Outokumpu Oyj Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tristan Gresser - BNP Paribas Exane - Analyst : Yes, I thank you for the presentation and the questions I have two. I'll start with the US Could you quantify the flooding impact in Mexico on a million euro basis and could you give us an update on the situation there; if it has improved, any cost impact in Q4 as well or everything has been sold? And just excluding maybe this oneoff, the level you're having in the US in terms of margins, is that a margin level you feel comfortable defending into Q4 despite lower volumes?

Question: Tristan Gresser - BNP Paribas Exane - Analyst : That's helpful. But on Q3, how much is that?

Question: Tristan Gresser - BNP Paribas Exane - Analyst : Okay. So if the impact was negligible or just market driven then let's push EBITDA to EUR5 million; but the US stainless prices are still above Europe, you still have a premium. So I'm just wondering what has been driving the underperformance. It looks like you're doing better margin in Europe than in the US on an underlying basis. So why is that? And if you can touch a little bit on the market environment. You talked about the US election uncertainty. How much of a driver do you think that is and how optimistic you are that once we get past the election, you'll get some type of recovery? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 1:00PM, OUT1V.HE - Q3 2024 Outokumpu Oyj Earnings Call

Question: Tristan Gresser - BNP Paribas Exane - Analyst : Okay. That's very clear. And maybe one last quick follow-up. If there is a change of ownership at Calvert, I mean we've seen reports that Nippon Steel may sell its stake; does it have any implications for your supply agreement or there's nothing really there?

Question: Tristan Gresser - BNP Paribas Exane - Analyst : Okay, perfect. Thank you very much.

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Yeah. Hi, good afternoon, all. I've got a couple of questions as well. I'm going to start with Europe and I think your performance here was pretty good, particularly also even when we consider that even when exing out the metal and hedging effect, I think your underlying margin was relatively decent in the given environment. So I'm wondering like can you maybe give us a bit of a split between how that performance actually separates between your standard business and your advanced materials just to get an idea? And maybe can you also give us some color on the underlying gross margin trends into the fourth quarter? From what I understand, you're talking about falling scrap prices and the market is easing here a little bit, but then I think transaction prices are more or less stable. So are you seeing expanding margins and then possibly lower volumes against that as an offset? Obviously I'm ignoring hedging effects and the maintenance break here as well, but I'm really just curious about the underlying margin trends into the fourth quarter. That's my first question.

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Gross margins into the fourth quarter?

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Okay. Got it. But you basically see expanding gross margins into the fourth quarter?

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Okay. And then secondly, just coming back to Americas and sorry to let you not get away on that business as easily, but I still find the performance hard to reconcile. I guess I understand that volume is obviously low, demand is very weak; but then still obviously it's one of the most protected markets. You're basically almost in a duopoly. Yes, imports have been going up. But when we look at your margins, you're basically making USD 30 to USD 40 EBITDA per tonne despite like standard or benchmark transaction prices obviously being higher. And the scrap series I'm following, they're not really explaining the delta. So can you help us to get to the bottom REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 1:00PM, OUT1V.HE - Q3 2024 Outokumpu Oyj Earnings Call of the issues here? Is there a structural problem, a structural productivity or cost problem? What are you doing to tackle the issue? And other than a market recovery, is there anything which will help you in Q4 or in 2025?

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Then my last question is on the strategy and your role as a new team and obviously both of you are very familiar with the company, have literally been with it before taking over. But what are your initial thoughts in terms of what has to change in terms of strategy and what are the obvious tweaks here? You talked obviously about what you like about the company and the strength, some priorities. But are there any obvious tweaks and changes to strategy? And I'm thinking particularly about growth, which I guess has been emphasized quite a bit in the last couple of quarters.

Question: Bastian Synagowitz - Deutsche Bank - Analyst : Okay, great. That's very helpful. Thanks so much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 1:00PM, OUT1V.HE - Q3 2024 Outokumpu Oyj Earnings Call

Question: Tommaso - Jefferies - Analyst : So my question is on Americas and sorry to insist on that. But I was wondering given the current softness in the market and the deteriorating environment that you forecast into Q4, which is likely to have an impact also in Q1, do you still retain your EUR170 million by 2025?

Question: Tommaso - Jefferies - Analyst : Okay. And maybe just to follow up on Europe. So Q3 is usually the seasonal trough and we see some slowness there and the holiday season as well impacting. So where is the deteriorating condition coming from into Q4? Is it like more pricing? Is it more volumes?

Question: Tommaso - Jefferies - Analyst : That's very clear. Thank you very much.