CEO Kati ter Horst’s review from last week’s Annual General Meeting! 
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Let’s return to this when it becomes topical and the situation has clarified. Petri responded to considerations from the balance sheet and cash flow perspectives in July if the entire convertible bond (vvk) is exchanged for shares held by the company.
Let’s still assume that convertible bond (vvk) holders fully convert into shares, meaning no repayment of debt capital from cash. Now the situation has indeed clarified in the sense that the entire 45 million shares would be issued as new shares in a directed issue, and 31 million old shares held by the company would be cancelled. The total equity (B) increases as a result of the operation, and then the equity per share (opo/share) must account for the increase in the number of shares (14 million units)? Quickly calculated, equity per share (B) also increases, which would only make Outokumpu’s strong undervaluation relative to its balance sheet even more glaring without an increase in market value (P) as the P/B ratio decreases?
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According to the article and announcement, the chromium mine’s annual extraction volume is intended to be increased from 3.7 million tons to 4.7 million tons.
Outokumpu is updating the Kemi mine’s environmental permit due to significantly growing operations
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Here is Outokumpu’s announcement regarding the expansion of chrome mine operations.
The mine was expanded to new depths a few years ago with an investment of over 200 million euros.
Subsequently, it was also announced that more could be mined without special measures.
And it was also announced that mineral resources are significantly larger than previously ‘identified’.
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Now there was a change, so new shareholders were “pressed” related to convertible bonds, and at the same time old, already purchased ones were “pushed into the shredder”…
Selling pressure will continue through convertible bond conversions for a long time, the last conversion date is not until July 9, 2025. Then the new happy owners might sell their shares, unless they hold & lend…
Subscription of shares based on the conversion of a convertible bond and simultaneous cancellation of own shares
Outokumpu has an unsecured convertible bond of 125 million euros maturing in July 2025. Outokumpu has received a conversion notice, according to which bonds will be converted for a value of 2,500,000 euros into a total of 941,832 Outokumpu shares (“conversion shares”).
The company has today decided to issue new shares as conversion shares and cancel a corresponding number of its own shares, so the total number of Outokumpu shares will not change. After the cancellation, the total number of own shares held by Outokumpu is 31,702,784.
The conversion shares and the cancellation of own shares are expected to be registered in the Trade Register on approximately April 24, 2025. The conversion shares will entitle their owners to shareholder rights from the registration date. Trading with the conversion shares on Nasdaq Helsinki Oy is expected to begin on approximately April 25, 2025.
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More on VVK
After 125 MEUR VVK in the next interim report (3Q2020)
- Outsa’s cash reserves were thus 411 MEUR
- incl. liquidity reserves 900 MEUR…
And 3Q2020 net cash flow from operating activities was +170 MEUR
- 1Q2020: -32 MEUR
- 2Q2020 had been +72 MEUR
- 4Q2020 would be +112 MEUR
Interest-bearing net debt - which was thus zeroed out in the post-COVID boom - was indeed huge
- 1Q2020: 1249 MEUR
- 2Q2020: 1243 MEUR
- 3Q2020: 1105 MEUR
- 4Q2020: 1028 MEUR
We probably have to wait for Jordan’s memoirs to hear why such a VVK-loan was resorted to. Some interest rate over 4% and on top of that an option to convert into shares at approx. 3.30 EUR, which is adjusted (downwards) by dividends and share count. There was indeed a premium to the bottom price at the time, but something motivated the action. Could it have been that the 1.1 net indebtedness covenants were tight…
Either way, an additional 10% of shares were issued for 125 MEUR.
Those covenants, like debt/EBITDA - if that was the case - are harsh, because an EBITDA slump significantly changes the ratios.
3Q2020 interim report
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On the other hand, July isn’t far off. It seems clear to me that now that this convertible bond (vvk) has been put to rest in the summer, and then when the steel cycle properly turns at some point (which will inevitably happen sooner or later), the company’s market value will also rise significantly. Outokumpu has its balance sheet and operations in a good position for the next upcycle.
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The CEO gave a professional speech at the general meeting (I watched the video, I wasn’t there).
The slides can be found online
Strikes didn’t help the situation, but unfortunately Outokumpu is a chip on the waves of the global stainless steel market; Asian demand and production determine the direction, and the difference between these then appears as imports in Western countries.
