Annual report 2022
Contents
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
4
5
6
7
9
11
12
17
Sustainability review
Sustainability at Outokumpu 29
Environment
People & society
Reporting requirements
35
52
78
Governance
Regulatory and structural
framework
Board of Directors
Shareholder's Nomination
Board
Executive Management
Internal controls and risk
management
90
91
98
99
104
Remuneration report
Dear shareholder
Remuneration
and performance
Remuneration policy
Fees of the Board of
Directors
Remuneration of the CEO
110
111
113
114
115
Financial year
Review by the Board of
directors
Financial statements
Auditor’s report
118
144
212
Information for shareholders 219
Numbers in this report refer to continuing operations, unless otherwise stated. Since Outokumpu announced
the divestment of the majority of its Long Products business in 2022, the figures for 2022 and 2021 include
only continuing operations and the divested units are reported as discontinued operations.
Pioneers don't let the future happen.
They build it and reform it. Like
Outokumpu: we relentlessly redesign,
recycle and reduce what is necessary
to accelerate circularity towards a
more sustainable planet. The best
time to start building the circular
future for the next generation is today.
About this report Our Annual report combines Outokumpu’s sustainability and financial reporting. The sustainability review has been assured and the financial statements have been audited. Our official financial statements in Finnish and unofficial translation in English published according to the ESEF regulation are available at www.outokumpu.com/reports. Annual
review
We produce the world’s most
sustainable stainless steel, which we
are very proud of. In 2022, we took
this to the next level and introduced
Circle Green that has the lowest
carbon footprint in the world.
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Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
3/220
Outokumpu Annual report 2022 We are Outokumpu
The world needs more sustainable solutions to fight
the climate change. We are proud to be the producer
of the most sustainable stainless steel in the world: we
are able to help our customers to reduce their carbon
footprint. Our customers use our stainless steel to build
bridges and buildings, produce cars, trains and trucks,
and manufacture household appliances and utensils.
Outokumpu is known in the market for our unmatched
expertise in stainless steel as well as the quality of our
products. Our experts produce stainless steel in our mills
in Finland, Germany, Mexico, Sweden, and in the US. Our
engineers research and develop it further at our research
centers and mills, and our dedicated salespeople and
technical experts help and advise our customers in
choosing, using, and processing stainless steel.
Our stainless steel has the smallest carbon footprint
on the market, covering all the emissions from scope 1,
2 and 3 in our supply chain. Our total carbon footprint
is less than 30% of the global average1). By using our
products, our customers can contribute to fighting the
climate change by reducing their CO2 emissions by around
10 million tonnes every year. We have also introduced an
emission-minimized stainless steel to the market – our
Circle Green product line has up to 92% lower carbon
footprint than the global average and 64% lower than
Outokumpu’s regular production, the current sustainability
leader in the industry.
Sales, EUR
9.5
billion
Adjusted EBITDA, EUR
1,256
million
Net debt free with a
net debt of EUR4)
-10
million
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Operations in close to
30
countries
8,357
employees2)
Recycled content
94%
CO2 emissions3)
-18.4%
Carbon footprint
30%
of industry average1)
How Circle
Green was born
Watch a video
1) Outokumpu’s carbon footprint is on average 1.7 t/ton of crude steel
against the global average of 6.1 (source: ISSF 2020).
2) Personnel as full-time equivalent.
3) Total specific CO2eq emissions, compared to the baseline of 2016.
4) Including discontinued operations.
4/220
Outokumpu Annual report 2022 Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
2022
2021
2020
2019
2018
9,494
2,106
1,256
1,086
778
-10
-0.3
93.9
1.70
10.5
86.5
7,243
2,254
980
526
597
408
13.1
5,639
2,121
250
–116
322
1,028
43.6
6,403
2,196
263
-75
371
1,155
45.1
6,872
2,428
485
130
214
1,241
45.1
89.6
92.5
89.6
88.6
1.76
10.2
78.1
1.55
11.0
77.1
1.61
10.9
90.8
1.72
10.1
89.9
0.530
0.561
0.590
0.500
0.472
1.8
0.8
8,591
8,357
2.1
1.3
8,727
8,439
2.4
1.4
9,915
9,602
3.2
1.4
10,390
10,078
4.1
1.7
10,449
10,118
Financial key figures
Net sales, € million
Stainless steel deliveries, 1,000 tonnes
Adjusted EBITDA, € million
Net result for the period, € million
Operating cash flow1)
Net debt, € million1)
Debt-to-equity at the year-end, %1)
Environmental key figures
Recycled content, %
CO2 emission intensity, tonnes of CO2 eq. per
tonne steel
Energy intensity, use in GJ per tonne crude steel
Use rate of slag, %
Total landfill waste intensity, tonnes per tonne
steel
Social key figures
Total recordable injury frequency rate 2)
Lost-time injuries rate 3)
Personnel
Personnel, full-time equivalent
1) Including discontinued operations.
2) Total recordable injury frequency includes fatalities, lost-time injuries, restricted work injuries and
medically treated injuries, per million working hours.
3) Lost-time injuries including fatalities and lost time injuries, per million working hours.
5/220
2022 in figures
Our adjusted EBITDA in 2022 was best in our history even as the
share of energy and consumables of our costs rose. We also improved
our safety performance, and recycled content was the highest ever.
Sales by business area,
9,494 € million
Cost structure, %
Key figures
Europe 66%
Americas 28%
Ferrochrome 2%
Other operations 4%
Adjusted EBITDA, € million
1,500
Legend
Value in %
1,200
Europe
Americas
Ferrochrome
900
Other operations
66%
28%
2%
4%
Raw materials 61%
Energy and other consumables 19%
Personnel expenses 9%
Others 10%
For graph number 1 See graph nr. 24
Net debt, € million*
Empty space used for new graph number 0
1,300
1,100
Legend
Value in %
900
Raw materials
Energy and other
consumables
Personnel
expenses
700
500
Others
61%
19%
9%
10%
600
300
0
2018*
2019*
2020*
2021
2022
2018
2019
2020
2021
2022
300
100
-10
* Including discontinued operations
* Including discontinued operations
* Including discontinued operations
2018*
2019*
2020*
485
263
250
2021
980
2022
1256
Same as graph #44
Year
2018
1,241
2019
2020
2021
2022
1,155
1,028
408
-10
34
24
1
2
Outokumpu Annual report 2022 Our year 2022
2022 has been an eventful year.
We started our next strategy phase
ahead of time and introduced a
product line with the lowest carbon
footprint in the world. On the other
hand, we had to deal with the
rising energy prices and increasing
uncertainty due to the war in Ukraine.
New energy efficiency target
corresponding to the annual electricity use of
15,000
households in 2023 and 2024
Q1
The Russian attack against
Ukraine shocked us, and
we announced that we would
severe all business relations with
Russia. For our most important raw
material, recycled steel, we stopped
sourcing from Russia immediately
in the first quarter. In the beginning
of 2023, we do not buy nickel of
Russian origin for our operations.
In March, our shareholders
approved a donation of 1,000,000
euros for supporting Ukraine.
Q2
We launched our Circle Green
product line in June. Our stainless
steel already routinely has the
lowest carbon footprint, but we were
able to reduce it by a further 60%.
Circle Green is the first product of
its kind in the market and has been
well received by our customers.
Circle Green has
90%
smaller carbon
footprint than
global average
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Q3
As a result of exceptionally high
electricity prices, Outokumpu began to
optimize the ferrochrome production.
Optimizing our ferrochrome production
helped us to manage rising energy costs.
Q4
Outokumpu decided to improve its energy
efficiency significantly in the next two years
amidst the European energy crisis. The target
is to improve energy efficiency by 8% and
prioritize related investments in 2023 and 2024,
corresponding to the savings of 600,000 MWh.
6/220
Outokumpu Annual report 2022 CEO’s review
A record
year despite
geopolitical
turmoil in Europe
Year 2022 was a combination of a
record financial performance and the
mitigation of the far-reaching impacts
of Russia’s attack on Ukraine.
We have seen exceptional tailwinds in the market for
the past two years. During this period, we succeeded
in de-risking the company and exceeded our strategic
targets ahead of plans. In this second record-breaking
year in a row, Outokumpu delivered another solid year
and the company’s full-year adjusted EBITDA increased
to EUR 1.3 billion in 2022. In addition to delivering the
best financial result in our history, Outokumpu is now net
debt free.
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
7/220
“During turbulent times,
it is crucial to have a
strong balance sheet.
Outokumpu is now financially
stronger to withstand the
changing conditions in the
market environment.”
Outokumpu Annual report 2022
The year 2022 turned out to be truly exceptional with
the war in Europe. Outokumpu strongly condemns the
continued military actions that Russia is taking in Ukraine
and has taken decisive actions to sever connections
with a country that does not honor international laws or
human rights. We would like to thank our shareholders for
approving the donation for relief work in Ukraine in 2022.
The prolonged war in Ukraine has had far-reaching
consequences for Outokumpu through the adverse
development of the geopolitical tension in the global
economy. In particular, the energy crisis in Europe,
resulting from the war, impacted Outokumpu during
the second half of the year 2022.
Especially the business area Ferrochrome suffered
from high electricity prices in the latter part of the year.
Ferrochrome production was limited to 50–60% of its total
capacity by optimizing production due to high electricity
prices and shutting down one of the furnaces. In both
“In sustainability we took
actions to further improve
our position as the
sustainability leader of the
stainless steel industry.”
stainless steel business areas, Europe and the Americas,
the results improved despite significant cost inflation, as
the higher realized prices for stainless steel supported
profitability.
In sustainability we made excellent progress and
took actions to further improve our position as the
sustainability leader of the stainless steel industry. For
instance, we announced an ambitious energy efficiency
target and reduced our CO2 emissions successfully in line
with our 1.5°C science-based climate commitment. We
also reached an all-time high recycled material content of
94% for the full year and the safety performance was even
better than in the previous year.
Moreover, we launched Circle Green, which is a product
line with a carbon footprint taken to extreme lows – to
a level that has never been achieved in the industry.
Customer demand for zero-emission products is real, and
we are well-positioned on our path to help our customers
to reduce their emissions. We are now looking into
expanding our green stainless steel offering to cover more
grades to serve even more of our customer segments.
As we are focused and committed to sustainability
as a priority, it is important that the global playing
field is as level as possible. A comprehensive political
agreement was reached by the EU regarding Carbon
Border Adjustment Mechanism, or CBAM, to include CO2
emissions from not only the direct emissions but also
to precursor materials to limit carbon leakage outside of
“We launched Circle Green, which
is a product line with a carbon
footprint taken to extreme
lows – to a level that has never
been achieved in the industry.”
the European Union. This is an important step in the right
direction, but the implementation will take time and the
mechanisms need to be defined.
After two exceptionally favorable years, we are now moving
into a period of weakening in the global economy. During
times like these, it is crucial to have a strong balance
sheet. I am pleased to say that Outokumpu is now
financially stronger than ever and resilient to withstand
the changing conditions in the market environment.
Lastly, I want to express my heartfelt thanks to all of our
team members across the globe for their contribution,
to our shareholders for their continued trust, and to our
customers, suppliers and other stakeholders for the
good collaboration in a year when the supply chains were
under pressure.
Heikki Malinen
President and CEO
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
8/220
Outokumpu Annual report 2022 Vision and strategy
We completed the first phase of our strategy six months ahead of schedule and have moved to
the second phase. Our vision is to be the customer’s first choice in sustainable stainless steel.
Outokumpu’s long-term strategy has three phases,
each building on the other. The first phase, with the
aim to de-risk the company, was started when the
new strategy was first launched in November 2020.
The aim was to complete the first phase by the end
of 2022, but as a result of the diligent strategy
execution we managed to achieve and exceed
our targets already by mid-2022. The successful
first phase provided us a great basis for the latter
phases, and we started to ramp up the second
phase well ahead of schedule.
Our vision is to be customer’s first
choice in sustainable stainless steel.
PHASE
3
2026–
Investing in growth
and sustainability
PHASE
2
2022–2025
Targeted productivity
investments to improve margins.
Additional investment to improve
sustainability
PHASE
1
2021–2022
Margin improvement and
de-leveraging the balance sheet
WE HAVE A STRONG FOUNDATION TO BUILD ON
Megatrends drive
stainless steel
demand growth
Great people and
strong safety
performance
Leader in
sustainability
High customer
satisfaction
Ways of Working
Stable operations
and continuous
improvement culture
MUST-WIN
BATTLES
Sustainability
Customer-
focused
steering
Growth from
productivity
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
9/220
Outokumpu Annual report 2022
More resilient than ever
The main focus in the first phase of our strategy was
to de-risk the company and strengthen the balance
sheet. We set two financial targets for ourselves, which
were improving our EBITDA run-rate by EUR 250 million
and reducing our net debt to adjusted EBITDA ratio to
below 3.0 by the end of 2022. As a result of our diligent
strategy execution, both financial targets were achieved
well ahead of time. We significantly reduced our net debt
and improved our financial performance by commercial
initiatives, by cost and capital discipline, and by making
the organization more efficient. These were not any
one-off savings, but sustainable improvements in our ways
of working.
Our net debt reduction in the past two years has been
significant. Our strong financial performance combined
with a favorable market environment sped up the work,
as did the directed share issue executed during the first
phase. In a cyclical business like stainless steel, we see
it as extremely important to have a strong balance sheet.
We succeeded in de-risking the company in the first phase
and are now financially stronger than ever. Outokumpu
is now more resilient to withstand also more challenging
economic environments.
On to strengthening the core
The second phase of the strategy is about strengthening
the core of the company. We will focus on three key
priorities: sustainability, growth from productivity and
customer-focused steering. We will aim to improve our
EBITDA run-rate by another EUR 200 million and maintain
our net debt to adjusted EBITDA ratio below 1.0 in normal
market conditions. Capital discipline continues throughout
the second phase and there will also be an increasing
focus on shareholder returns.
We will keep and further improve our leading position
in sustainability to be able to meet our customers’
increasingly critical and challenging needs. We will make
targeted investments in sustainability and productivity to
improve our margins. In the second phase, Outokumpu
aims to reduce its CO2 emissions by 14% by the end
of 2025 in line with its SBTi 1.5°C climate target. We
also intend to create defendable competitive advantage
through sustainability, particularly against the Asian
producers.
As part of the second phase, we launched two customer
differentiated strategies for business area Europe. We
aim to strengthen our cost leadership in high-volume
stainless-steel products and a global market leadership
in advanced products. Cost leadership in high-volume
products is about running our largest and fully integrated
facilities as efficiently as possible. The stainless steel
industry is a very tough cost-per-ton game. We are the
lowest-cost producer in Europe today and our intention
is to maintain that position. We also need to further
improve our delivery flow to customers, to increase
customer satisfaction and lower working capital. As the
green transition in the energy market is intensifying, and
industrial activity is increasing, we will utilize our market
leadership in advanced products used in many industrial
segments. In the business area Americas, our focus will
be on sustaining the high profitability levels, and at the
core of business area Ferrochrome’s strategy is carbon
neutrality.
Outokumpu
is now
financially
stronger than
ever.
Targets for 2022
Achieved by end of June 2022
Targets for 2022–2025
Achieved by end of 2022
Net debt to adjusted
EBITDA ratio to below 3.0
Net debt to adjusted EBITDA
ratio at 0.2
Net debt to adjusted
EBITDA below 1.0 in normal
market conditions
Net debt ratio at 0.0
EUR 250 million EBITDA
run-rate improvement
EUR 260 million EBITDA run-rate
improvement
EBITDA run-rate
improvement of EUR 200
million
EUR 28 million EBITDA
run-rate improvement
EUR 600 million of capital
expenditure for the coming
three years
EUR 158 million of
capital expenditure
Stable and growing dividend
Dividend proposal of
EUR 0.25 plus additional
EUR 0.10 per share
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
10/220
Outokumpu Annual report 2022 Value creation
Our operations impact society and the environment in many ways. Our biggest
impact is our product, stainless steel, manufactured mostly of recycled
metal. We contribute to several United Nations’ sustainable development
goals either through the way we operate or through our products.
