Quite grim reactions in the stock market!
And regarding the thread title; it doesn’t seem to be some Linnanmäki’s wooden roller coaster, but a Ferrari theme park roller coaster featuring a gigantic drop!
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Predicting a turnaround in cyclical stocks is really challenging for an investor. One must dare to buy them only when the price, in one’s own opinion, is too low. In business, the turnaround often comes long after the stock price turnaround. Sometimes the price manages to take several false starts, but fortunately, they are not disqualified like in sports competitions. 
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Jefferies just cut its target from €5.30 to €4.50 & Buy. That’s still 16% above the day’s closing price.
And after today’s -10% collapse, the stock is still YTD +34%, plus nice dividends.
Of course, the targets and today’s share price are partly based on the commission definitely getting the import system up and running.
Measured by enterprise value, Outokumpu’s value is below the corona lows, as €2/share has disappeared from the net debt.
Video entertainment, if misery entertains…
00:00 Start
00:22 Q3 Highlights
01:05 Weak market situation in Europe
01:41 Trump’s tariffs protect US markets
02:54 Commission plans to limit import steel quotas
04:35 Mining tax can be quadrupled in Finland
06:25 US €45M investment
07:37 Delivery volumes decrease in Q4
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Here is a company report from Petri following Outokumpu’s Q3 results. 
Outokumpu’s Q3 figures were as weak as expected, but the short-term outlook delivered a cold shower. This year’s result will be historically weak, but we still believe that a pick-up in demand prospects, combined with planned protective measures in Europe, will strengthen the earnings outlook for the coming years. The stock’s valuation is inexpensive relative to its through-the-cycle earnings level, which, in the current phase of the cycle, offers what we believe is an attractive risk-reward ratio. Thus, we reiterate our Add recommendation, but revise our target price to 4.5 euros (previously 4.6 euros). The company’s CEO’s Q3 interview can be viewed from this link.
Quoted from the report:
Despite our significantly lowered forecasts, the overall picture for the coming years has remained unchanged – we expect a recovery in industrial investment activity and consumer demand to strengthen the stainless steel market in both Europe and North America. In Europe, the market is aided by shrinking import quotas as a result of Commission actions, and the US market is protected by local tariffs. Thanks to these factors, we also expect Outokumpu’s achieved average prices to rise, which supports its earning power. Reflecting these same drivers, our adjusted EBITDA forecasts for 2026-2027 are in line with the historical through-the-cycle earnings level.
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Haven’t listened to the press yet, so I don’t know if there was any mention of the progress of these EU safeguards there. Ter Horst hoped for swift decision-making so that they could come into force already in January. The same was announced by Eurofer and the automotive industry together on 22.10., in their statement a day before the European Council meeting.
The process goes as follows: the Commission has made a proposal (which has been praised everywhere!) and then it will be discussed in the European Council and Parliament.
I dug into the minutes of the Council meeting on 23.10. I’ll put the link below. From page 12, deep within point 42, there is an entry where the Council also welcomes these safeguards and, among other things, emphasizes their urgency.
Based on this, everything looks good for the new strict safeguards to be implemented even from January onwards. Considering that November is starting, the improvement of the market environment and thus the results is not far off.
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Nordea’s analyst doesn’t lose faith, even though Q3 was dismal and Q4 will also be dismal:
Buy recommendation and target price and fair value €5.5
2026 naturally better than 2025, and for 2027, an EBITDA of €746 million is dared to be forecast, from which an EPS of €0.80 would remain.
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Exactly the right approach. It’s completely pointless to look at this year, which, along with 2024, is the bottom of the cycle. Now, during the rest of the year, important decisions will be made both in the EU and domestically (mining tax, etc.). The company will surely do its part by influencing for the most favorable outcome for the coming years.
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Acerinox managed to publish its results before Outokumpu, on 31.10.2025. Acerinox is an interesting benchmark in that its business, including stainless steel production, is in Europe/USA, similar to Outokumpu, although with a greater emphasis on the USA.
