One would gladly believe and hope that Outokumpu’s investments in both capex and opex would produce something that others don’t do and that wouldn’t collectively be given away for the customers’ benefit…
According to Inderes’ DCF calculation, the fair value of future cash flows is around 4.9 EUR, i.e., let’s say +20% in 10 years compared to today’s share price of 4.00 EUR, meaning a few real % per year, of course, a 9.9% interest rate is calculated for equity here.
Perhaps the simplest way is to look at the free cash flow of approx. 215 MEUR, which amounts to about 45.6 c/share for 471 million shares, i.e., a P/E of 8.8 from super-cyclical sluggishness, even though gross investments are a conventional 220 MEUR (maintenance investments, productivity investments, and some smaller new ones).
But, it could be that those Evolve initiatives are achieved, and the back door doesn’t leak output for the “common good”. Indeed, it was stated in the CMD that
- EBITDA “normalised baseline” 500-600 (current) => 750-850 MEUR (2030)
- funds for activities including dividends from cash flow / through working capital (according to CMD illustrative image approx. 80%), the rest debt financing
- That EBITDA change would indeed be significant, because half of the current level would truly go to conventional investment, meaning the remaining portion would double once the investments have been paid off.
For years, Outokumpu has been a company that has achieved poorly sustained performance levels; perhaps the benefits given to customers and cyclicality then overshadow the declared achievements.
However, from its own investments, Outokumpu has indeed been remarkably rewarding, as long as one remembers more than just holding.
I myself also expect a good coming year (as already in 2023 and 2024). Now with extra support from
- a flawed and poorly implemented CBAM, but something nonetheless
- the EU’s naive and gullible steel policy correction package / tariffs by 1.7.2026 at the latest
- as an option, the stabilization and recovery of the EU’s general misery, and with it a demand surge
- as an option, the reconstruction of Ukraine
