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Finnish steel firm Outokumpu shares fall on difficult…

HELSINKI, Aug 7 – Finnish stainless steel maker Outokumpu expects business to remain difficult in the third quarter, after second-quarter core operating profit halved from a year ago as the coronavirus crisis hit demand, it said on Friday, sending its shares down nearly 13%.

The pandemic battered the global steel sector in the first half of the year, especially in Europe, as swathes of industries that use steel shut down.

“Despite some signs of gradual market recovery, the operating environment continues to be difficult,” said Chief Executive Heikki Malinen, who took up his position in May.

The company gave no EBITDA guidance for the third quarter because of uncertainty caused by the pandemic but said it expected shipments to fall 10% from the second quarter, which JPM analysts interpreted “materially worse than peers”, with Luxembourg-based Aperam guiding their shipments “slightly higher” and Spain’s Acerinox “in-line”.

Shares in the company were down 12.6% before noon in Helsinki on the news.

Outokumpu, which until May was saying demand for ferrochrome was “normalish”, said second-quarter adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was 45 million euros ($53 million), down from 91 million euros a year earlier and below the 53.3 million euros expected by analysts in a company provided poll.

Second-quarter sales dropped 16.5% to 1.42 billion euros year on year, above the 1.31 billion euros expected by analysts.

Outokumpu said deliveries decreased by 11% in the second quarter globally and by 20% in its Americas business area.

In Europe, the result was “burdened by lower deliveries, continued price pressure and high import penetration,” Malinen said.

He blamed the price pressure on Asian imports and called the European Commission’s decision in June to increase the import quotas by 3% “a major disappointment for the European steel industry.”

($1 = 0.8444 euros) (Reporting by Anne Kauranen; Editing by Edmund Blair and David Evans)

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