HELSINKI - Shares in Finnish stainless steel maker Outokumpu fell 5.6% to 5.46 euros on Thursday after the company beat expectations in second quarter core earnings, but warned that deliveries were likely to fall by up to 10% in the third quarter.
Instead of demand decreasing in the second half due to the seasonal nature of Outokumpu's industry, Chief Executive Heikki Malinen sees demand for stainless steel and ferrochrome continuing to be strong and delivery volumes falling only due to planned maintenance.
The drop from 0 to 10% volume boils down to what our need for shutdowns will be, Alhamdo told Reuters and added that Outokumpu has already seen customers start negotiations on delivery for 2022.
Analyst Petri Gostowski from Inderes said the drop in share price could mean investors were reacting to the expected seasonal change in the business.
Some investors are bringing home the wins and estimating that market drivers will not be as favourable in the second half, Gostowski said.
Outokumpu recorded an operating profit of 163 million euros in April-June compared to loss of 16 million a year earlier, and topped 143.4 million expected by seven analysts, according to Refinitiv Eikon's data.
The good result was aided by higher stainless steel and ferrochrome prices, the company said.
Stainless steel orders rose from 523,000 tonnes to 626,000 tonnes a year earlier as demand recovered from the coronavirus pandemic.
Malinen said Outokumpu was producing as much ferrochrome as possible in its three smelter furnaces in northern Finland, but added that we are pretty much at capacity.
Ferrochrome production was stable from the first quarter at 131,000 tonnes but sold to higher prices and sales were up 28% to 155 million euros.
Outokumpu has been focusing on reducing costs and lowering risk since the release of its new strategy in November.
The company said it would reduce costs to increase earnings before interest, taxes, depreciation and amortisation by 200 million euros by 2022.
Malinen said Outokumpu had achieved 123 million euros of that target in the first half of 2021.