Short Term Outlook
Demand for stainless steel is expected to grow slightly in the fourth quarter as a result of normal seasonality. No visible recovery among investment-driven end-use segments has taken place and distributor inventories are currently estimated to be below normal levels.

Outokumpu’s average base prices for stainless steel in the fourth quarter are expected to be approximately at the same level as in third quarter. Outokumpu’s fourth-quarter external delivery volumes (stainless and ferrochrome) are expected to be at the same level or slightly higher than in the third quarter.

Outokumpu’s underlying operational result is expected to be approximately at the same level as or slightly weaker than in the third-quarter. At current metal prices, no significant raw material related timing impact is expected. Outokumpu’s operating result in the fourth quarter could be impacted by non-recurring items associated with the Inoxum transaction and the Group’s on-going cost-cutting programmes.

Comments from CEO Mika Seitovirta
"Outokumpu’s third quarter developed in-line with our expectations with profitability remaining at unsatisfactory levels. The beginning of the quarter was seasonally slow but customer activity picked up in September. Seasonality and continued economic and nickel price weakness resulted in lower volumes and prices for the quarter. The oil and gas customer segment was one of the few customer segments in which we continued to see solid activity. Most other end-use segments were affected by the weak economy, especially in Europe.

"We continued to implement our on-going cost-cutting and working capital programmes to manage our financials in this challenging environment. We were very happy to see the fifth consecutive quarter of positive operational cash flow – € 83 million for the quarter – as well as continuing reductions in our fixed costs. We expect to see the full effect of the Group’s €100 million cost-savings programme from the beginning of 2013.

"We made good progress in the ferrochrome expansion project and we expect to be able to finalise the project ahead of schedule with €30 million lower capital expenditure than originally planned – a great achievement from the project team. We plan to start ramp-up of the new ferrochrome smelter in Tornio during the fourth quarter.

"In October we filed a binding remedy commitment in connection with the Inoxum transaction and we expect the European Commission to make its decision regarding the transaction by 16 November. We expect to be able to finalise the transaction by end of 2012. Despite the remedy, the strategic importance of the transaction remains unchanged and we expect to achieve annual synergy savings of approximately €200 million. I am very excited to start the implementation of the much-needed structural change and creating the new global leader in stainless steel," he concluded

Third Quarter 2012 Highlights

• Underlying operational result was €-57 million
• Operating loss was €89 million including raw material-related inventory losses of some €18 million and net non-recurring items totalling €-14 million
• Operating loss excluding non-recurring items was €75 million
• Positive operating cash flow of €83 million
• Total external deliveries at 325 000 tonnes
• Outokumpu maintained its membership in the World Dow Jones Sustainability Index (DJSI) for the sixth consecutive year
• Ferrochrome expansion project to be finalised ahead of schedule and below budget
• In connection with the Inoxum transaction, Outokumpu submitted a binding remedy commitment in October to ensure the approval of the transaction. Despite the remedy commitment, the company expects to achieve annual synergy savings of approximately €200 million.

Outokumpu’s underlying operational result in the third quarter was €-57 million. The positive effects resulting from lower production costs and a better product mix compared to the second quarter were offset by lower delivery volumes and lower prices. Certain maintenance break related issues at the Group’s ferrochrome operations in Tornio resulted in some short production stoppages in the third quarter. Outokumpu’s operating loss in the third quarter totalled €89 million and included some €18 million of raw material-related inventory losses resulting from lower metal prices as well as €-14 million of non-recurring items.

Net cash from operating activities in the third quarter totalled €83 million and remained positive for the fifth consecutive quarter. The main contributor to the Group’s good cash flow was further reductions in levels of working capital. A total of €156 million was released from working capital in the third quarter. The Group’s net loss in the third quarter totalled €116 million and earnings per share totalled €-0.08. Return on capital employed in the third quarter was -9.8%. Excluding proceeds from the rights offering, Outokumpu’s gearing was 90.8% at the end of the third quarter, above Outokumpu’s maximum target level of 75%. Excluding proceeds from the rights offering, net interest-bearing debt increased to €1 714 million.