Inputs
Outokumpu
Outputs and impacts
Sustainable development
goals we impact
448,000 tonnes alloys
418,000 tonnes slag formers
227,000 tonnes coke
2,135,000 tonnes of recycled steel
7,493 million euros of operating
costs (6,482 million euros of
materials and supplies and 1,011
million euros on services)
6,228 suppliers (45% local)
3,973 GWh of electricity used (86% of
low carbon, of which 20% renewable)
574 GWh of our own of process gases
2,407 GWh of primary fuel used
9,494 million euros of sales
94% of recycled material
content in our products
98,000 tonnes of recycled metals
167 million euros of
environmental expenditures
8,357 employees (full-time equivalent)
2.8% decrease in energy efficiency
128,000 tonnes of recycled
and reused waste
99% of dust captured
Total recordable injury frequency rate 1.8
65,708 training hours
Development discussion % of 98
Employee survey's overall score of 79
Avoided CO2 emissions by
using our stainless steel
10,700,000
tonnes in a year
2,160,000 tonnes of stainless steel
430,000 tonnes of ferrochrome produced
927,000 tonnes of slag
1,043,000 tonnes of direct CO2 emissions
368,000 tonnes of indirect CO2
emissions of electricity
2,718,000 tonnes of other indirect
mainly upstream CO2 emissions
249,000 tonnes of waste landfilled
54,000 tonnes of dust recycled
and 16,000 tonnes landfilled
Some 10.7 million tonnes of avoided CO2
emissions by using our stainless steel and
1.7 million tonnes by using our ferrochrome
80 million euros of payments to creditors
155 million euros of dividends
15 million euros paid taxes
1,061,000 euros to sponsoring
722 million euros of employee
benefit expenses
Annual average salary of 66,013 euros
Affordable and clean energy
Decent work and economic growth
Industry, innovation and infrastructure
Responsible production
Climate action
Partnership for goals
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
11/220
Outokumpu Annual report 2022
Stainless steel market
The long-term outlook for stainless steel consumption remains positive: there is an
increasing need for long-lasting and sustainable solutions to the world’s most critical
challenges. Outokumpu has a strong market position in its key markets.
Sustainability is the key
The main growth drivers for the stainless steel industry
are global megatrends like urbanization, mobility,
economic and population growth, and climate change.
These megatrends drive the demand for economic, social,
and environmental sustainability as well as the need to
develop sustainable solutions that are durable and can be
reused at the end of their lifecycle.
Our commitment and contribution to sustainability are
embedded throughout our value chain from procurement
and production to customer deliveries. Mitigating climate
change by reducing our carbon footprint is a clear focus
area, and we aim to reduce our environmental impact
through, for example, energy efficient production and by
using low-carbon electricity. We are continuously looking
for ways to improve the sustainability of our products and
processes even further. In 2022, we presented the new
sustainable product, Outokumpu Circle Green, the world’s
first emission-minimized stainless steel.
We sell our stainless steel either directly to end-users
or to stainless steel distributors, tube makers, and
processors, such as steel service centers, who resell
the products to end-users. In 2022, around 60% of our
business area Europe’s stainless steel flat products was
sold directly to end-user customers, with the share of
end-users rising from the previous year. The remaining
40% were delivered to distributors that stock and process
stainless steel to serve end-users. In the Americas
business area, distributors have a higher share, with
around 70% of the total quantities.
Global market with a few big players
Outokumpu operates in the global stainless steel
market. We are known in the market for our world-
class assets, comprehensive product portfolio and
proven expertise, which form a sound foundation for
our strategy execution and future success. In 2022, the
market for cold-rolled flat products totaled approximately
30.5 million tonnes. Outokumpu’s global market share
was approximately 3.6%. Outokumpu is the market
leader in Europe, given our cold-rolled market share of
approximately 26%, impacted by elevated imports into
EU30. In the USMCA region, our market share stands at
23%, making Outokumpu the clear number two in the
Americas. Focusing on the US market, Outokumpu’s share
amounts to around 22%. (Sources: CRU Stainess Steel
Flat Products Market Outlook November 2022, EUROFER,
Foreign Trade Statistics, American Iron & Steel Institute,
StatsCan, Canacero)
Overcapacity has burdened the stainless steel industry in
recent years, especially in Asia. In addition to Outokumpu,
the largest stainless steel producers worldwide include
Asian companies Tsingshan, Delong, Baosteel, TISCO and
POSCO as well as European-based Acerinox and Aperam.
Global steel production amounted to 1,391 million tonnes
of which approximately 4.1% was stainless steel. (Source:
CRU Nickel Monitor January 2023, Worldsteel).
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Amazon Doppler tower in Seattle combines sustainable, corrosion-
resistant material fits for the coastal location with bright colors on
stainless steel by Inox-Color GmbH.
12/220
Outokumpu Annual report 2022 Sales of customer segments
Kilotonnes of flat products
Stainless steel deliveries
by business area, %
In 2022, the global stainless steel production capacity of
slabs increased by roughly 16% to 70.3 million tonnes.
The global utilization rate was calculated around 66% in
2022, down from 80% in 2021, when mills operated at
full steam. In the second half of 2022, the market slowed
down and faced decreasing production volumes. (Source:
CRU Stainless Steel Flat Products Statistical Review
November 2022)
As the production of stainless steel is capital intensive,
producers generally aim for continuously high capacity
utilization in order to maintain and improve profitability.
Several Asian producers also manufacture carbon steel,
which can be a substitute product for stainless in some
cases, while European stainless steel manufacturers
focus on the production of sustainable material.
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Appliances 9%
Automotive 10%
Architecture, building & construction 3%
Chemical, petrochemical and energy 2%
Metal processing & tubes 16%
Heavy industries 11%
Other 2%
Distributors 47%
Value in %
Legend
Appliances
Automotive
Architecture,
building &
construction
Chemical,
Business area
petrochemical
Metal processing
& tubes
Heavy industries
Market share
Other
Distributors
9%
10%
3%
2%
16%
11%
2%
47%
Europe 68%
Americas 31%
Other operations 1%
Legend
Value in %
Europe
Americas
Other operations
68%
31%
1%
Europe
Americas
Ferrochrome
Million tonnes
2023
2022
Major stainless steel producers
#1, 26% (EU3O) 1)
#2, 23% (USMCA) 2)
3% 3)
Calvert, Alabama, the US
San Luis Potosí, Mexico
Kemi and Tornio, Finland
Previously: Industry segments of flat products
Production
Source: SRT, stainless steel flat products by
volume of BA Europe, 9th January 2023.
Tornio, Finland
Avesta, Degerfors and Nyby,
Sweden
Terneuzen, the Netherlands
Dahlerbrück, Dillenburg and
Krefeld, Germany
5
4
Stainless steel producers
Largest customer
segments
Distributors
Automotive
Metal processing and tubes
Heavy industries
Distributors
Appliances
Automotive
Pipes and tubes
Tsingshan
Delong
Baosteel*
TISCO*
POSCO
Acerinox
Outokumpu
Guangxi
Jindal
Aperam
9.8
5.9
5.2
4.5
3.3
3.3
3.2
3.0
2.9
2.8
9.8
5.9
5.2
4.5
3.3
3.3
3.2
3.0
2.9
2.8
Source: Stainless steel production capacity of slabs, CRU Stainless
Steel Flat Products Statistical Review, November 2022.
* Subsidiaries of Baowu Steel
Main competitors
Aperam, Acerinox, Acciai
Speciali Terni
NAS, Cleveland Cliffs (AK),
ATI
Glencore, Samancor, ERG
1) EUROFER. 2) American Iron & Steel Institute, StatsCan, Canacero. 3) ICDA.
13/220
Outokumpu Annual report 2022 2022: a year with two different halves
Exceptional circumstances in 2021 were an outcome
of unprecedented order intake growth, mainly due to
economic stimulus across the world and a successful
rollout of COVID-19 vaccines. For many markets, the
momentum continued into the first quarter of 2022,
leading to upwards revised cold-rolled apparent
consumption for the first quarter. With extraordinary high
base prices, profitability of mills in Europe and the USA
remained on a high level.
After the start of the war in Ukraine in the first quarter
of 2022, the market saw unprecedented nickel price
volatility and raising energy costs putting European
producers under pressure. Uncertainties of cost
development undermined consumer demand, and stocks
were full. Mills’ order books normalized in the second
quarter, with European producers’ lead times extending to
two−three months for commodity grades.
During the second half of 2022, the stainless steel
market saw a steep correction. High energy prices and
consumer inflation created a challenging landscape in
Europe as demand weakened. Logistical constraints
and a shortage of components continued to weigh on
industrial production worldwide. In China, strict COVID-19
restrictions and extraordinary weather conditions delayed
demand recovery and pessimism among producers led to
production cutbacks.
During the first quarter the wide price gap between
European and Asian material offered many advantages for
importing material and led to an extraordinary high import
penetration. The difference between transaction prices
narrowed in the course of 2022, and imports became
more and more unattractive. Decreasing base prices and
shortening lead times in Europe made domestic ordering
more favorable, starting in autumn 2022.
Unprecedented
order intake
growth
followed by a
steep correction.
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Stainless steel and raw material prices in 2022
Stainless steel price*, EUR/t
Nickel price, USD/t
6,000
5,000
4,000
3,000
2,000
1,000
0
95
40,000
30,000
20,000
10,000
0
Ferrochrome price, USD/lb
2.5
2.0
1.5
1.0
0.5
0.0
0
5
10
15
22
13
14
15
16
17
18
19
20
21
22
13
14
15
16
17
18
19
20
21
22
Source: CRU Stainless Steel Flat Products Monitor, December 2022.
* Stainless steel reference price for cold rolled 304 2mm sheet in Europe.
Source: LME settlement, monthly average prices.
Source: Quarterly contract prices agreed between South African
ferrochrome producers and European buyers.
14/220
7
8
9
Outokumpu Annual report 2022 Outokumpu's CEO Heikki
Malinen and Klöckner
& Co's CEO Guido
Kerkhoff at our finishing
plant in Terneuzen, the
Netherlands.
Circle Green has the lowest
carbon footprint in the world
Our Circle Green product line has raised interest and demand among our customers
across segments, and in 2022 we witnessed early successes with Circle Green product
orders. Circle Green’s emission intensity is the smallest in the world: 92% smaller than
the global industry average and 64% less than Outokumpu’s stainless steel routinely,
which was already the smallest in the industry.
Our long-term customer Fiskars Group, the global home of design-driven brands for indoor
and outdoor living, was the first company to use this product as a raw material in Fiskars
branded cookware products made at Fiskars Group’s Sorsakoski Factory in Finland.
In December, Klöckner & Co became the second customer, and in their product portfolio
Circle Green is classified in the best, so-called ‘PRIME’ category in Klöckner & Co’s new
Nexigen® categorization for CO2-reduced stainless steel. By cooperating with Outokumpu,
Klöckner & Co will be able to significantly expand its range of sustainable Nexigen®
products and services.
Annual review
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Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
15/220
Global apparent consumption of stainless steel flat
products amounted to 39.6 million tonnes in 2022, a
gain of 0.4% vs. 39.4 million tons in 2021. The demand in
APAC decreased by 0.8%, while Americas and EMEA were
able to grow by 0.4% and 6.5% respectively. (Source: CRU
Stainless Steel Flat Products Market Outlook November
2022)
In China, domestic production has rebounded strongly,
but strict lockdowns in key consuming and logistical hubs
severely undermined demand.
Regional distribution of stainless
steel apparent consumption in 2022
EMEA 17%
APAC 75%
Americas 8%
Source: CRU Stainless Steel Flat Products Market
Outlook, November 2022.
Value in %
Legend
EMEA
APAC
Americas
17%
75%
8%
6
Outokumpu Annual report 2022 Challenges ahead but recovery expected
The global market will remain turbulent and mixed
throughout 2023 when it comes to apparent consumption
growth.
While Europe may struggle with an upright recession and
energy crisis, the Chinese market may not recover as fast
as expected. The end of strict COVID-19 restrictions might
lead to disruptions in economy during the first quarter, but
in the long-term stronger growth rates are to be expected.
Extreme climate conditions and weakening global demand
could impose additional uncertainty on the market.
Although being more independent from energy supply
than Europe, the US demand is still challenged by high
distributor inventories, high-interest rates, an uncertain
economic outlook and volatile costs. These factors will
result in some uncertainty in 2023.
The world GDP is expected to have grown 3.0% in 2022.
For 2023, growth is expected at 1.5%. (Source: CRU
Global Economic Outlook December 2022)
We are taking
immediate
action on
our energy
efficiency.
New ambitious
energy efficiency
target set
Outokumpu introduced a significant increase in its energy
efficiency improvement target and will therefore prioritize
related investments in 2023 and 2024. We set a new
8% energy efficiency improvement target until the end of
2024 compared to the January–September 2022 level.
These measures would correspond to energy saving of
approximately 600,000 MWh which is equal to the annual
electricity usage of 15,000 households.
“The European energy crisis has created a turbulent
operating environment. To tackle the uncertainty, we have
decided to take immediate action on our own energy
efficiency. This means that we will prioritize investments
to improve our energy efficiency and also increase related
annual capital expenditure by EUR 20 million in 2023 and
2024”, says Outokumpu’s Chief Technology Officer Stefan
Erdmann.
We aim to improve our energy efficiency by investing in
furnace improvements of heat treatment lines, optimizing
our energy consumption and fully utilizing our energy
management system, and improving yield.
Annual review
We are Outokumpu
Year 2022 in figures
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Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2022
16/220
Risks and opportunities
Effective risk management is critical
to the delivery of our strategic targets.
Risks and opportunities delivering
on the Outokumpu's strategy
Opportunities and risks
The risk management approach is mapped to eight
material risk areas relevant for Outokumpu, set out in
the table on the next page. Financial risks are described
in further details in note 5 to our audited consolidated
financial statements. Risks associated with internal
controls over financial reporting reporting are described in
Corporate Governance Statement.
Having completed the first phase of our strategy, we
have emerged financially stronger and have built a solid
foundation to unlock further value for the long term. We
explored the value accretive opportunities that leverage
Outokumpu’s capabilities and resources, while positioning
us favorably for a decarbonizing world and operating in a
circular economy.
Risk management’s role in delivering
Outokumpu's strategy
Outokumpu’s strategy is built on our strong foundation,
starting with megatrends driving stainless steel
demand growth, our people and our stable operations
and continuous improvement culture. Our aim during
the second phase of the strategy is to strengthen the
core of the company, focusing on three key priorities:
sustainability, growth from productivity and customer-
focused steering.
Outokumpu's Board of Directors recognizes that
creating shareholder returns is the reward for taking
and accepting risk. The effective management of risk is
therefore critical to supporting the delivery of the Group's
strategic objectives. In order to manage risks associated
with the strategic business decisions, an effective risk
management has a vital role in
- Determining the appropriate level of risk tolerance
and appetite
- Assessing the risks and the nature of the risks
- Ensuring that appropriate processes, risk mitigations
and controls exist in Outokumpu to manage the risk
under each risk area
Annual review
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Remuneration report
Financial year
Our most important raw material is recycled steel, and melting it
requires a lot of energy. We are actively managing risks related
energy costs and sustainable sourcing.
17/220
Outokumpu Annual report 2022 Risk areas relevant to us and our strategy implementation
Macro economics
and steel markets
Legal and compliance
Raw material and
energy prices
Operational / supply chain
Steel demand is affected by business
environment, economic outlook, market
megatrends, demand for sustainable
materials and long-term prospects for
stainless steel across regions. Risk of
overcapacity in stainless steel, global
trade and industrial actions and trade
defense measures also affect the
supply-demand balance.
Material risks in the area:
- Stagnation/economic downturn
- Trade and geopolitics
Evolving legal, compliance and
ethical requirements in areas such as
competition law, trade sanctions, anti-
corruption, data protection and contract
requirements require constant attention
to which Outokumpu is committed
adhering to. Breaches of applicable
laws and regulations, other unethical
behaviour, as well as exposure to
crime, fraud and other unauthorized
activities may result in adverse criminal,
financial or reputational consequences.
Developments in the area of trade
sanctions may also cause disruption to
Outokumpu's supply chain.
Price changes of alloy metals such
as nickel and chrome as well as
volatility in energy prices may have
significant impacts on earnings, cash
flow and balance sheet. Price volatility
may also impact adversely stainless
steel demand, level of inventories
and consequently also capacity
utilization ratios.
Material risks in the area:
- Metal price risk
- Energy costs
Our production processes are dependent on the
continuous operation of critical production equipment.
Fire or machinery breakdown may lead to major
interruption in production and severe incident to
personnel. Supply chain disruption may arise from
e.g. equipment failures, natural disasters, epidemics
or other factors affecting security of supply for raw
materials (especially sustainable nickel), energy
required in the manufacturing process and also
dependencies on the suppliers and their contractual
terms and conditions.
Material risks in the area:
- Dependency on critical suppliers and machinery
- Sustainable nickel availability
- Energy availability
Information security
ESG
Financial
Reporting
Outokumpu relies on various
applications and other information
technologies that are used globally.
Unplanned interruptions or failures
in the applications and underlying
infrastructure could result in business
interruptions. Furthermore, cyber
threats could cause leaks of sensitive
information, theft of intellectual
property, business disruption and
imposition of penalties.