IF we could get past oversupply and price pressure, then ton prices would rise and Outokumpu’s result (and share price?!) would soar.
But that’s not immediately in sight, and apparently not all owners have the patience to wait for a new upturn.
Foreigners are selling, and the share of nominee-registered holdings has already fallen very low. Nominee-registered holdings now own Outokumpu for less than 250 million euros. An optimist might imagine that foreigners will rush to buy Outokumpu shares later at a higher price, pushing up the share price, once a new upturn soon begins (while waiting for that 
)
In celebratory speeches, a strategically important mine is nice, but it should also make money 
Good results could be achieved by selling Circle Green and other premium products, or by selling stainless steel based on life cycle costs to replace other materials.
In addition to that, there’s nothing to do but wait for the market to pick up.
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The share of those in nominee registers is indeed at rock bottom. I recall that previous lows around 2016 and 2020 were around 18% (when the stock price was at its lowest). At the peak of a price increase, on the other hand, they usually hover above 30 percent.
The CEO probably commented on Circle Green’s growth expectations in the presentation. I don’t remember directly now, but was there something like 30% growth expected during this decade?
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I haven’t come across very informative news regarding the market situation recently. It’s probably not a bad guess that demand is still largely sluggish, but the price level has likely bottomed out. This perspective would be supported by the following links, the first of which provides an interesting picture from the US market regarding the price surge of carbon steel in March. One can hope that something similar has happened in stainless steel as well. The second provides forecasts for this year from the US, European, and Asian markets, where a cautious improvement in price levels is also expected, along with an easing of Asian import pressure on the US and EU. In a week, we’ll already hear Outokumpu’s results and outlook for Q2.
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Here are Petri’s preliminary comments, as Outokumpu reports its Q1 results this week on Thursday. 
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Outokumpu delivered its 1Q2025 results, with the sluggish trend continuing in line with analyst expectations.
2Q2025: adjusted EBITDA at the same level as 1Q2025, or growing.
From the earnings call I listened to, “the same level” does not meet analysts’ consensus expectations.
As for market expectations - with this performance, people probably won’t be rushing to the market to cheer either, which is ensured by the 4-10% short interest that has continued for years…
The first quarter of 2025 in brief
Stainless steel deliveries were 470,000 tonnes (444,000 tonnes)*.
Adjusted EBITDA was EUR 49 million (EUR 38 million).
EBITDA was EUR 47 million (EUR 37 million).
Return on capital employed was -0.8% (-5.7%).
Free cash flow was EUR -62 million (EUR -26 million).
Earnings per share was EUR -0.04 (EUR -0.05).
Net debt was EUR 252 million (31 Dec 2024: EUR 189 million).
After the reporting period, on 3 April 2025, the Annual General Meeting approved a dividend payment of EUR 0.26 per share for the financial year ended 31 December 2024, in two instalments. The first instalment of the dividend, EUR 0.13 per share, was paid in April.
*Figures in parentheses refer to the corresponding period of the previous year, unless otherwise stated.
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The guidance is indeed soft compared to the consensus. Of course, growth is also mentioned there, not just “certainty” at the same level. On the other hand, this is not surprising given the market situation with its tariff uncertainties and Asian import pressures. I personally see 2025 as a year of stabilization and expect strong earnings growth to come as the market situation improves for 2026 and 2027.
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Here is Kati’s interview on the market situation, demand in the defense industry, and of course, the impact of tariffs.
Topics:
00:00 Q1
00:40 Good demand for ferrochrome
01:28 Customer sectors
02:10 Defense industry
03:08 Pricing
03:20 Demand situation
05:40 Trade war
06:25 Import pressure from Asia
09:00 Net impact of tariffs
09:55 Circle Green
11:00 Capital Markets Day
11:48 Guidance
P.S. The company has a Capital Markets Day on June 11th!
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Regarding the guidance, the video refers to it as conservative and not wanting to cause disappointment, it’s not known how much better etc.
In the results webcast, it was referred to as “prudent & conservative” etc. due to uncertainty. Positive development in underlying business, etc.