Acerinox’s stainless steel 3Q2025 vs 2Q2025 offered stable EBITDA (käyttökate) as well as a stable positive operating profit (liiketulos), which serves as a model for Outokumpu. Cash flow was also positive, matching the EBITDA.
As guidance (at company level), 4Q EBITDA will decrease vs 3Q, similar to Outokumpu, but of course, this is a more comforting starting point after a period of stable and positive operating profit.
Acerinox evaluates positively the solutions made in the USA, as well as the EU’s CBAM (turn of the year) and planned protection updates.
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800 million euro revolving credit facility tied to carbon dioxide emissions?
On a neighboring forum, this was amusingly described as a depth charge. Unsecured, meaning is it also at a high interest rate?
Why does Outokumpu need such funds, and it certainly sounds, at first glance, well, like a depth charge that will truly explode in the future, if they try to draw on this loan. And why wouldn’t they try, if such an arrangement was made in the first place.
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A press release has also been published about the loan; it’s an update of a revolving credit facility belonging to normal financing arrangements,
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Tying it to carbon dioxide emissions has certainly come from an EU-level climate strategy for financial instruments. And good corporate management always keeps a limit in reserve, even if it would probably never be needed. Normal risk management, which is increasingly important in today’s world with customs, war, and other turbulences.
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Outokumpu CEO Kati ter Horst was at the Investor Days talking about her company as an investment.
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I wonder if that was a warning about the upcoming spring dividend at the end. First, it’s stated that there will be a steady, growing dividend, but then it’s implied that potential growth investments mean those dividends won’t materialize.
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That’s certainly what it sounded like. So, a stable/growing dividend policy will have to be flexible when seeking new growth investments. Now, 45 million is being invested in pilot-scale chromium production in the USA, and production phase investments after 2027 will likely be several hundred million, if the project proceeds. AI analyzed the industrial logic of the project as follows:
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Circumventing tariffs and the “domestic processing” advantage in US industrial policy
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Producing higher value-added chromium products for a market with little competition
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Energy and logistics advantages, as well as customer proximity
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Geopolitical need in the USA to secure the availability of critical minerals
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Potential government support (DoD/DOE/IRA) and state-level benefits
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Outokumpu’s strategic expansion into the US stainless steel value chain
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I myself do not see that this recently announced 45 mUSD investment will cause a dip in the dividend level, but indeed, the dividend policy has prepared, as Kati also said in her presentation, for flexibility if/when (larger) investments are made in high-return targets. I consider such an investment, for example, a potential investment in Avesta (approx. 200m€) for the production of high-nickel products. Kati stated that if the dividend level were to be lowered for year x due to such an investment, the aim would be to return to the previous curve afterwards. It was also clarified in the CMD that the starting level is the current 0.26 euros per share. It is quite possible, of course, that before the next dividend proposal is given, this Avesta study will have been completed and the investment decision made 
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Quote from Helsingin Sanomat headline. Part of the “dividend funds” flows there. Or if we manage to prepare a new model next year, we will get a model that is more easily acceptable to the industry.
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Well then, we’ll see if Kati ter Horst keeps her word that investments in Finland will not materialize…
When the company’s valuation is P/BV = 0.5, it’s understandable not to invest, or ROI <<5%
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The only thing Outokumpu should invest in is its own stock. To put it a bit pointedly. No dividends, but large-scale share buybacks.
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I wouldn’t interpret those numbers quite so pessimistically. I had to listen to Kati’s Inderes presentation again, with time. Outokumpu does have a clear “strategy” for improving margins. It also requires investments. The numbers are expected to improve.
AI-calculated scenario.
2) Realistic scenario – EVOLVE partially succeeds
Assumptions
P/BV rises 0.5 → 0.7–0.8
EBITDA grows +150…200 M€
Dividend 4–6 % / year
Average economic cycle
ROI estimate
A. Increase in valuation multiple:
0.5 → 0.75 = +50 %
B. Dividends over 10 years:
≈ 5 % / year → +50 % total (assuming dividends are reinvested, return could be up to +60–70 %)
Total return 10y:
≈ +100…+140 %
Annual return:
≈ 7–9 % / year
This is the “most likely” long-term scenario held by many analysts
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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
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