Material risks in the area:
- Cyber security
Outokumpu is committed through its
emission reduction targets to be carbon
neutral in 2050 for direct and indirect
CO2 emissions. Complying with ESG
goals requires mitigating ESG-related
risks related to physical climate change,
adapting environmental management
practices and duty of care, integrity and
ethic risk, social responsibilities such
as gender neutrality, respect for human
rights, anti-bribery and corruption
practices, and compliance to relevant
laws and regulations.
Material risks in the area:
- Climate risk
- People and safety
- Sustainable sourcing
Financial risks arise from adverse
changes in metal prices, foreign
currencies, interest rates and fair values
of equity instruments, credit risk, liquidity
risk, insurance and underwriting risk and
country and counterparty risk.
The risks associated with reporting in
Outokumpu’s business include failure in
financial reporting, incomplete reporting or
disclosures towards authorities, incomplete
sustainability reporting and internal reporting.
Opportunities can further leverage our capabilities in strategy implementation
- Global megatrends like urbanization, mobility and economic and population growth drive the
need for sustainable solutions.
- Mitigating climate change increase demand for low-carbon products as well as transparent
product carbon footprint information.
- Investments in energy efficiency improvement initiatives and programs across Outokumpu
enhance cost competitiveness, innovation, and business resilience.
More about opportunities in connection with risk areas on the following pages.
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
18/220
Outokumpu Annual report 2022
Risk management
Our three lines model
Within Outokumpu, identified risks are monitored
and controlled at different organizational levels.
Outokumpu's risk management policy outlines the
roles and responsibilities of the relevant governance
bodies in implementing the risk management, including
continuous reporting within the Outokumpu Group.
The CEO and CFO form the main governing roles in
governance, risk and compliance (GRC) topics and are
responsible for monitoring material risks and exposures
on a regular basis. The GRC functions (consisting of risk
management, legal, IT risk and security, compliance
and internal control) are responsible for day-to-day
coordination and supporting of risk management
activities and reporting. Internal audit periodically
reviews risk management, internal control, IT risk and
security, compliance, and governance processes.
Detailed descriptions of our three lines model can be
found in the table on the right.
Annual review
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Year 2022 in figures
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Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
E
x
t
e
r
n
a
l
a
u
d
i
t
Board of Directors
Audit Committee
CEO and CFO
Business areas, Functions
and Legal Entities
Governance, Risk, Control
and Compliance functions
Accountability: Management
of Business Areas, Functions
and Legal Entities
Accountability: Legal,
risk management, IT risk
and security, compliance,
and internal control
Group Internal Audit
Accountability: Independent
assurance and value
adding recommendations
1st
2nd
3rd
First line roles
Second line roles
Third line roles
Have the primary
responsibility & accountability
for the management of
risks emanating from
business activities
Establish policies and
processes, coordinate and
support risk management
and related reporting
Review of risk management,
internal control, compliance
and governance processes
Delegation, direction,
resources, oversight
Accountability,
reporting
Alignment, communication,
coordination, collaboration
19/220
Outokumpu Annual report 2022
Risk management and control procedures
Our risk management is based on a holistic risk
management procedure, which is shaped by our vision
of being the customer’s first choice in sustainable
stainless steel and by our strategic objectives and risk
appetite.
We operate in accordance with the risk management
policy approved by our Board of Directors. The risk
management framework sets out clear roles and
responsibilities for each role at different organizational
levels. At Outokumpu, we have begun the journey to
digitalize our risk management and control procedures.
By leveraging our digital enterprise risk management
and control platform, we improve risk communication
and enhance the overall effectiveness of our risk and
control management process. Outokumpu is committed
to managing risks in a proactive and effective manner,
which includes the early identification and evaluation
of risks, and the management and mitigation of risks
before they materialize. Furthermore, the platform
supports also control testing. The risk management
process consists of the following five core stages: 1) risk
identification; 2) risk evaluation; 3) mitigation actions; 4)
control activities, and 5) risk reporting. The illustration
on the right summarizes our risk and control framework.
Annual review
We are Outokumpu
Year 2022 in figures
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Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Risk management process in Outokumpu
Outokumpu's vision
Outokumpu’s pursuit of its strategic
objectives affects the risks to
which the company is exposed
Risk management policy
The policy defi nes the objectives,
approaches and areas of responsibility in
the Group’s risk management activities
Risk and control management system
Who
How
Board of
Directors
Approves Risk Management Policy including
risk tolerances and monitor material risks
Audit Committee
& Remuneration
Committee
Oversees fi nancial reporting, audit process and monitors
related party transactions and risk management. Determines
and approves the terms of service, including remuneration,
Outokumpu Leadership Team members exc. CEO.
CEO & CFO
Develop and implement risk management
approach in line with policy
Risk Management
Steering Group & other
Steering groups
Execute risk management actions delegated
by the CEO and CFO.
Contribute to company’s overall risk management
Governance, risk and
compliance (GRC)
Plan and coordinate governance, risk management,
compliance and internal control efforts
Business, operations
and functions
Ownership of the risk management activities related
to risks arising from their business activities
Internal audit
Determines whether governance and compliance
processes, the internal control system, and the risk and
control management process are effective and effi cient
- Risk management process
is supported by the digital
platform for risk and
control management,
where risks are identifi ed,
evaluated, mitigated,
controlled and reported on
a timely basis
- Adherence to sub-
policies including fi nancial
risk, informational and
cyber security, internal
control, security policy and
Outokumpu’s internal audit
charter
- Risk management actions
are linked to strategy
planning, performance
management, internal
controls and compliance
Risk management process
Analyze
Manage
1. Identify
2. Evaluate
3. Mitigate
4. Control
5. Report
Identify all
signifi cant risks,
including causes
and effects
of the risks.
Evaluate the risks,
determine gross
and net impacts
and likelihoods of
occurrence of risks
Develop and implement
risk mitigation actions,
seek to reduce the
likelihood and impact or
realization of the risk
Monitor and conduct
control activities,
improve the level of
assurance on the
underlying processes
Report and communicate
the risks on an on-going
basis and regular
update to maintain
continuous improvement
20/220
Outokumpu Annual report 2022 Material risks
Significant identified risks in relation
to the risk areas
Material risks recognized by Outokumpu's management
could be of any nature and arise from any part of the
business all having a potential material impact on our
business performance and objectives. Outokumpu
regularly assesses the likelihood and potential impact of
risks from both financial and non-financial perspectives
in order to also reflect our ambition in ESG strategy and
reputational tolerance. The evaluation of the material
risks, and the effectiveness of our associated mitigation
actions and internal controls, reflect management’s
current expectations, forecasts and assumptions, and
involve critical judgments that are subject to changes
in our internal operations and external factors that are
beyond our control. Outokumpu deploys preventative and
mitigative actions and controls to reduce the likelihood
of certain threats. Some of the threats cannot always be
avoided. We closely monitor the threats on an ongoing
basis and develop business resilience plans to mitigate
the disruptions caused by any threats.
Based on our risk evaluation criteria and scoring,
Outokumpu has identified 11 significant material risks
in relation to the risk areas. They are presented in the
table on the right. Outokumpu continuously monitors
and re-assess these material risks, reviews changes
overtime, and identifies new opportunities to achieve our
strategy and new emerging material risks having arisen.
The identified material risks are described in the risk
profiles in the following pages to provide overview on
the possible threats, opportunities and our actions to
mitigate these risks.
Risk areas and material risks
Macro economics and
steel markets
Stagnation/economic downturn
Macro economics and
steel markets
Trade and geopolitics
Raw material and
energy prices
Metal price risk
Raw material and
energy prices
Energy costs
Operational/supply
chain
Dependency on critical suppliers
and machinery
Operational/supply
chain
Sustainable nickel availabiliy
Operational/supply
chain
Energy availability
Information security
Cyber security
ESG
ESG
ESG
Climate risk
People and safety
Sustainable sourcing
Annual review
We are Outokumpu
Year 2022 in figures
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CEO’s review
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Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
We are actively
mitigating
identified
material risks.
21/220
Outokumpu Annual report 2022 Stagnation and economic downturn
Trade and geopolitics
Summary
Adverse changes in the global economic environment may impact the
stainless steel market and thus Outokumpu’s business in its core
markets. Examples of such adverse developments are, for instance,
an economic downturn driven by energy crisis in Europe and a slower
than expected recovery in the Chinese market from further COVID-19
restrictions.
Opportunities
- Global megatrends including population growth, urbanization, increasing
mobility and climate change drive the need for sustainable materials
over the economic downturns and hence supporting the long-term
prospects for stainless steel demand.
- Maintaining our competitiveness through economic cycles strengthens
the confidence towards Outokumpu.
- Benefiting from post-COVID-19 market recoveries in Asia, especially in
China.
Threats
- An economic downturn could have negative impact on demand for
our products.
- Inflation pressures could increase the cost of production and negatively
impact demand and profitability.
Outokumpu’s response
- Continue to safeguard our strong financial position and ensure our
corporate credit rating to remain at least at the current level, maintain
a diversified source of funding and secure access to funding when
needed.
- Continue capital discipline with targeted investments in sustainability
and energy efficiency.
- Monitor market development with supporting tools enabling us to
respond and react changes in business plans and operations.
Risk area
Macro-
economics
and steel
markets
Summary
As Outokumpu’s operations are global, Outokumpu is exposed to
the developments of global trade policies and geopolitics. Potential
geopolitical conflicts and unfavourable trade policy decisions for
Outokumpu can result to risk of increased unfair imports on the home
markets, or undermine access to the export markets.
Risk area
Macro-
economics
and steel
markets
Opportunities
- By calling for a level playing field, Outokumpu could contribute to
creating fair competition on its markets.
- More assertive trade and climate policies for the imports imposed
by the EU could level the playing field and ensure they are not
circumvented.
Threats
- Imports surge if the trade defense measures in our home markets,
(such as the EU steel safeguard quota measures and antidumping/
antisubsidy duties) are not renewed or not made effective enough to
mitigate from unfair imports.
- Geopolitical tensions, trade sanctions or the trade policies imposed
by the third countries could result in restricting access to our export
markets or on the other hand disrupting access to our key raw
materials.
Outokumpu’s response
- Continue advocacy actions on the national and the EU level to promote
relevant measures and cooperate with organizations such as the
European Steel Association (EUROFER) to initiate new investigations
when possible to ensure a level playing field and fair competition.
- Closely review the status of the EU trade defense measures and related
investigations to be able to proactively react to the threat of import
surge, and ensure the measures are not circumvented.
- Continually monitor the geopolitical and global trade policy
developments to proactively prepare for potential supply
chain disruptions.
Read more about stainless steel market.
Annual review
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Financial year
22/220
Outokumpu Annual report 2022
Metal price risks
Energy costs
Summary
Outokumpu is exposed to price changes in alloy metals (such as chrome,
nickel, molybdenum and iron) for example through purchase of raw
materials as well as sale of stainless steel end products where the price
of alloy metals is based on market prices. The timing difference in such
commercial purchase and sale transactions as well as the inventory
position expose Outokumpu to metal price risk alongside our capability to
pass on price changes in raw materials to end-product prices. Changes in
ferrochrome market prices expose Outokumpu revenue from ferrochrome
sales to metal price risk.
Opportunities
- Managing turning points of metal markets successfully reduces metal
price risk impacts on earnings, cash flows, and balance sheet structure.
- End-to-end approach in metal price and margin steering ensures
alignment and consistent metal price risk mitigation from raw materials
to stainless sales.
Threats
- Significant price level changes of alloy metals could have an impact
on profitability.
- Changes in market and trading conditions at metal exchanges may have
adverse impacts on metal pricing and risk mitigation through hedging.
- Fluctuation of revenue from ferrochrome sales due to changes in the
ferrochrome market prices.
Outokumpu’s response
- Steer the metal price risk mitigation through the Financial Risk Steering
group and other steering groups.
- Manage metal margin in both raw material and stainless steel pricing
according to Outokumpu’s pricing policies and processes.
- Hedge the nickel price risk, excluding the risk related to base stock, in
full according to Treasury Policy.
- Mitigate risk through pricing decisions by including an alloy surcharge
clause in some of the stainless steel sales contracts, with the aim of
reducing the risk arising from the timing difference between alloy metal
purchase and stainless steel pricing and delivery.
- Ensure that mitigating actions are conducted across functions, i.e.,
in sales, raw material procurement, operations and supply chain
management and treasury.
Read more in the note 5.3 in the financial statements.
Risk area
Raw
material
and energy
prices
Summary
The production of stainless steel and ferrochrome requires significant
amounts of energy, particularly electricity, natural gas and, to a lesser
extent, propane, and fuel oil. Energy costs represent a substantial portion
of Outokumpu’s total cost of sales, and energy spend has increased as a
result of political and economic factors beyond Outokumpu’s control.
Risk area
Raw
material
and energy
prices
Opportunities
- Enhancing cost competitiveness, innovation, and business resilience
through investments in energy efficiency improvement initiatives and
programs across the Group.
- Better control over energy costs by optimizing energy utilization and
avoiding electricity price peaks.
Threats
- Adverse economic development such as the energy crisis in Europe, the
war in Ukraine, and political interventions could cause imbalance in the
energy market.
- High and volatile electricity and gas prices together with increasing
hedging and spot costs could constrain our competitiveness.
Outokumpu’s response
- Manage energy price risk centrally, complying with Energy Procurement
Policy and increased energy steering cadence.
- Hedge energy price risk with long-term agreements, fixed price supply
contracts and partial ownerships in power utilities.
- Launch and implement energy efficiency initiatives and measures,
revising targets and priorities related capital expenditure.
- Optimize ferrochrome production and maintenance periods to avoid
increase in costs and to ensure profitability by daily activities.
- Monitor and issue regular energy updates on availability and
cost outlooks to business to ensure visibility and updates for
management decisions.
Annual review
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Year 2022 in figures
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Remuneration report
Financial year
23/220
Outokumpu Annual report 2022
Dependency on critical suppliers and machinery
Sustainable nickel availability
Summary
Stainless steel and ferrochrome production processes are dependent on
the continuous operation of critical production equipment. Production
downtime and disrupted operations may occur as a result of fire,
mechanical failures in production equipment, disruptions in supply
chain management or supplier relationships. Main critical supplier
dependencies exist in Calvert in the US, where hot rolling is done under
a hot rolling agreement at a facility owned and operated by an external
company close to Outokumpu’s own facilities; and in Tornio, Finland,
where the operations rely on the take or pay liquid natural gas agreement
for the supply of LNG.
Opportunities
- Preventing the risk of machinery breakdown improves safety and
increases efficiency in production.
- Stringent supplier qualification requirements and efficient supplier
relationship management improves supply chain resilience.
- The continuous evaluation of dependencies and review of alternative
plans could increase our ability to identify opportunities to further
improve the efficiency of our operations.
Threats
- Natural catastrophes, fire or serious mechanical machinery
breakdowns could lead to major damage to property, business
interruption or severe accidents for personnel on site.
- Supply chain disruptions or critical supplier relationships ending
without sufficient alternative arrangements in place could cause
substantial interruptions to the downstream part of our business.
Outokumpu’s response
- Ensure maintenance and manage loss prevention actions in close
cooperation with our insurers with regular site loss prevention audits.
- Place appropriate insurance covers to secure the company against
large financial losses arisen from insurable loss events.
- Manage our supply chain by maintaining good visibility into the supply
chain and maintaining good relationships with suppliers. Also, reviewing
alternative plans for securing availability of critical services and goods
with contingency plans being developed.
- Prioritize sustainable sourcing and creating supply chain resiliency via
strict supplier qualification requirements, including ESG criteria.
Risk area
Operational
/ supply
chain
Summary
Nickel is one of the essential metal alloys in the stainless steel
production. In addition of secondary nickel units derived from stainless
steel scrap, Outokumpu utilizes primary nickel ore in its production. As
with all raw materials, Outokumpu aims to ensure that its nickel supply
chain is complying with its sustainable and responsible sourcing values,
including human rights and carbon emission reduction. Depending on the
nickel ore type, the carbon footprint varies.
Risk area
Operational
/ supply
chain
Opportunities
- Maximize sourcing and using steel scrap as a raw material rather than
virgin ore minimizes our carbon footprint and ensures utilization of
sustainable nickel through recycled material.
- Increase in sustainable nickel capacity or new innovations in
technologies to improve low carbon footprint in nickel unit production.
Threats
- Increase in demand on low-carbon class 1 nickel predominantly from
western countries in electric vehicle battery industry.
- Limited alternatives could push towards the use of high carbon
footprint options which would negatively impact on our CO2 emission
and sustainability targets.
Outokumpu’s response
- Maintain and further develop strong relationships with our scrap metal
suppliers. Better quality scrap of the right composition is key to using
recycled steel as efficiently as possible.
- Manage projects that aim to increase the use of stainless steel scrap
and also to maximize the benefits of the recycled content in order to
reduce primary raw materials with higher carbon footprint.
