Stainless steel maker Outokumpu steps up efforts to go greener

By Anne Kauranen

HELSINKI (Reuters) -Finnish stainless steel maker Outokumpu will step up efforts to reduce its carbon footprint despite energy price pressures and tough competition from less regulated Asian rivals, the company said on Tuesday.

Outokumpu said it would link its management bonus plans with climate targets that aim to cut emissions throughout its value chain by 30% from their 2020 level by 2030.

"This is quite unique. In the stainless steel business we are the only one with an emission-reduction target approved by an independent observer," finance chief Pia Aaltonen-Forsell told Reuters, referring to the Science Based Targets initiative that found Outokumpu's targets to be aligned with the Paris climate agreement.

The European Union is in talks https://www.reuters.com/markets/commodities/eu-carbon-plan-divides-states-build-up-2022-climate-talks-2021-12-20 over its carbon reduction plan, which would include a carbon border adjustment mechanism https://www.reuters.com/business/eu-commission-proposes-three-new-eu-taxes-repay-recovery-fund-borrowing-2021-12-22to tax imports of goods made in countries with weaker CO2 emissions standards, seeking to equalise CO2 emissions costs.

Outokumpu uses 90% recycled scrap materials in its production and Aaltonen-Forsell called for the EU to adopt a model in which all emissions, including those from raw materials, would count.

Shares in the Finnish company tumbled more than 7% to 5.60 euros by 1330 GMT on Tuesday after its first-quarter outlook disappointed investors.

Outokumpu said it expects adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to remain at a similar or higher level than the fourth quarter of last year, an outlook described by JP Morgan analysts as "soggy".

"You can drive a bus through the Q1'22 guidance for (adjusted) EBITDA," the analysts wrote in a note, adding that the guidance could prompt a lowering of consensus expectations for a 10% rise quarter on quarter.

Aaltonen-Forsell estimated the company's first-quarter energy costs would be up by between 20 million and 25 million euros from the previous quarter.

She said the company had also been hit hard by the COVID-19 pandemic, with 10-20% of the workforce at some sites either on sick leave or quarantined, though it had mostly managed to mitigate the impact on its business.

Outokumpu reported fourth-quarter adjusted EBITDA broadly in line with expectations, a 64% rise in fourth-quarter sales to 2.22 billion euros and stainless steel deliveries up 12%, both of which beat forecasts. It also reported higher sales prices.

"However, profitability was impacted by significantly increased energy and consumable prices as well as higher fixed costs," it said in a statement.

Outokumpu's board proposed a dividend of 0.15 euros per share for 2021.

($1 = 0.8758 euros)

(Reporting by Anne KauranenEditing by Jason Neely and David Goodman)