So, they are playing it safe with “same level or growing”, perhaps growing, and in a bad case, the same level if the tariff world and trade flows hit hard on both sides.
That’s good,
because the EBITDA, which even Outokumpu (Outokumpu) likes to talk about, certainly doesn’t generate any real profit at 50 MEUR/Q currently, as the mill constantly absorbs money to the tune of 50 MEUR, whether we’re talking about depreciation or investments, and interest is paid on debt. The debt is 600 MEUR, although interest-bearing net debt is only 250 MEUR. Interest expenses were 16 MEUR in 1Q2025, other net financing expenses/income totaled -1 MEUR.
And taxes must also be paid because in some countries taxable income arises even if the company makes a loss.
Below is the presentation from the results webinar
Interest-bearing net debt increased during the first quarter of 2025 to EUR 252 million
(31.12.2024: EUR 189 million), and the increase of EUR 64 million was mainly influenced by
free cash flow. Interest-bearing debt was EUR 607 million (31.12.2024: EUR 502 million), and
a new three-year term loan of EUR 200 million was signed and drawn
during the quarter.66
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Acerinox again offers a profit-making model for Outokumpu. Acerinox’s stainless steel production, like Outokumpu’s, is in Europe and the USA.
Profit came from the stainless steel side at 3% EBIT level (EBITDA 6%).
Also, in the guidance, they dare not to produce a future negative outlook, meaning EBITDA will grow with the stainless steel segment’s order book.
EDIT:
- Are Outokumpu’s savings a bit softer (P&L impact of measures, sustainability of savings) than competitors’?
- Is Outokumpu’s pricing a bit softer than competitors’?
- Is Outokumpu’s production efficiency still a bit softer than competitors’?
- etc., many smaller differences together make something bigger
Looking ahead, Acerinox expects Q2 2025 EBITDA to exceed Q1 levels, supported by an improving order book in the stainless steel segment. The company anticipates stability in the US HPA market but lower volumes in Europe.
Management believes that tariffs should ultimately benefit Acerinox, though they are creating near-term uncertainties. The company maintains its focus on controlling internal factors while navigating external challenges.
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Target remains unchanged, 3.8 eur & More
Low valuation supports further purchases
With this year’s weak result, the share’s valuation multiples are high or unusable (P/E ratio neg. and EV/EBIT 36x). Relative to an earnings level looking beyond the cycle, the share is again moderately priced (P/E ratio ~ 8x and EV/EBIT ~ 6x). The same valuation picture is also drawn by the valuation relative to the long-term historical average free cash flow (P/FCF about 9x). Thus, reflecting the moderate valuation and a financial position that carries beyond the current subdued cycle, we consider the share’s return-risk ratio attractive, and in our opinion, it supports further purchases of the share. However, it should be noted that the aforementioned valuation methods do not work for timing purchases, which supports temporal diversification.
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Vara research has finally updated the compiled analyst forecasts after the latest earnings report.
Target prices seem to be amusingly close to each other (i.e., less surprisingly set where the stock price is, and slightly above or below depending on the analyst…)
2025 looks dismal, but 2026 should pick up slightly.
It seems that no one else but us few masochists wants to buy the stock at any price, so if one doesn’t want to trade the stock, then hopes for returns must be turned towards the company itself!
Own shares have been bought against the dilution of the convertible bond, while waiting for results.
For now, shareholder remuneration will presumably only happen as dividends. According to consensus, the annual dividend is ~0.24-0.28 € and the stock price is 3.45 €.
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Outokumpu Oyj: has cancelled 3,578,962 of its own shares. The change in the number of shares has been registered in the trade register on May 27, 2025. The change will be taken into account in trading on May 28, 2025.
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Well, the tariff shaman has visited US Steel and talked about raising steel tariffs from 25% to 50%.
U.S. President Donald Trump declared an upcoming increase in tariffs on steel imports, doubling down on his trade war strategy. The tariffs are set to jump from 25% to 50%, a move aimed at bolstering the American steel industry. This announcement was made during a Pennsylvania rally, where Trump reiterated his commitment to further securing the U.S. steel sector.
“Trump announces steel tariff hike to 50%”
https://www.investing.com/news/stock-market-news/trump-announces-steel-tariff-hike-to-50-4073785
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