- Improve the supplier evaluation process with the aim to support
Outokumpu’s strategy of sustainable and responsible sourcing.
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
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Outokumpu Annual report 2022 Energy availability
Cyber security
Summary
Outokumpu requires significant amounts energy in its stainless steel and
ferrochrome operations, particularly electricity and gas, and hence the
availability of energy is critical to continuity of Outokumpu’s operation.
Adverse development in geopolitics, trade sanctions, energy crisis in
Europe together with possible new regulations and governmental actions,
such as possible controlled electricity black-outs, could all negatively
affect the energy availability.
Opportunities
- Strengthening the independence of Outokumpu from fossil fuels
through possible investments in biocoke and biomethane being
investigated could reduce CO2 emissions but also improve business and
operational resilience towards lack of energy.
- Focus on energy utilization could drive us to explore further economic
opportunities within energy markets and also embed a culture of energy
efficiency across the company.
Threats
- Disruption in energy availability could lead into temporary shutdowns or
production limitations.
- Trade sanctions could disrupt energy market by limiting energy supplies
and indirectly expose Outokumpu as energy gases are acquired from
the European market, for which Russia is one of the indirect suppliers.
Outokumpu’s response
- Launch and implement energy efficiency initiatives and measures,
revising targets and priorities related capital expenditure.
- Ensure diversified energy sources and suppliers.
- Purchase and store alternative gas to ensure business continuity in
case of supply disruption.
- Source renewable wind power by long-term power supply agreements.
- Evaluate regularly the availability of electricity and energy gases for the
main countries in Europe by energy sourcing teams in order to plan and
adjust business decisions.
Risk area
Operational
/supply
chain
Summary
Outokumpu relies on various applications and other information
technologies that are used globally. Possible cyber security breach
could cause damage to our operations, data privacy or leaks of sensitive
information related to Outokumpu or its partners such as customers and
suppliers.
Risk area
Information
security
Opportunities
- Cyber security analysis and improvement investments could increase
transparency on the underlying synergies and efficiencies in
Outokumpu’s global and local information technology environment.
- Cyber engagement campaigns targeted to better cyber security
engagement, awareness and knowledge within Outokumpu employees
will also improve overall security culture.
Threats
- Outokumpu production facilities could face sudden disruption which
could cause delays in deliveries and in severe cases large business
losses as well as damage our customer and supplier relationships.
- Employee identities used in fraud cases, personal or confidential
information leaked outside company could cause financial losses,
imposition of penalties but also reputational harm.
Outokumpu’s response
- Ensure continuous improvements in cyber threat intelligence and cyber
threat detection to notice any attacks to conduct proactive prevention.
- Enhance security operations capability for infrastructure resilience and
faster incident response.
- Raise internal awareness of cyber threats by cyber security
engagement campaigns.
- Improve cyber security global governance with cross-functional
co-operation for cyber security strategy implementation.
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
25/220
Outokumpu Annual report 2022 Climate change
People and safety
Summary
Outokumpu is exposed to climate risks, both physical and transition risks.
Physical climate-related risks are threats to our production sites, such as
extreme weather conditions. Transition risks are changes in, for instance,
climate policies, emission trading systems as well as electricity prices which
can have an adverse impact to Outokumpu’s operating environment and
financial position.
Risk area
ESG
Summary
Outokumpu has set its safety vision and principles on a high level.
Despite the ongoing efforts and actions, a serious incident or fatal
accident may occur during working hours to Outokumpu employees or
contractors. Risks relating to our people also include the risk of not being
able to provide a healthy and inclusive working culture that can attract
and retain the best talents.
Risk area
ESG
Opportunities
- Increased demand for more sustainable products with lower
carbon footprint.
- Growing need for more transparent product carbon footprint
information, for example product-specific carbon footprint calculations.
- Being well positioned in the industry towards Carbon Border Adjustment
Mechanism (CBAM) and EU’s taxonomy alignment could create
competitive advantage.
Threats
- Failure to meet emission reduction targets coud result in losing
business and reputational and financial impact.
- Physical climate change risks such as floods, tornados, hurricanes and
rising sea water level.
- Increase in production costs due to new regulation after 2025 such
as in Emission Trading System (ETS) and Carbon Border Adjustment
Mechanism (CBAM).
Outokumpu’s response
- Implement ambitious climate targets set in line with the Science Based
Targets initiative’s 1.5°C ambition of limiting global warming.
- Improve energy efficiency, including the use of biocoke, fuel changes,
scrap increase and work on additional emission reduction technologies
such as carbon capture.
- Embed climate targets to main loan facility and to performance-based
share plans.
- Support customers in their emission-reduction targets with new low-
carbon solutions, such as the Circle Green, and transparent product-
specific carbon footprint data.
- Implement CO2 reduction program to meet challenging emission
targets.
Read more about climate change.
Opportunities
- Sharing best safety practices globally creates opportunities to improve
safety in all our processes.
- Safety leadership trainings improves management skills and ensure
that safety is kept priority in the company.
- Investments in our production lines and ways of working upgrades
our workplaces to ensure safe environment for our employees and
strengthens the engagement.
- Inclusive and diverse workforce ensures best market understanding and
fosters innovation.
Threats
- Risk of serious injuries and fatalities due to failure in high level safety
practices and culture.
- Lack of adherence to ensure that safety standards are fully
implemented in every site across the company.
- Inability to attract skilled and diverse workforce.
Outokumpu’s response
- Improve safety performance according to our safety strategy, including
active safety network activities.
- Address social and governance topics in the revised ESG strategy, such
as social responsibility, compliant behaviour, gender neutrality, and
alignment with the United Nations’ Guiding Principles on Human Rights
and Business (UNGPs).
- Continue roll-out of established diversity, equity and inclusion targets.
- Provide a communication channel, SpeakUp, enabling Outokumpu
employees and external stakeholders to report breaches of Outokumpu
Code of Conduct and other misconduct.
Read more about safety, our people, and ethics and compliance.
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
26/220
Outokumpu Annual report 2022
Sustainable sourcing
Summary
Outokumpu is part of a global supply chain, including raw material,
services and other material suppliers worldwide. Sustainable sourcing,
with the process of selecting suppliers, is critical across all purchases,
especially in raw material sourcing. Outokumpu is exposed to risks related
to raw material sourcing in high-risk countries, including ESG risks and
dependencies on certain critical suppliers.
Risk area
ESG
Opportunities
- Improving environmental protection and conditions for people and
communities in our supply chain ensures that Outokumpu is contributing
to sustainable development globally.
- Engaging and partnering with our suppliers supports in building not only
sustainable but also resilient supply chain.
- Exceeding customer expectations to provide a traceable and
responsible supply chain.
Threats
- Wrongdoing or social or environmental issues in our supply chain.
- Increase in external ferrochrome usage and slippage of scrap content.
- Competition over needed raw materials could increase sourcing in high-
risk countries.
Outokumpu’s response
- Ensure strong steering through established ESG core team and raw
materials supplier sustainability team.
- Implement ESG strategy where responsible sourcing is one of the
focus areas.
- Continue ResponsibleSteel certification of European sites.
- Continue implementation of United Nations Guiding Principles (UNGPs)
to prevent and mitigate human rights risks.
Read more about sustainable supply chain.
Annual review
We are Outokumpu
Year 2022 in figures
Our year 2022
CEO’s review
Vision and strategy
Value creation
Operating environment
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
27/220
Outokumpu Annual report 2022
Sustainability
review
Annual review
Sustainability review
Sustainability at Outokumpu
Environment
People & society
Reporting requirements
Governance
Remuneration report
Financial year
In this company of great people, we
work towards a world that lasts forever
and produce the most sustainable
stainless steel with the lowest carbon
footprint in the world. Our people and
their expertise is what separates us
from other companies.
Download separate
print-friendly version
of this section
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Outokumpu Annual report 2022 Annual review
Sustainability review
Sustainability at Outokumpu
Environment
People & society
Reporting requirements
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Remuneration report
Financial year
29/220
Sustainability
at Outokumpu
Sustainability is the beating heart of
everything we do at Outokumpu.
Outokumpu’s sustainable stainless steel helps to create a
world that lasts forever.
Our product is at the very core of our sustainability
approach. Stainless steel helps to build a more
sustainable future as it is 100% recyclable, efficient and
long-lasting. The cornerstone of our business is enabling
growth and innovation through sustainable stainless steel
solutions. Our vision is to become our customer’s first
choice in sustainable stainless steel.
However, it is not only what we do, but also how we do
it. We are the industry leader in sustainability as our
stainless steel has the lowest carbon footprint in the
industry when taking into account all indirect emissions,
including raw materials. We also lead the industry in
terms of the circular economy. The recycled material
content of our stainless steel is more than 90% and
we are continuously looking for ways to minimize our
environmental impact.
“More than 90% of
material that goes into
our stainless steel is
recycled, and we are
continuously looking for
ways to minimize our
environmental impact.”
Outokumpu Annual report 2022 Sustainability strategy and targets
Sustainability at Outokumpu is founded on good
governance and on three pillars: environmental, economic,
and social, all of which need to be in balance. In 2022, we
continued to implement our sustainability strategy which
was updated in 2021. The updated sustainability strategy
was based on our most recent materiality analysis and
reflects the growing importance of sustainability and the
possibilities it offers to our business.
As a part of the new sustainability strategy, we launched
more ambitious goals for our sustainability. Our
greenhouse gas emission reduction target was increased,
and we committed to the Science-Based Target initiative’s
(SBTi) 1.5°C climate ambition. Outokumpu's approved
SBTi target requires a 42% CO2 emission reduction across
all scopes by 2030 compared to the 2016 baseline. This
translates into a 30% CO2 emission reduction compared
to the 2020 level. Outokumpu is working closely with the
SBTi to define the decarbonization approach for the steel
sector.
In 2022, we announced new ambitious target for energy
efficiency in the next two years. By the end of 2024,
Outokumpu now aims to improve its energy efficiency by
8% across the group compared to the January–September
2022 level.
Outokumpu’s other sustainability targets include improved
safety and organizational health, strengthening diversity,
equity and inclusion, supply chain sustainability, zero
environmental incidents, and high material recycling.
Highlights in 2022
Outokumpu launched a new emission-minimized product
line Circle Green in June. It has the smallest emission
intensity in the world, up to 92% lower carbon footprint
than the global average. The unprecedented emission
reduction was achieved with improvements throughout
the whole stainless steel production chain. The first batch
was produced in Tornio, Finland, and was delivered to
one of our strategic customers, Fiskars Group, for use in
cookware.
During 2022, Outokumpu started the certification process
for the ResponsibleSteel standard for its operating sites
in business area Europe. ResponsibleSteel is a standard
that was developed to recognize steel sites that are being
operated in a responsible manner with the focus on the
most material ESG issues identified and agreed upon by
ResponsibleSteel members and stakeholders.
In September, Outokumpu announced that it is
investigating a significant investment in a biocoke and
biomethane plant in Tornio, Finland. With this investment
Outokumpu aims to significantly reduce its direct CO2
emissions and increase energy self-sufficiency in Finland.
Outokumpu's product-specific carbon footprints for
its stainless steel products produced in Europe were
published in November. The calculations are based on
continuous production data. Outokumpu is the first
stainless steel producer able to provide product-specific
footprint data.
Several supplier visits with sustainability topics in
focus were conducted during the year. Outokumpu also
published a Human Rights Policy as well as a Supplier
Code of Conduct during the year.
To strengthen organizational health and wellbeing,
Outokumpu started to conduct regular employee pulse
surveys during the second half of the year. The first survey
focused on employee engagement and the second on
safety culture. In May, Outokumpu conducted a company-
wide inclusion survey which was used as a basis for
creating Outokumpu’s roadmap and targets in diversity,
equity and inclusion.
Our reporting is based on material topics
Outokumpu regularly conducts a materiality analysis
to map our stakeholders' expectations and to assess
our business impact on sustainability. We updated our
materiality analysis in 2021 to further improve our focus
on the sustainability topics that are most important
for our stakeholders and operations. The analysis also
guides our reporting on the relevant topics. The detailed
Annual review
Sustainability review
Sustainability at Outokumpu
Environment
People & society
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Remuneration report
Financial year
We achieved unprecedented emission reduction in our
Circle Green product. The first batch was delivered to
one of our strategic customers, Fiskars Group.
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Outokumpu Annual report 2022 materiality analysis study is updated every three years.
The materiality analysis will be updated in 2024.
Materiality matrix
Focus areas for acceleration
Sustainability enablers
Management at local level
The analysis is applying double materiality, meaning
both the impact of and on Outokumpu’s business were
assessed. As a basis for the materiality analysis, an
external advisor conducted an extensive data study of
the emerging trends in the steel industry and compared
these trends with the material topics of Outokumpu’s
main peers, customers and suppliers. This analysis
was complemented with an overview of material issues
found in global sustainability frameworks. Additionally,
interviews with customers, suppliers and other
stakeholders such as investors, employees and non-
governmental organizations were conducted to gain a
deeper insight into the relevant stakeholder groups.
Based on the research and internal workshops, a list of
the 15 most material topics was compiled. The topics
were ranked and prioritized based on the stakeholder
rankings and the business impact of Outokumpu on
these issues.
Four topics were defined as focus areas for acceleration
based on alignment with business model and high
potential for differentiation. Sustainability enablers
have been defined to have a lower level of potential for
differentiation. Topics defined for management at local
level have value creation potential from execution on the
local operating level.
The selection of material topics covers both inside-out
topics that related to corporate strategy as well as
outside-in topics that reflect stakeholder concerns.
Topics are material when they have the ability to affect
Outokumpu’s operational results and the company has
the ability to control and influence the topic.
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Talent attraction
and development
Sustainability chain
management
Diversity and inclusive
employment
Emissions and
footprint reduction
Data security
and privacy
Business ethics
and governance
Occupational health,
safety and well-being
Human rights
Product
safety
Circular economy and
waste management
Innovative
technologies
Biodiversity and
ecosystems
Climate change
adaptation
Local community
and citizenship
Water
management
Medium
Business impact of Outokumpu
High
Annual review
Sustainability review
Sustainability at Outokumpu
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People & society
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Financial year
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Outokumpu Annual report 2022
Sustainable Development Goals in our focus
We are a signatory to the United Nations’ Global Compact
initiative, and we have committed to the UN’s Sustainable
Development Goals (SDGs). We contribute to several
SDGs either through the way we operate or through
our products.
Our focus on the SDGs is aligned according to our
materiality analysis. Our main focus is on the following six
goals:
United Nations Global Compact
Goal 7: Affordable and clean energy
Products: Stainless steel is the only long-lasting material for many applications of clean energy,
e.g. solar farms and biofuels. Operations: We follow sustainable energy supply practices to gain
secure and stable energy. Highlight in 2022: Share of low-carbon electricity was about 86%.
Goal 8: Decent work and economic growth
Products: Stainless steel is a key element in building a modern, efficient and well-being society.
Operations: We contribute to the community well-being through direct and indirect employment,
taxes and other involvement. Highlight in 2022: We employed directly in total over 8,500
employees and achieved high engagement rate in our company-wide people pulse survey.
Goal 9: Industry, innovation and infrastructure
Products: Due to its excellent properties, stainless steel is a key material in sustainable
industrialization and modern infrastructure. Operations: We have a long history in developing
new steel grades. We work closely with customers to find the most sustainable material solution.
Highlight in 2022: We launched a new product line Circle Green with the industry's lowest carbon
footprint.
Goal 12: Responsible consumption and production
Products: Our stainless steel has the highest recycled content. Stainless steel is also the single
most recycled material globally. Operations: Our business is based on circular economy. Our mills
are among the largest material recycling facilities in the world. Highlight in 2022: We achieved
record-high recycled material rate of 94%.
Goal 13: Climate action
Products: Our stainless steel reduces our customers’ overall carbon footprint by 10 million tonnes
annually. Operations: Our carbon footprint is less than 30% of the global industry average. We are
committed to reaching carbon neutrality by 2050. Highlight in 2022: We met the science-based
climate target for 2022 and launched new product-specific carbon footprint calculations.
Goal 17: Partnerships for goals
Products: We are working together with our customers and partners to minimize the environmental
impact of our stainless steel products. Operations: We are committed to global sustainability
frameworks and to partnering with our whole value chain to drive sustainable development.
Highlight in 2022: We partnered with our customers Fiskars Group and Klöckner & Co. to publish
the new product line Circle Green.
Annual review
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Outokumpu Annual report 2022
Commitment to global frameworks and standards
Sustainability is integrated into all our operations,
activities, and decision making. The most important
policies guiding Outokumpu’s sustainability management
are the Group’s Code of Conduct and the Corporate
Responsibility Policy. We expect our business partners
and suppliers to follow similar standards. All of our
policies are available at outokumpu.com.
