee and union consultation processes have been completed. The duration of the employee and union consultation processes on the fixed cost reduction program vary from country to country. The required consultation processes are now starting. In Finland and Sweden they are estimated to be completed by year-end 2005.

Plans submitted by the units confirm that the overall 10% reduction target of fixed costs is achievable. More than half of the reduction is coming from other than personnel costs. The proposed reduction in the Group’s personnel, which will be discussed in the consultation processes, is some 700 employees in total. The proposed effect in Finland is some 300, in Sweden some 300 and in other countries some 100.

The amount of provisions to be booked for the redundancies from the fixed cost reduction program will be defined as the consultation process evolves, and will be booked in the fourth quarter 2005 results.

CEO Juha Rantanen says: "It is regrettable that we have to take these drastic actions, but they are necessary so that we can ensure that Outokumpu is financially robust even in current difficult market conditions. The goal is to maintain our financial flexibility to be able to capture growth and development opportunities in the years to come."