All of Outokumpu’s production sites are certified
according to quality ISO 9001 and environment ISO
14001 management systems, including energy efficiency
targets. The functioning of the systems is monitored by
both internal and external audits. These management
systems are used to implement sustainability issues on
the local level. Outokumpu complies with international,
national, and local laws and regulations, and respects
international agreements concerning human and labor
rights, such as the International Bill of Human Rights,
the UN Global Compact and the ILO Declaration on
Fundamental Principles and Rights at Work. Outokumpu
also implements the UN Guiding Principles on Business
and Human Rights in its corporate policies.
Management of sustainability
Outokumpu’s Board of Directors approves Outokumpu’s
sustainability agenda and targets. On the Group level,
sustainability is managed by the Group Sustainability
Team headed by the Vice President – Sustainability who
reports to the Chief Technology Officer. The Outokumpu
Leadership Team regularly follows the progress of
Outokumpu’s sustainability agenda. The business
areas and functions are responsible for ensuring that
operations within their own organizations and business
lines are conducted in a responsible manner and that
monitoring, data collection and reporting are duly
carried out.
Outokumpu has also an ESG Advisory Council consisting
of four external advisors:
- Pia Theresa Duerrschnabel, Director of Sustainability,
Wieland Group
- Antoine Allanore, Professor of Metallurgy,
Massachusetts Institute of Technology (as of Dec 2022)
- Sirpa Juutinen, Independent Sustainability Advisor
- Julia Woodhouse, Board member, member of the Audit
Committee, Outokumpu
- Lucas Joppa, Chief Environmental Officer, Microsoft
(until Dec 2022)
Sustainability is integrated
into all our operations, guided
by our Code of Conduct
and Responsibility Policy.
We expect our business
partners and suppliers to
follow similar standards.
The council’s role is to challenge and comment the
company’s sustainability strategy and actions as well
as facilitate dialogue between Outokumpu and its
stakeholders. In 2022, the council discusses topics
such as decarbonization, Circle Green and other
commercial initiatives, supply chain sustainability and
human rights as well as Outokumpu’s ResponsibleSteel
certification process.
Annual review
Sustainability review
Sustainability at Outokumpu
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Financial year
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Outokumpu Annual report 2022 Sustainability performance in 2022
Outokumpu has set challenging goals and key sustainability
performance indicators. We also follow up and measures other
selected economic, social and environmental indicators.
All sustainability figures are available on our sustainability data tool
Energy efficiency
Energy efficiency decreased this year
due to lower production volumes but
several improvement projects were
started.
More on energy efficiency
No significant
environmental incidents
Recycled material content
on a very high level
Reduced CO2 emissions
intensity
We haven't had any significant
environmental incidents for years. We
follow up on medium incidents and
permit breaches.
Our stainless steel contains the highest
rate of recycled material content
in the industry. Recycled material
includes steel scrap and recycled
metals from other residuals.
More on our environmental impact
More on resource efficiency
Target 3.06 MWh/t
Result 3.15 MWh/t
Target 16
Result 14
(7 of which were
permit breaches)
Target 92,5%
Result 93,9%
Our target is to reduce our CO2
emissions per tonne stainless
steel by 42% by 2030 compared
to the baseline of 2016.
More on our actions on
climate change
Target 1.71 CO2/t
Result 1.70 CO2/t
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Financial year
Employee engagement
on a good level
New DE&I roadmap and
targets
Work-related injuries
continued to decline
Employee engagement index score was
79 in the latest pulse survey, above the
average of the benchmark companies
and well in-line with previous results.
During 2022, we created a roadmap
to strengthen diversity, equity and
inclusion. Our new target is to
have 30% diverse representation
in our leadership teams.
Our total recordable injury frequency
rate (TRIFR, per million working hours)
continued to decline and was 1.8
compared to 2.1 in 2021.
More on our people
More on our people
More on safety and health
Ethics and compliance
trainings conducted
In 2022, we relaunched company-
wide eLearning on anti-corruption.
99% of administrative employees
completed the training.
More on ethics and compliance
Result 79
Target 30%
Target < 2.0
Result 1.8
Result 99%
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Outokumpu Annual report 2022
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Financial year
Environment
We constantly research and develop
new ways of operating to reduce the
environmental impact of stainless
steel and its production.
“Our growing environmental
efficiency is based on long-
term efforts and continuous
improvement, and our aim
is to minimize our emissions
and environmental impacts.”
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Outokumpu Annual report 2022 Decarbonizing for the climate
Stainless steel helps to mitigate climate change as it is a durable, long-lasting, and
endlessly recyclable material. In addition to offering solutions with a low carbon
profile, we have ambitious goals to reduce our own carbon emissions.
Global megatrends such as population growth and
accelerating mobility and urbanization have resulted
in increased carbon emissions and climate change.
Stainless steel can help to build solutions and
infrastructure for a more sustainable world.
Stainless steel produced by Outokumpu has the lowest
total carbon footprint in the industry, and we help
our customers to reduce their carbon footprints. Key
reasons for our low carbon footprint are having our own
ferrochrome, high recycled material content and the use
of low-carbon electricity.
We have committed to reducing our own emissions
throughout our whole value chain. The keys to reducing
our own carbon emissions are to increase our energy
efficiency and the use of low-carbon energy sources. We
are also working closely with our suppliers and partners to
reduce emissions.
Committed to the 1.5 degree ambition
We are committed to the Science Based Targets
initiative’s ambition of keeping global warming below
1.5°C and our new climate targets were approved by the
initiative in 2021.
In 2022, we launched a new product line, Circle Green,
which has the smallest emission intensity in the world,
up to 92% lower carbon footprint than the global average.
During the year, we also published product-specific
carbon footprints that help our customers to provide more
sustainable solutions to the market.
Outokumpu’s near-term science-based target is to reduce
direct and indirect emissions as well as our supply
chain emissions (scopes 1, 2 and 3) by 42% per tonne
of stainless steel by 2030 from a 2016 base year. This
translates into a 30% CO2 emission intensity reduction
compared to the 2020 level.
“We are committed to limiting
global warming to below 1.5°C.
By working closely with our
customers, we help them to
develop solutions that further
decrease their carbon footprint
and reduce burden on climate.”
This target follows the well-below 2°C scenario
convergence criteria of the steel industry’s
decarbonization approach, as no revised approach is
available, and the electricity decarbonization approach,
where the specific emission reduction target is 95%
by 2050.
The updated targets cover Outokumpu’s value chain
from raw materials to own production and delivery. In the
long-term, Outokumpu is committed to reaching carbon
neutrality in our own operations by 2050.
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Our Circle Green product line has the smallest emission intensity
in the world. Fiskars was the first of our customers to use it in their
production of cookware.
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Outokumpu Annual report 2022 In 2022, Outokumpu divested its Long Products
operations. The impact of this structural change was
limited to 2% increase in the base year emissions and did
not impact the approved SBT target.
Where do our emissions come from?
The greenhouse gas emissions from Outokumpu
operations are limited to CO2 emissions. These emissions
come directly from production (scope 1), indirectly from
the use of electricity (scope 2) and from upstream CO2eq
emissions mainly from the use of materials (scope 3).
Direct emissions originate from the carbon content of our
raw materials and from the use of fuels. Our production
has decreased by 2% compared to new structure
baseline, but direct emission intensity has decreased by
5% compared to base year thanks to improving energy
efficiency, replacing fossil fuels with lower-emission
options and digitalization.
Indirect emissions in scope 2 are caused by the use of
electricity. Emission intensity from electricity use were
reduced by about 66% compared to the base year mainly
due to increased use of low-carbon electricity. Electricity
emissions are reported as market-based emissions and
also published as location-based emissions with the
specific emission factors for electricity published by the
country statistics.
Scope 3 emission intensity, originating mainly from the
use of raw materials, decreased by 5% compared to the
base year. The reduction was mainly supported by the
high share of recycled material content in our production,
93.9%.
Scope 3 emissions from material use are, for example,
ferroalloys (except ferrochrome which is included
mostly in scopes 1 and 2) as well as lime and dolomite,
downstream transportation and, to a lesser extent, from
some other sources. Emissions arising from externally
used process gas and external services are included in
scope 3 emissions. A certain amount of slabs from the
divested meltshops are processed in our operations. This
amount is seen as own crude steel production in CO2
emission intensity calculations.
At the moment, there are no estimation methods for the
complex downstream use emissions of stainless steel
available. External case studies indicate CO2 net savings
from steel use in life cycle assessments.
Reducing our carbon footprint
Our total company carbon profile, including upstream
emissions, is the lowest in the industry. As stainless steel
production is energy intensive, we continuously strive
to make our operations more energy efficient and to
maximize the use of low carbon electricity and recycled
materials in our operations. These are the main factors in
reaching even lower CO2 emissions and reducing upstream
emissions.
We are also working with our raw material suppliers to
decrease our upstream emissions. We are in the process
of integrating CO2 emissions into purchase decision
making and working on innovations across industries to
discover news ways of reducing CO2 emissions.
In 2022, the total specific CO2eq emissions reduced by
18.4% compared to the baseline of 2016. Key drivers for
reduced emissions were the increased energy efficiency
and the record high level of recycled material content.
Scope 3 emissions were negatively influenced by the
external ferrochrome that was purchased during the year
and higher e-factors for some raw materials.
In 2022, Outokumpu consumed overall 25,033 GJ of
primary fuels and electricity with a decrease due to lower
production. The overall energy intensity increased from
10.2 to 10.5 GJ per tonne crude steel.
See all data on CO2 emissions in the sustainability data
tool on Outokumpu’s website
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37/220
Energy
efficiency
and recycled
steel reduce
emissions.
Outokumpu’s CO2 emission intensity,
tonnes of CO2 per tonne steel
3.0
2.5
2.0
1.5
1.0
0.5
0.0
16* 17* 18* 19* 20* 21 22 23 24 25 26 27 28 292030
Direct
Indirect
Upstream CO₂ emission intensity
All scopes
Total emission target line
The restructuring resulted in a recalculation of the
baseline and in 2% higher emission intensity figures.
* Including discontinued operations
* Including discontinued operations
16* 17*
18*
19* 20*
21
22 23 24 25 26 27 28 29 2030
Direct
Indirect
0.4520.3980.4360.4650.4590.43
0.4510.3810.3940.2900.2650.20
1.1791.1851.0781.0261.000
0.43
0.15
1.12
Upstream
CO₂
emission
intensity
Total
emission
target line
2.0821.9641.9081.7811.724
1.70
1.21
1.14
1.76
11
Outokumpu Annual report 2022 Low-carbon roadmap
Outokumpu has developed a roadmap to reach our
ambitious climate targets. Electric arc furnaces, in use at
our mills, are the best available technique for stainless
steel production. The continuous work to increase energy
and material efficiency, the amount of recycled material
and the amount of low-carbon electricity are currently the
main drivers. In addition to these, several other projects
have also been identified.
In 2022, we announced a new ambitious target for energy
efficiency within the next two years. Until the end of 2024,
Outokumpu prioritizes investments in energy efficiency
and aims to improve the energy efficiency run-rate by 8%
across the Group compared to the January–September
2022 level. Planned energy efficiency improvements will
reduce scope 1 and 2 emissions substantially.
The strategy to further reduce the CO2 emissions of
electricity is to expand the low-carbon electricity supply,
invest in renewable energy projects and buy certificates.
During 2021–2022, Outokumpu announced altogether
three new supply agreements for wind power in Europe.
In 2022, Outokumpu bought guarantees of origin for 33%
of electricity from the energy producers, all used in the
EU area.
Implementation of various digitalization projects are
estimated to help increase yield, energy and material
efficiency in our operations which directly impact our
CO2 emissions.
In the Tornio mill, the majority of direct CO2 emissions
originate from coke which is used as a reductant in
the ferrochrome production. For the short-term target,
a significant share of fossil coke is to be replaced by
biocoke and this would reduce a notable amount of CO2
emissions in Tornio. In the long run, direct reduction
for ferrochrome could replace completely the use of
coal-based reductants, which are being studied but no
deployable technology is yet available.
In September, Outokumpu announced that it is planning
an investment in a biocoke and biomethane plant at its
stainless-steel production site in Tornio, Finland. This
large-scale biocoke project has now proceeded to a phase
where Outokumpu is applying for investment support of
EUR 25 million. If realized, this project would potentially
reduce CO2 emissions by more than 200,000 tonnes
per year.
A further option to reduce CO2 emissions in the
atmosphere is the carbon capture and storage/utilization
(CCS/CCU). Slag use in CCU is seen as one of the most
potential techniques to reduce direct CO2 emissions. Flue
gas from own processes could be used in accelerated
carbonation technique and outcome would be carbonated
slag product replacing cement that can be utilized as
construction material.
Most direct CO2 emissions come from the use of heating
fuels, i.e. natural gas, propane and a small amount of
oil. In the long run, these fuels could be replaced either
by induction heating or by the use of carbon-neutral
fuels, such as biogas. The scenario for the short-term
target includes a change to lower emission fuels, such
as replacing propane with natural gas where reasonable
and plans to use carbon-neutral biofuels in some
operating sites.
Magnesium-rich mine tailings can be utilized in CCU by
using technology developed by Åbo Akademi University.
During 2022–2024, the aim is to pilot the technique
and find applications for magnesium-rich residues in
carbonation. The project consortium has several industrial
partners, institutes and universities involved and it is
funded by Business Finland.
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Outokumpu Annual report 2022 Reducing indirect and transport emissions
Close to 70% of the scope 3 emissions originate from
material use such as ferronickel, burnt lime and dolomite
as well as other alloying elements. Alloying elements
are used to generate the different grades and quality
of stainless steel. The roadmap for reducing scope 3
emissions follows two strategic approaches.
For the short-term target raw material purchasing is taking
the carbon footprint of the supplier into account to align
the purchasing to suppliers with lower carbon emissions.
The second approach is the increase of recycling as steel
scrap and recycled metals from any waste management
can replace raw material use. The amount of scrap
depends on the availability of suitable scrap.
Outokumpu’s low-carbon roadmap also contains projects
to reduce the transport emissions. Two projects focus on
switching from road transport to electric train transport.
Outokumpu cooperates with local communities to realize
the projects together.
Raw material
purchasing
takes suppliers'
carbon footprint
into account.
Biocoke to reduce
climate emissions
As a part of its ambitious climate actions, Outokumpu announced plans in September
2022 to invest in a biocoke and biomethane plant at the Tornio site in Finland.
If realized, this project would significantly increase energy self-sufficiency in Finland.
It also has the potential to reduce CO2 emissions by more than 200,000 tonnes per
year. This project significantly supports the Finnish and European energy and climate
targets for 2030.
“The new biocoke and biomethane plant would show that it is possible to produce
a new raw material from the forest industry waste that is currently burned for low-
efficiency energy creation. Biocoke could replace the coke we currently import and
which is used as reductant in our ferrochrome production process. The usage of the
forest waste instead of solid wood, and the ability to produce a significant amount
of biomethane in that process is an example of our innovative capabilities. The
production of biomethane enables us to become more independent of external fossil
fuels,” says Juha Erkkilä, Outokumpu’s Head of Sustainability.
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Outokumpu Annual report 2022
39/220
Area
Governance
Disclose the organization’s
governance around
climate-related risks and
opportunities.
Strategy
Disclose the actual
and potential impacts
of climate-related risks
and opportunities on the
organization’s businesses,
strategy, and financial
planning where such
information is material.
Risk management
Disclose how the organization
identifies, assesses, and
manages climate-related
risks.
Metrics & Targets
Disclose the metrics and
targets used to assess
and manage relevant
climate-related risks and
opportunities where such
information is material.
Reporting aligned with the TCFD recommendations
Outokumpu acknowledges the recommendations from the
Task Force on Climate-related Financial Disclosures (TCFD)
and the underlying framework and acknowledges that
there are financial impacts in a 2°C or lower transitions
scenario. Outokumpu has performed a scenario
analysis according to the stated policies scenario and a
sustainable development scenario analysis in line with
the 1.5 degree ambition of the Science Based Targets
initiative. As soon as a steel sector decarbonization
approach to net-zero scenario is available it will be taken
for further scenario analysis.
More information in the Risks and opportunities and
Review by the Board of Directors.
Climate change scenario analysis
The stated policies scenario takes into account countries’
energy and climate-related policy commitments, including
nationally determined contributions under the Paris
Agreement. These provide a baseline scenario against
which we assess the additional policy actions and
measures needed to achieve the sustainable development
scenario (SDS). The SDS sets out the major changes that
would be required to reach the main energy-related goals
of the United Nations Sustainable Development Agenda,
including an early peak and subsequent rapid reduction
in emissions, in line with the Paris Agreement, universal
access to modern energy by 2030 and a dramatic
reduction in energy-related air emissions. The trajectory
for emissions in the sustainable development scenario
of IEA is consistent with reaching global “net-zero” CO2
emissions for the energy system as a whole by around
2070. (Source: International Energy Agency or IEA Iron and
Steel Technology Roadmap, 2020)
To translate the steel industry scenarios to the stainless
steel production, it is assumed that the emission intensity
of the steel sector is the same as the intensity of the
stainless steel production, including scope 3 emissions.
The target year of the scenarios is set to 2050 in line with
the company’s carbon neutrality target. The assumption
Recommended TCFD disclosures
Source of information in reporting
Annual review
a) Describe the board’s oversight of climate-related
risks and opportunities.
Sustainability at Outokumpu SR 33,
FS 125
b) Describe management’s role in assessing and
managing climate-related risks and opportunities.
Sustainability at Outokumpu SR 33,
Risks and opportunities AR 17-27, FS
125, GC 104-108
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a) Describe the climate-related risks and opportunities
the organization has identified over the short, medium,
and long term.
b) Describe the impact of climate-related risks and
opportunities on the organization’s businesses,
strategy, and financial planning.
c) Describe the resilience of the organization’s
strategy, taking into consideration different climate-
related scenarios, including a 2°C or lower scenario
Climate change SR 26-41, Risks and
opportunities AR 26, FS 124-125
Governance
Climate change SR 26-41, Risks and
opportunities AR 26, FS 124-125
Climate change SR 26-41, Risks and
opportunities AR 26, FS 124-125
Remuneration report
Financial year
a) Describe the organization’s processes for identifying
and assessing climate-related risks.
Climate change SR 26-41, Risks and
opportunities AR 26, FS 124-125
b) Describe the organization’s processes for managing
climate-related risks.
Climate change SR 26-41, Risks and
opportunities AR 26, FS 124-125
c) Describe how processes for identifying, assessing,
and managing climate related risks are integrated into
the organization’s overall risk management
Climate change SR 26-41, Risks and
opportunities AR 26, FS 124-125
a) Disclose the metrics used by the organization to
assess climate related risks and opportunities in line
with its strategy and risk management process.
b) Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions, and the
related risks.
c) Describe the targets used by the organization to
manage climate related risks and opportunities and
performance against targets.
Climate change SR 26-41, Risks and
opportunities AR 26, FS 124-125
Climate change SR 26-41, Risks and
opportunities AR 26, FS 124-125
Climate change SR 26-41, Risks and
opportunities AR 26, FS 124-125
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Outokumpu Annual report 2022 Outokumpu's emissions scenarios,
scope 1, 2 & 3 emission intensity
2.5
2.0
1.5
1.0
0.5
0.0
16* 18* 20* 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50
Upstream emissions
Direct and indirect emissions
Target
* Including discontinued operations
* Including discontinued operations
of the SDS includes the possible CO2 reduction projects
at different maturity grades according to the developed
carbon neutral road map. It is assumed in the SDS
scenario that nickel-containing stainless steel grades are
produced mainly by recycling, more heating furnaces are
changed to electricity-driven heating and that the biocoke
and biomethane project is further expanded. All projects
are to be realized during the journey in addition to the
efficiency improvements.
12
Analyzed scenarios have been estimated under
pessimistic, optimistic and realistic implementation of the
projects and technologies for the carbon neutral roadmap
to 2050. It is expected that compensation or new carbon
capture, sequestration and utilization options for some
remaining amount of emissions are needed.
Climate change risks
Outokumpu has assessed physical climate risks and
mitigation measures for all sites and included them in the
general risk assessment system. None of the physical
risks have been identified as a key risk to our company.
According to the analysis, the most physical risk is
flooding caused by increased events of extreme weather
conditions or storms. Natural and catastrophe hazards
could impact deliveries and result in interruptions to
operations or facility damage at some sites.
The financial impact of the climate transition risk have
been estimated for the target period until 2030. The
transition risks to Outokumpu are driven by changes
to climate policies, which can have adverse impact to
Outokumpu’s operating environment and financial position
as by an increased price of greenhouse gas emissions and
the linked rising electricity price. The risk on realization of
lower emissions technology will become effective in the
coming years. The risk of losing customers and market
share is assessed and included in the risk management
system. Read more about risks in Risks and oportunities.
In the beginning of 2022, Outokumpu announced that its
long-term incentive plans were linked to the company’s
science-based climate targets.
Opportunities of a low-carbon society
Climate change is one of the three megatrends driving
our business. The lifecycle of a stainless steel solution
can have a lower climate impact compared to other
materials such as carbon steel. As stainless steel is
corrosion resistant and long-lasting material, it stands
out in many applications of renewable energy production
such as in high temperature power plants, solar farms,
and biofuel plants. This growing market in the transition to
a low-carbon society gives Outokumpu the opportunity to
increase the revenue.
Continuous increasing of material recycling and energy
efficiency as well as change to use lower emission fuel
and electricity have significantly reduced the product’s
carbon profile. This is driving the competitive advantage of
alloyed steel with low-carbon footprint that customers are
increasingly demanding.
Investors are looking to finance sustainable projects
or to invest in sustainable companies. The low-carbon
profile of Outokumpu’s stainless steel enables financial
advantages in investments and the transition to the low-
carbon society.
Emissions trading and fair competition
88% of Outokumpu’s direct CO2 emissions fall under an
emissions trading system (ETS). The share has decreased
from 2021 due to discontinued sites. The main risks of
the trading phase 2021–2030 of the emissions trading
system to Outokumpu involves the pass-through costs
of allowances to the electricity price and the protection
against carbon leakage by phasing out of free allocations.
Free allocations have been decided until 2025.
Decision on the European carbon border adjustment
measure will phase out the free allocation 2026–2034.
Additional uncertainty on reduction of free allocations
in the second half of the ongoing period by further
decreasing benchmarks and possible cross sectoral
reduction factor will impact the company's position.
Outokumpu forecasts to have an adequate quantity of the
EU emission allowances until the end of this decade, if
the projected CO2 reduction projects are realized.
Allowance prices are expected to further increase
especially as the Green Deal of the European Commission
requests further greenhouse gas reduction, and the
benchmark for free allocation will decrease.
The European proposal on carbon border adjustment
measures is not considering the high impact of the
scope 2 emissions. Some main impacts of stainless
steel raw materials, such as ferronickel, ferrochrome and
ferromanganese are taken in account. There remains a
risk that the carbon leakage avoidance measure in the
trading system will not effectively be overtaken by the
planned carbon border adjustment mechanism for the
stainless steel industry.
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Outokumpu Annual report 2022 Working with ambitious climate goals
Verena Schulz-Klemp, Director of Sustainability
and Environment, has worked with environmental
challenges for several decades. Since 2016, she has
developed Outokumpu’s climate target setting.
How has Outokumpu’s emission
reporting developed over the years?
We have reported our climate emissions for decades
but first we only reported our direct emissions and
emissions from electricity use. These are called
scopes 1 and 2. The next major step was to include
the raw material and supply chain emissions, which
are also called scope 3 or upstream emissions.
Scope 3 was included in our calculations in 2016.
What are the challenges in reporting
upstream emissions?
It was a big challenge to estimate and calculate
the upstream emissions as it can be tricky to get
correct emission factors. We started with including
the main raw materials and then other materials,
downstream, transport, and process gases. The
number of different emission sources to be included
in scope 3 calculation can be quite big: we have over
a dozen of separate sources of scope 3 emissions
which need to be calculated per each production
site. A bit ironically, the better and more thorough
our climate reporting has become, the higher the
emissions have become because we have been filling
the missing gaps. But we are in a good position to
lower our emissions in line with the Science Based
Targets initiative.
Why did Outokumpu join the Science
Based Targets initiative?
We joined the initiative in 2016 as the first stainless
steel producer. Our first science-based climate target
was approved in the beginning of 2019. SBTi has
a deep technical background focusing on emission
intensities, and it takes into account all scopes,
which was important for us. We also wanted to
contribute to reducing CO2 emissions and give the
signal that we are taking climate change seriously.
What are Outokumpu’s climate targets now?
Our targets are now clear but ambitious: our CO2
target for 2030 corresponds to a reduction of 30%
compared to 2020. To reach the set targets we are
applying a bottom-up approach and considering
all options. For example, lowering our ferrochrome
footprint would make a big difference. We produce
our own ferrochrome, and it has around 70% lower
CO2 footprint than the industry average, but we still
aim to reduce it even more. This can be achieved
for example with the planned biocoke investment. In
2022, we also announced an ambitious program for
improving our energy efficiency. This program is also
a big step to reach our targets.
Developing the stainless steel sector’s
decarbonization approach is an important
focus area for the industry. Can you explain
what is being done at the moment?
We have very good expertise on stainless steel
decarbonization, and we are working with the SBTi
and other organizations to develop the industry’s
target setting even further. The first steel sector
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decarbonization approach did not take into account
the special characteristics of stainless steel
production. Compared to carbon steel, stainless has
lower scope 1 emissions but higher scope 2 and 3
emissions. Stainless steel is produced in electric arc
furnace (EAF) mainly out of scrap. A transition from
integrated production process to an EAF process, as
in carbon steel, is not possible for stainless steel.
Developing common target setting principles for the
whole stainless steel sector will be significant for the
global aim to limit climate warming to 1.5 degrees.
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Outokumpu Annual report 2022 Annual review
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Energy efficiency in focus
Improving the energy efficiency of our operations is one
of our focus areas for the next few years.
Outokumpu’s operations are energy intensive. For the
recycled steel to melt, it is heated to over 1,400°C. The
process requires a high amount of electricity as the best
available technique for melting recycled steel is to use
electric arc furnaces.
Outokumpu is continuously striving to make its production
operations more energy and material efficient. Although
the melting of recycled steel and the production of
stainless steel consume a lot of energy, stainless steel
enables energy efficient solutions from a life-cycle
perspective by saving energy during its use phase.
Key drivers in energy efficiency improvements
In 2022, we announced the decision to significantly
increase our energy efficiency improvement target and
prioritize related investments in the next two years. Until
the end of 2024, we aim to improve energy efficiency by
8% across the group compared to the January–September
2022 level. These measures would correspond to energy
savings of approximately 600,000 MWh which is equal to
the annual electricity usage of 15,000 households.
We aim to improve our energy efficiency by
- investing into furnace improvements of heat
treatment lines,
- optimizing our energy consumption and fully utilizing our
energy management system, and
- improving yield.
The new energy efficiency targets have been translated
into site-specific targets. Sites will have specific
plans and targets for improving energy efficiency and
related investments.
Energy efficiency development
In 2022, our energy intensity per tonne stainless steel
increased by 3% from last year mainly due to lower
production volumes. Energy efficiency is calculated as
a sum of different process steps including ferrochrome.
Origin of electricity, %
100
80
60
40
20
0
2017* 2018* 2019* 2020* 2021 2022
1)
Renewable sources
Nuclear
Fossiles
1) Includes electricity mix of Mexico for the first time
* Including discontinued operations
* Including discontinued operations
Our operations are energy intensive, but our new energy
efficiency target by end of 2024 would mean an energy
saving of 600,000 MWh – equal to annual electricity usage
of 15,000 households.
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2017*
2018* 2019*
2020*
2021
2022
Renewable sources
Nuclear
Fossiles
20.2
40.3
39.5
20.7
42.9
36.4
21.3
55.6
23.1
18.6
57.8
23.7
20.2
61.8
18.0
19.5
66.4
14
13
Outokumpu Annual report 2022 Total energy efficiency was 3.15 MWh/t against the
target of 3.06 MWh/t.
During 2022, the energy efficiency was impacted by a
standstill in ferrochrome production and performance
of melt shops, but the performance was helped by
digitalization and energy efficiency projects.
Low-carbon electricity
Outokumpu has centralized energy procurement in
order to secure a sufficient energy supply, to ensure
predictable, competitive, and stable energy prices, and
to optimize the energy portfolio also on low-carbon
electricity.
In 2022, 86% of our electricity sources came from low-
carbon (renewable and nuclear) sources. Outokumpu
participates in several programs that promote the use of
low-carbon electricity such as wind power, hydropower as
well as combined heat and power. During 2021–2022,
Outokumpu announced altogether three new supply
agreements for wind power in Europe.
As primary energy sources, we use natural gas, propane,
or other fuels, such as diesel. Fossil fuels cover about
81% of our total fuel consumption. Outokumpu does not
yet consume fuels from renewable sources in production
processes, except small amount for the circle green
production, but we utilize our own recovered carbon
monoxide process gas which accounts for 19% of our
total use of fuel.
Process gases and waste heat are also used to heat
buildings on sites. For example, the combined heat
and power plant in Tornio, Finland produces heat for
the Tornio site out of recovered process gases, and in
Dahlerbrück, Germany, we have our own hydropower
plant to generate some 10% of the electricity needed
in the production. Outokumpu is also a shareholder in
a wind power park in Tornio. Fuel switch to lower carbon
emission fuels is ongoing. See more details in the
sustainability data tool
Share of low-carbon energy
86%
of our electricity sources
Energy used in operations
Gigawatt hours, GWh
Electricity
Carbon monoxide gas
Natural gas
Propane
Diesel, light and heavy fuel oil and other
Energy
2022
3,973
574
1,775
483
149
6,953
2021
4,384
678
1,990
492
152
7,696
2020*)
4,371
625
2,019
508
159
7,682
Energy use in GJ per tonnes crude steel
10.5
10.2
11.0
Market-based electricity emission
factor, kg CO2eq/MWh
250
200
150
100
50
0
2018*
2019*
2020*
2021
1)
2022
2)
1) 0,5% of electricity use in EU market is coming with
GoO or from ownerships in power production.
2) 33% of electricity use in EU market is coming with
GoO or from ownerships in power production.
* Including discontinued operations
* Including discontinued operations
2018*
2019*
2020*
2021
2022
238
165
148
124
93
14
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Outokumpu Annual report 2022
Circularity at our heart
We are committed to a circular economy model with our sustainable,
100% recyclable, long-lasting and resource-efficient stainless steel.
We recycle the equivalent of the weight of 250 Eiffel
towers annually. In fact, only at Outokumpu's Tornio mill
– the largest material recycling center in Europe – we
recycle over one million tons of metals per year.
All our stainless steel mills are significant recycling
facilities, producing new products out of recycled steel,
recovering and recycling everything reasonable in our
production, and finally selling by-products from the
production process to replace natural resources.
The recycled steel content of our stainless steel, defined
according to ISO 14021, was 89.8% in 2022. This
includes pre- and post-consumer scrap. Including the use
of recycled metals from our waste streams, the recycled
material content of our products was 93.9% in 2022
against our target of 92.5% for 2022.
The result was impacted by the good availability of steel
scrap. For 2023, our goal is to keep the high level of
92.5%.
Record high recycled content rate
Recycled steel from both stainless and carbon steel is
our most important raw material. Increasing the recycled
content of stainless steel is the most efficient way for
Outokumpu to reduce the overall environmental footprint.
Increasing the use of recycled raw materials helps us to
reduce our indirect scope 3 emissions which form the
largest share of our total CO2 emissions.
Recycling in our own processes
One key factor in reaching such a high level of recycled
material content is the recovery and recycling of metals
from the production processes, e.g. from dust and scales.
We are continuously looking for the best ways to recycle
the metals of our melt shop dust. These side streams are
either treated on site or by an external facility for recycling
in our melt shops.
Our business is
based on circular
economy.
In addition to metals, other materials, such as slag
formers, acids, and gases, are needed in the production
process although they do not become part of the stainless
steel products. Some of these input materials are needed
to minimize or prevent emissions into the environment.
As far as reasonable, these are also recovered and
recycled in the process. For instance, the used acids are
continuously regenerated for reuse, and the hydrogen
from the bright annealing process is recovered in the
incineration of the process furnace.
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Our Tornio mill in Finland is actually the largest material
recycling center in Europe.
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Outokumpu Annual report 2022 Recycling as much as possible
In our production, all material streams in production
are studied carefully to find the means of fully recycling,
reusing, or selling them as by-products. Waste
management is in our focus and we reuse, recycle and
recover as much material as reasonable.
The biggest waste items at Outokumpu are slag that
are not used, tailing sand from the mining operation,
and sludges, dust, and scales from the stainless steel
production. While waste is recycled whenever possible in
our own production, our production still generates landfill
waste. Our target for waste (other than slag) going to the
landfill is to reduce it by 0.5% per year. In 2022, all waste
to landfill per tonne stainless steel was reduced to 0.53
tonnes from 0.56 tonnes.
The amount of tailing sands from the mining operation
slightly decreased in 2022 compared to the previous
year, as less ore was concentrated. Scales and metals
from filter dust or from slag are recycled and acids are
regenerated. Other recovered materials like lime, bricks,
and some sludges were mostly used in our melt shops
to substitute virgin additive materials like slag formers.
Tailing sand is deposited in the pond of the mining area
itself. Outokumpu’s waste management is described in
more detail on Outokumpu’s website
By-products
In addition to reducing the total volume of landfill waste
from our own operations, we also aim to increase the
proportion of materials sold as by-products.
We have developed slag-based products, e.g. for reractory
and concrete production and water treatment. Slag is an
essential material in the steel melting process, and it is
made from lime or other natural minerals. By-products
made of slag mineral reduce the amount of waste
generated by steel, save virgin raw materials and lead to
lower CO2 emissions. In 2022, Outokumpu sold or used
0.93 million tonnes of slag as the main by-product of
operations.
In 2022, the use rate (including use, recovery, and
recycling) of all slag was 86.5%. The remaining share of
slag was sent to landfill. In September, the University of
Oulu in Finland published a study that linked Outokumpu’s
ferrochrome slag by-product to the increased number
of broken timing belts in cars in northern Finland.
The ferrochrome slag by-products have been used in
road construction in the area. Outokumpu is currently
assessing the implications of the study, and the sales
of the ferrochrome slag for road construction has been
stopped for the time being.
During 2022, a company-wide working group worked
to develop value-added products of slag and other
sidestreams.
Waste management
Tonnes
Generated
Diverted from landfill
Hazardous waste
Steelmaking dust
Oily sludge
Regeneration & hydroxide sludge
Neutralization sludge
Other waste
Non-hazardous waste from stainless steel
production
Scales
Slag
Other waste
Tailing sand (surface impoundment)
122,962
68,846
12,437
5,747
20,006
15,925
254,138
11,298
144,608
98,233
1,003,150
79,046
53,654
12,294
5,200
2,314
5,584
49,082
11,298
0
37,784
0
Landfill
43,916
15,192
143
547
17,692
10,341
205,057
0
144,608
60,449
1,003,150
Waste diverted from disposal by recycling
Tonnes
Hazardous waste
Recycling
Other recovery operations
Total
Non-hazarduous waste
Recycling
Other recovery operations
Total
Waste circulation
Onsite
Offsite
Total
7,457
57,738
24,753
12,405
12,239
1,612
11,924
0.00
19,696
59,350
79,046
36,677
12,405
49,082
128,128
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Outokumpu Annual report 2022 Achieving high
recycling rate
Circularity is in our heart as stainless steel is a key
ingredient in the circular economy. At the end of its
lifecycle, it’s fully recyclable. In our own production
we recycle as much as possible and also the rate
of recycled materials in our production is the
highest in the industry. In 2022, we reached the
record-level of 93.9%. How is that possible?
To start with, we use as much as recycled steel in
our production as possible. Recycled steel can be
both stainless and carbon steel. The recycled steel
can be anything from old car bodies and machine
parts to old pots and pans. This is why it is so
important to return for example old kitchen utilities
to recycling once those have been worn out.
We also reuse and recover all metals from our own
process, such as filter dust or slags, which is what
really differentiates us and helps us the achieve
the record high rate. These side streams are either
treated on site or by an external facility. Recycling
truly is integrated into every step of our processes.
High recycled content
is one of the drivers
for reducing our
emissions.
Total waste development,
tonnes per steel
0.7
0.5
0.4
0.2
0.0
2018*
2019*
2020*
2021
2022
Landfilled
Recovered
Recycled
Thereof tailing sand
* Including discontinued operations
* Including discontinued operations
Landfilled
Recovered
Recycled
Thereof
tailing sand
2018*
2019*
2020*
0.472
0.023
0.023
0.340
0.50
0.027
0.024
0.387
0.589
0.014
0.042
0.408
2021
0.562
0.040
0.009
0.395
2022
0.530
0.022
0.030
0.422
Dotted line added by
hand on top!
15
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Outokumpu Annual report 2022
47/220
Environmental impacts minimized
We aim to reduce our impact on the environment by proactively developing our
production processes, energy and material efficiency. Our growing environmental
efficiency is based on long-term efforts and continuous improvement.
The biggest environmental impacts of stainless steel
production are dust emissions from melt shop and
ferrochrome production processes into the air, water use
and discharges from production, use of direct and indirect
energy, and the waste created in the production process.
Environmental compliance
Our environmental network closely follows the
environmental performance of our operations, their permit
status and legal compliance. The network conducts
internal site audits in the production units according
to risk screening. Environmental incidents have been
reduced continuously.
In 2022, there were 7 permit breaches at our operational
sites, but all were temporary and did not have a significant
impact on the environment. Outokumpu reported each
incident to environmental authorities, and carried out
corrective actions immediately or resolved the incidents
together with the authorities. No environmental damage
was detected, and no fines were declared in 2022.
As our main raw material is recycled steel, we take all
possible precautionary measures to check the input
material for any unwanted content, such as mercury and
radioactive contaminated material. We work together with
our suppliers to decrease the share of unwanted materials
in our production processes. All input material, the liquid
steel and waste gas of the melting process, is controlled
regarding radioactive contamination.
Dust emissions remained low
Steel melting and rolling processes generate dust and
scales that are collected, treated and, whenever possible,
recycled in our own production. For example, raw material
metals (chromium, nickel, and molybdenum) are recovered
from dust, sludges, and scales in specialized internal and
external recovery plants. Our dust filtering systems are
extremely efficient and remove 99% of the particles.
The measured particle emissions from all of our
production processes were 223 tonnes in 2022. A large
share of the particles, 139 tonnes, were emitted from the
ferrochrome production process. However, the emission
measurements include high uncertainty, causing a
remarkable fluctuation in the results year by year. The
level of dust emissions from the melt shops is within the
limits of environmental permits and in line with BAT levels.
No significant further reduction is expected.
Water is reused as much as possible
Water is used in our production process in annealing,
pickling, and cooling. The withdrawal of water is metered,
and rainwater is estimated by average rainfall and the
surface of captured rainwater. It is treated and recycled
as much as possible, and only some is discharged to the
municipal wastewater system.
All wastewater is treated in the company’s own treatment
plants or in municipal water treatment systems before it
is discharged. The main discharges into water are metals
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During the last decades, we have made significant
investments to minimize our environmental impacts.
48/220
Outokumpu Annual report 2022 and nitrates. The discharge is measured and supervised
by the authorities. Out of the 7 permit breaches that
occurred in 2022, one case was a minor non-compliance
in sanitary wastewater. They were coordinated with
authorities, immediately removed and analyzed.
Wastewater treatment depends on the contamination of
the wastewater. According to the needs, treatments are oil
skimming, neutralization, flocculation, and sedimentation
to extract metals and, when necessary, a Cr(VI) reduction
process. Nitrate is often treated in the municipal water
treatment to reduce discharge. In these cases, the steel
allocated discharge cannot be monitored. The water
impact is managed by municipal treatment operators.
The water used in the production is mainly surface water
from rivers and sea and often includes rainwater. The
impact of water withdrawal is evaluated at sites where
river water is used, and where data on the river water is
available.
Regular water impact assessments in our biggest
operating site Tornio and in the mining site in Kemi are
available publicly. Latest assessment from 2021 covers
meteorological and hydrological development, factors
impacting the sea area, physical and chemical water
quality and fishery impact and development. The studies
show that the impact of the stainless and ferrochrome
production on the sea area's water quality and the
biodiversity changes is minor.
Outokumpu operates a cold rolling mill in San Luis Potosí,
Mexico, in a dry, arid area, where groundwater is a scarce
resource for people (extremely high water stress area
according to Aqueduct). The groundwater withdrawal
accounts for about 0.29 million m³ and the water
discharge to municipal wastewater system was at about
0.04 million m³. Water recycling and treatment at this
site are especially ambitious to minimize the groundwater
impact. The site has self-committed on specific
groundwater use and on high water treatment.
Impacts of the mining operation are limited
Outokumpu operates the only chrome mine in the EU
located in Kemi, Finland. We are a member of the
Finnish Network for Sustainable Mining, and Kemi mine
is committed to the Finnish sustainability standard for
mining.
The environmental impacts of the mine are very
limited due to the nature of the process. The minerals
are in oxide form and very stable with only a minimal
amount of sulfur compounds. Chemicals are not used
in the beneficiation process, which is based on gravity
separation.
The Kemi mine is almost self-sufficient with water as
it recycles water on site and collects rainwater. The
underground mine takes drilling water from old open pits
(rainwater), and drilling water is also recycled inside the
underground mining process. All dewatering from the mine
is pumped to the closed circuit of the tailings site and
Water withdrawal and discharges
2022
29.1
11.6
0.5
2.6
1.2
45.1
32.3
13.7
0.7
11.4
6.5
2021
29.2
13.1
0.5
2.3
1.9
46.9
35.0
14.5
0.8
12.9
6.7
2020*)
46.1
na
1.1
2.6
2.4
52.2
na
13.2
na
21.0
na
Million m3
Surface water
Seawater
Municipal water
Groundwater
Rainwater
Water withdrawal by
source
Water discharges
Cooling water out
Wastewater to municipal
treatment
Discharge to surface water
Discharge to sea water
Emissions to water,
tonnes
Metal discharges to water,
tonnes
Nitrogen in nitrates, tonnes
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Steel melt shop particle
emissions, grams/t
25
20
15
10
5
0
2018*
2019*
2020*
2021
2022
* Including discontinued operations
Total amount of environmental
incidents at operational sites
28
21
14
7
0
2018*
2019*
2020*
2021
2022
17
13
20
12
15
2018*
2019*
2020*
2021
2022
27.9
1,648
26.9
1,049
43.7
1,070
Includes all environmental incidents in addition to the
permit breaches.
* Including discontinued operations
* Including discontinued operations
2018*
2019*
2020*
2021
2022
28
24
21
15
12
16
17
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Outokumpu Annual report 2022 concentrator plant on the surface level. Furthermore, a
significant amount of 0.43 million m³ of rain and snow
melting waters, less than half of last year, were collected
in the process in 2022. The Kemi mine discharges
2,522,000 m³ water from the area, including rainwater,
whereas the water intake from the municipal supply is
only 23,000 m³.
During 2018–2021, the Kemi mine carried out a project
to increase the resource efficiency of the mine. The
project was about the depth extension and building
underground mine infrastructure from 500-level to
1,000-level (meters) below surface. The area of the mine
site was not expanded.
The biggest impact on the environment from the mine
is nitrates in the discharge water, which originate from
explosives. However, the amount of nitrates is reduced
by natural processes in the internal water recycling
system of the mine site. Another environmental aspect
is chlorites from underground mine water that originates
from natural geological formations. Land use of mining
is limited to the existing mining area as mining is
underground. Tailing sand is deposited in the tailing
ponds of the mine area which will be landscaped as
forest when full.
In June, Outokumpu announced that it has established
a roadmap to achieve carbon neutrality at the Kemi
chrome mine by 2025. The three main factors to reach
carbon neutrality at the Kemi mine are the utilization of
carbon-free electricity, using biofuels in transportation
and machinery as well as replacing natural gas and
propane gas with biogas in heating. Mining machinery
electrification will also be extended to reduce the need
for fuels.
Biodiversity
Outokumpu is committed to supporting biodiversity and
takes it into consideration in its decision-making. The
main way for Outokumpu to contribute to maintaining
biodiversity globally is through the reduction of
greenhouse gas emissions and increase of recycling
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as this is saving natural resources. The production of
stainless steel does not occupy or reserve large areas
of land or have a significant effect on the biodiversity
of the surrounding natural environment. The company’s
chromium mining is an underground mining without
increase of used land, without the use of chemicals and
without impact on the climate development. Old open
pits in the mining area are ponds and living environment
for many birds and fishes. An environmental impact
assessment on the mining operation is still ongoing.
Outokumpu’s production sites are not located in sensitive
areas. However, Outokumpu has identified areas of high
biodiversity value that are owned by the company or
adjacent to our sites. These sites comprise 81% of the
total owned land. Find out more about these sites on
our website
Outokumpu has several projects ongoing to support
biodiversity on areas surrounding its sites. These include
building bird hotels at the Kemi mine, establishing insect
hotels in Avesta, Sweden and creating a wildflower
meadow for bees in Dillenburg, Germany.
Biodiversity
Site
Calvert, US
Dahlerbrück, Germany
Kemi, Finland
Tornio, Finland
Total
Area in km2
Percentage
4.69
0.063
9.16
6
19.2%
0.3%
37.4%
24.5%
81.4%
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Outokumpu Annual report 2022 Hosting birds and
insects in hotels
The unique ecosystem of the Kemi mine area has created a diverse
environment for different bird species. The area is popular among
local bird enthusiasts, and Outokumpu has been cooperating with the
local bird enthusiast association for decades. The latest step in the
cooperation has been to build a hotel for house martins in the Kemi
mine area.
“Due to the scarcity of nesting sites, the number of house martins has
decreased dramatically, and these birds have built nests in the office
area buildings. We wanted to build nesting sites for house martins
near a water basin, where there is enough water and insects for
them,” says Tuula Laasanen, Chairperson of the local bird-watchers
association Xenus.
A similar initiative took place at our site in Avesta, Sweden.
"As an initiative for biodiversity, we let tree logs remain on the ground
so they can become a hotel and food storage for a wide array of
insects. These logs are placed just outside the fence to our industrial
area," explains Joakim Rollin, Environmental Coordinator in Avesta.
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Outokumpu Annual report 2022 Annual review
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People
and society
Outokumpu is a part of a global
supply chain and a major employer
in many of our communities.
“We want to be a good
corporate citizen and an
employer, and we take
our role in the global
supply chain seriously.”
52/220
Outokumpu Annual report 2022 Sustainable supply chain
Outokumpu is a part of a global supply chain by producing stainless
steel for leading brands in demanding industries around the globe.
Our customers expect us to provide a traceable supply
chain and, therefore, we have in place stringent
requirements for our suppliers, too. Developing our
supply chain monitoring is one of the priorities in our
sustainability work.
Supply chain management and policies
Our procurement activities are divided into general
procurement and procurement of raw materials. Raw
materials are all ingredients that are in the steel we
produce. General procurement purchases everything that
is needed for our production activities and everything else
we do at Outokumpu.
In 2022, we had
- Over 6,000 suppliers globally, local suppliers account
for about 45% of purchases
- Raw material suppliers in 49 countries and General
Procurement suppliers in 48 countries
- 61 raw material suppliers operating in countries with
an assessed increased risk, covering 13% of the total
spend on raw materials.
- only a few of general procurement suppliers operating
in countries with increased risk with negligible
combined spend.
Outokumpu's supply chain activities are guided by our
Supplier Code of Conduct, Supplier Requirements and our
Corporate Responsibility Policy. We are committed to the
Modern Slavery Act and take into account the OECD Due
Diligence Guidance for Responsible Supply Chains. We
have started to implement the UN Guiding Principles on
Business and Human Rights (UNGP) into our operations
and supply chain.
Our most important raw material is recycled steel, which
primarily originates from Europe and the US where our
melt shops are located. The primary alloying element,
chromium, originates primarily from our own chrome
mine in Kemi, Finland. We also get large amounts of the
alloying elements (Cr & Ni) from the recycled materials.
Progress and events during the year
In 2022, we continued the development of our supply
chain sustainability management. During the year,
Outokumpu published a new Supplier Code of Conduct
which outlines our expectations for our suppliers.
Complying with our Supplier Code of Conduct is
considered a minimum requirement for business
engagement with any of our business units. We also
reviewed our Supplier Requirements and published a
Human Rights Policy.
The raw materials sustainability team was strengthened
in April with three additional resources. The team
developed a social audit approach with the support of
external advisors and was trained to be social auditors.
The onboarding process for raw material suppliers was
reviewed and now has a stronger focus on sustainability
and related risks, and we also developed a new digital
tool for the onboarding.
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We want to provide a tracleable supply chain and therefore
we look beyond our direct suppliers.
During the year, we had a particular focus on supply chain
transparency beyond direct (tier 1) suppliers and extended
the documentation of our supply chains.
All these activities contribute to us fulfilling the
expectations of the UNGP, the Norwegian Transparency
Act, the German Supply Chain Act and other existing and
upcoming legislation in this field.
Following the enactment of the Uyghur Forced Labor
Prevention Act (UFLPA) this year, we identified those
suppliers with increased risk in the context of the law and
asked them to sign a declaration and/or to present their
supply chain due diligence practices to us.
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Outokumpu Annual report 2022 We also continued the collection of supplier-specific CO2
emission values for selected raw materials and developed
a scope 3 CO2 emission reporting and forecasting tool.
Risk-based approach
Outokumpu applies a risk-based approach in supplier
management. Risks are assessed in different stages
of the relationship with the supplier, first during the
onboarding of a new supplier, but also later during the
relationship with the supplier.
Onboarding
A supplier shall be qualified before they can be approved
and added to the Outokumpu supplier portfolio. In
the qualification process, the potential risks and/
or opportunities are identified and evaluated. The
identification of risks follows Outokumpu’s Know Your
Business Partner Instruction.
This ensures that the suppliers comply with the
Outokumpu Supplier Code of Conduct and Supplier
Requirements and can provide conforming raw materials,
products, or services on a consistent basis. All new
suppliers go through a compliance screening for sanctions
before any business is initiated.
Around 500 general procurement and 11 raw material
suppliers were onboarded in 2022. Two raw material
suppliers were onboarded with the new process.
Regular desktop review
Outokumpu monitors its suppliers through regular
desktop reviews, by using, for example, country-based risk
indicators, self-assessments, and screenings. In 2022,
100% of our raw material suppliers were assessed with
this risk-based approach. In 2022, 18 of Outokumpu’s raw
materials suppliers were categorized with medium and 43
suppliers with high risk, covering 13% of the total spend
on raw materials.
Raw material procurement uses the EcoVadis platform for
self-assessments, which focuses on environment, labor
and human rights, ethics, and sustainable procurement.
Supply chain due diligence
Onboarding
Regular desktop review
On-site review
Risk assessment
based on
Country risk
EcoVadis results
Certifi cations
Audit / HRIA results
Other input factors
low
Visit with
sustainability
focus
k
s
i
r
Social audit
Human
rights impact
assessment
high
Onboarding questionnaire
Internal red-fl ag checklist
Enhanced
compliance
screening
Approval
System registration
Final approval
Development &
continuous engagement
Feedback on general
performance evaluation
Feedback on EcoVadis
scorecard / improvement
plans via platform
Development plans
after audits & HRIA’s
Continuing engagement
with external
stakeholders
Risk-based supplier due diligence in raw materials procurement
At the end of 2022, 56 raw material suppliers had valid
EcoVadis scorecards, with an average rating score of 52
(scale 1–100), covering 64% of the spend.
and performance evaluations, non-conformities and
improvement opportunities are identified and needed
actions agreed with the suppliers.
General procurement uses its own self-assessment
process to evaluate suppliers. The assessment is done
against our Supplier Requirements and includes the areas
ethics and sustainability, health and safety, environmental
management, quality, production and supply control,
supply chain and supplier management and company
management. In addition, the performance of selected
suppliers is regularly evaluated using the following criteria:
technology, quality, supply, cost, safety, environment,
and financial risk. As a result of the self-assessments
During 2022, 89 general procurement suppliers completed
a self-assessment questionnaire and 187 improvement
actions were defined and completed.
In general procurement, financial screenings for 97
potential new and existing suppliers were conducted. Of
the screened suppliers, five are located in medium or
low risk countries, which are defined in the Know Your
Business Partner Instruction.
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Outokumpu Annual report 2022 Visits, on-site audits, and impact assessments
Suppliers are selected for visits, on-site audits and impact
assessments based on their risk level.
Social audits are carried out on suppliers that have
potential human rights impacts arising from the supplier’s
own operations or its value chain. Impact assessments
are conducted on high-risk suppliers.
Whereas social audits are carried out by Outokumpu
itself, impact assessments are always carried out in
collaboration with an external auditor and usually take
longer than a social audit. Also, the scope of an impact
assessment goes beyond the supplier’s premises and
employees and includes external stakeholders as well.
During 2022, 12 general procurement suppliers were
audited. In raw material procurement, 11 suppliers were
visited, one was audited and three went through an
impact assessment.
Based on the visits and audits, improvement areas
were recognized and discussed with the suppliers. One
raw material supplier in Guatemala was subjected to a
human rights impact assessment after several allegations
were raised against the supplier. Based on the findings,
purchasing from the supplier was suspended.
More information about Outokumpu’s site visits to raw
material suppliers can be found on our website
Capacity building
During 2022, capacity building in the areas of social and
environmental issues within raw material supply chains
took place in the form of trainings related to the EcoVadis
concept, new onboarding process of new suppliers and
conflict minerals procurement and reporting. All category
managers and buyers participated in the trainings, and
everyone participated in at least one of the trainings. The
average participation rate was 96%.
In general procurement, category managers and buyers
were trained on supplier qualification and relationship
management processes during a 3-day capacity building
workshop. A separate human rights risk assessment
workshop was held for the transportation category group.
Four team members have developed their auditor skills
further in trainings.
In raw materials procurement, the strengthened supplier
sustainability team received the social auditor training,
and all category managers and buyers were trained on
conflict minerals, the new onboarding process, and on the
concept of social auditing.
Plans for 2023
Outokumpu will continue to strengthen its approach to
sustainable supply chain management in 2023.
In raw material procurement, the aim is to continue the
work on supply chain transparency and documentation in
our SRM tool, reducing scope 3 CO2 emissions, executing
and fine tuning the processes developed in 2022, such as
the new onboarding process, the regular desktop review,
and the social auditing approach.
In general procurement, the aim is to develop the risk-
based approach on supplier assessments by further
increasing the focus on sustainability and executing
on-site assessments for selected suppliers, improve risk
identification and evaluation efficiency with specific focus
on sustainability and compliance.
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Material and service suppliers
Outokumpu's supplier
countries
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Outokumpu Annual report 2022 Continuous improvement in
supply chain sustainability
Outokumpu conducted a human rights impact assessment
at one of its suppliers in Guatemala after allegations
of negative impacts were raised in the media. Hannah
Stratmann, Head of Human Rights and Supplier
Sustainability at Outokumpu, takes us through the case
and how we have developed our processes.
What happened?
In late 2021, Outokumpu was contacted by Swedish
journalists investigating nickel mining in Guatemala.
The journalists claimed that one of our sub-suppliers
was covering up pollution of a lake near a mine
operated by them. There were also other allegations, for
example negative impacts on the local people and lack
of transparency.
How did Outokumpu act on the situation?
As soon as we got the information about these allegations,
we acted firmly and decisively and decided to discontinue
purchases from the sub-supplier and to conduct a human
rights impact assessment together with an external
partner. As part of the assessment, a field visit was
completed in the beginning of March, during which both
internal as well as external stakeholders were involved.
How was the assessment conducted?
The purpose of the assessment was to investigate,
identify and assess the human rights impacts of our
sub-suppliers’ operations on the affected communities,
focusing on indigenous rights-holders. This included a
review of the company’s human rights risk management
practices and their status of implementation to determine
if Outokumpu can rely on those processes to fulfil its
own due diligence responsibilities under the UN Guiding
Principles for Business and Human Rights.
What happened after the visit?
Based on the findings in the assessment, the suspension
of purchases from the sub-supplier remained in place.
The final report contained recommendations for the
sub-supplier, and we stayed in regular contact with
them to discuss the recommendations and monitor
their implementation. We are committed to working with
the sub-supplier in improving the situation for the local
population and their welfare and safety.
Have you visited other suppliers to
assess human rights impacts?
Yes, in 2022 we visited five of our metallurgical coke
suppliers in Colombia together with the same external
partner that conducted human rights impact assessment
in Guatemala. This time, there were no allegations towards
the suppliers beforehand, so we conducted these visits
proactively based on our raw material supply chain risk
assessment. We also conducted a human rights impact
assessment at a nickel supplier in Colombia with our
external partner. During these visits, we discussed the
suppliers’ own due diligence processes, governance and
how they assess their suppliers. We also engaged again
with external stakeholders and NGOs to hear their views
on the companies and to learn about specific risks and
conditions in those regions. Interestingly, most of the
suppliers told us that we were the first of their customers
to visit them to talk about human rights.
In addition to the impact assessments we conducted
with our external partner, we did our first social audit at
a supplier in the Dominican Republic. We developed the
Outokumpu social audit approach with our external partner
and my team and I received training in how to conduct
these audits. We are aware of the criticism that social
audits sometimes are subject to, but we believe we have
found a good way to identify human rights risks and assess
our supplier’s due diligence practices. We will continue
conducting social audits on suppliers with medium risk and
we will finetune our approach along the way.
Currently, we are working with our external partner and
one of our scrap suppliers on identifying human rights
risks in the stainless-steel scrap supply chain. The
scrap supply chain is often seen as less risky than the
extraction and processing of primary metals, but as our
stainless steel is made to more than 90 % out of scrap,
we find it very important to get a better understanding of
the risks in this supply chain.
What remains to be done?
Developing our supply chain sustainability is a continuous
journey for us. In 2023, we will continue to strengthen
our approach and processes which we have developed
this year, for example the audit approach that I just
mentioned. Human rights impact assessments with the
external partner are also on our agenda for next year. We
also developed a new onboarding process for raw material
suppliers which we continue to execute and finetune. This
helps us to engage our suppliers right from the start.
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Impact on human rights
Outokumpu is committed to conduct its business with high
integrity. We respect and promote human rights and conduct
business in a safe, sustainable and ethical manner.
This section is a summary on the reporting on human
rights in accordance with the UNGP Reporting Framework
and the Norwegian act relating to enterprises’
transparency and work on fundamental human rights and
decent working conditions (Transparency Act). The full
report will be published on our website
Commitment
Outokumpu is committed to conduct its business with
high integrity. We respect and promote internationally
recognized human rights as set forth in the International
Bill of Human Rights and the ILO Declaration on
Fundamental Principles and Rights at Work. Human rights
are addressed in several publicly available company
documents: Outokumpu's Human Rights Policy, Code of
Conduct, our Corporate Responsibility Policy, Supplier
Code of Conduct, our Supplier Requirements for Raw
Materials and our Supplier Requirements for General
Procurement.
Our Human Rights Policy was developed during spring
2022 and is publicly available at www.outokumpu.com.
At the end of 2021, we engaged external experts to help
us identify human rights risks and impacts that we may
cause, contribute to, or are linked to through our business
relationships. This work included the identification of
our salient human rights issues, which informed our
human rights policy. Health & safety, equality, and
anti-discrimination, working conditions, freedom of
association, no tolerance for forced labour and child
labour, indigenous rights, and the right to a clean and
healthy environment are material topics to us and are
highlighted in our human rights policy.
Outokumpu is committed to respect and protect the
human rights of everyone who may be affected by our
activities or through our business relationships. We expect
not only our own employees, but also business partners,
including suppliers and sub-suppliers to respect and not
infringe upon human rights.
The CEO has most senior level of oversight and
accountability for human rights in Outokumpu.
Responsibilities are cascaded down via the Chief
Technology Officer, who represents sustainability in the
company's leadership team to the VP, Sustainability who
is responsible for the management of ESG risks within the
company and further to the Head of Human Rights and
Supplier Sustainability. Responsibilities related to human
rights and supplier sustainability are combined in one role,
because most of the identified high human rights risks are
connected to Outokumpu's sourcing activities. The Chief
Technology Officer, the VP, Sustainability and the Head of
Human Rights and Supplier Sustainability are part of the
ESG core team, which discusses human rights risks on a
regular basis.
Outokumpu has been involved in some labor-related
disputes, for example in the US regarding a dispute over
payment of wages, of which more information can be
found in the Review by the Board of Directors. Even when
Outokumpu is of the view that the claims asserted against
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In 2022, we completed a human rights risk assessment
of one supplier in Guatemala and visited several
suppliers in Colombia.
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it are without merit and is defending against them,
we always investigate each issue and take necessary
measures to improve our processes and mitigate any
residual risks of these kinds of claims.
Affected human
rights:
Risks:
Right to equality
& freedom from
discrimination
Health &
safety
Right related
to minorities
Rights to rest
and leisure
Right to
environment
Freedom
from slavery
Children’s
rights
Indigenous
rights
Risks stemming from Outokumpu’s own operations
Climate change
Discrimination,
intimidation, and
harassment within
the workforce
High workload
Radioactive
material in scrap
Human traffi cking
in coke supply
chain in Colombia
Environmental
pollution by nickel
suppliers
Risks stemming from Outokumpu’s supply chain
Development in 2022
Whereas 2021 was a year of commitment, 2022 marked
the start of our UNGP implementation journey. During
the first half of 2022 we developed and documented
a method of integrating human rights risks into our
enterprise risk management system. We also developed
and published our human rights policy and published our
first report on human rights due diligence following the
UNGP reporting framework. The Outokumpu human rights
network was founded, and first trainings and workshops
were held.
In addition to developing the structures for human rights
management in Outokumpu, we had a specific focus on
human rights in our raw material supply chain. A case
of potential human rights infringements at a supplier in
Guatemala was brought to our attention, which resulted
in an impact assessment in early 2022. During 2022, the
raw material supply chain team developed and improved
due diligence processes and visited 14 raw material
suppliers on-site.
Salient human rights issues
In 2021, we carried out workshops with internal
stakeholders to identify the most salient human rights
risks. The identified human rights risks were rated based
on their scale, reach and remediability to be able to make
a prioritization based on their severity, as well as on their
probability to occur. In 2022, the human rights risks were
separated into risks stemming from Outokumpu’s own
operations and risks within Outokumpu’s supply chain.
Some of the identified risks were renamed and their
likelihood and severity was re-evaluated.
Those risks with a very high rating on severity and
probability, are considered to be salient. Updated human
rights risk matrix can be found on this page.
Stakeholder engagement
Management of human rights issues requires the
involvement of stakeholders. We maintain a dialogue with
our stakeholders to understand what they expect from us.
We conduct a regular materiality analyses to stay up-to-
date on the expectations of our stakeholders. In 2022,
we also participated in the Reputation & Trust survey in
Finland to examine the general public’s view on reputation.
Access to remedy
At Outokumpu we encourage everyone inside and outside
the company to report potential and actual human
rights infringements to us, even if we are not causing or
contributing to them, but are linked to them through our
operations, products, or services.
All stakeholders, both internal and external, can raise
their concerns to Outokumpu in various ways, including
through our SpeakUp Channel. SpeakUp is an externally
operated channel enabling Outokumpu employees
and external stakeholders to report breaches of the
Outokumpu Code of Conduct or other misconduct. This
can be done confidentially and anonymously, if allowed by
the local laws and regulations. The Channel is available
through our website and can be used in several different
languages. The VP, Sustainability and the Head of Human
Rights and Supplier Sustainability can also be contacted
directly via e-mail, their e-mail addresses are available on
Outokumpu's webpage
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Outokumpu Annual report 2022 We operate safely, always
We believe that continuously strong safety performance correlates with
improved quality and operational efficiency. Everyone at Outokumpu
has the right to a safe and healthy working environment.
Taking every step necessary to protect ourselves and our
colleagues, we are continuously reducing our accident
record year on year. We aim to be the industry leader in
safety with the vision of zero accidents.
Managing safety with a proactive focus
Our proactive safety management system, which includes
hazard recognitions and Safety Behavioral Observations
(SBOs), supports us in striving toward our safety targets.
Hazard recognitions and SBOs are utilized to flag potential
risks and unsafe acts and behaviors before they lead to
accidents. Lessons from past incidents are shared with
other sites in the monthly Safety Call hosted by the CEO.
Our daily work is guided by common safety principles,
standards, guidelines, and our ten Cardinal Safety Rules.
Safety audits are performed regularly according to a
standardized audit program.
“When we work safely always,
we prevent accidents and
protect those around us.”
Our safety network, which comprises every site
safety manager and is coordinated by the Group
safety function, meets monthly to ensure up-to-date
safety topics are communicated effectively and best
practices are shared and adopted. In 2022, the working
methods of the network were developed further to
fully utilize the group’s expertise in implementing the
new safety strategy. The network group was expanded
to include more safety experts from sites and two
face-to-face workshop meetings were held to define a
common roadmap.
Safety themes in 2022
We have achieved remarkable improvements in our
safety performance over the past few years, but we still
have many accidents that are rooted in complacency
and errors in our day-to-day behaviors. Focusing on
safety culture and human factors will help us to maintain
our positive safety trend performance and supports our
journey towards zero accidents within our organization.
Our safety strategy and ambition were updated in 2022.
The updated safety strategy is based on three pillars:
- strengthening our safety culture,
- developing our safety management, and
- utilizing the latest safety technologies.
To support the development of our safety culture,
a pulse survey was launched in November to map
our organization’s views on safety. Over 71% of our
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To protect ourselves, our colleagues and all our stakeholders we
work and carry out our day-to-day jobs and tasks in a safe manner.
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Outokumpu Annual report 2022 employees answered the survey. According to the results,
our safety culture is at a good level with the Safety Index
grade being at 87. The results are used to develop an
action plan for further strengthening safety culture. Going
forward, the survey will be conducted regularly.
In safety management development, one of the key
projects was to establish a cross-learning program
for safety. Read more about the program on the next
page. During the year, the safety network worked on
implementing a global digital tool for harmonizing safety
management. The network also conducted research
into how artificial intelligence could be utilized in safety
management and risk detection.
Safety performance
Outokumpu uses total recordable injuries per million
working hours of employees and contractors (TRIFR) as the
main safety performance indicator. Group TRIFR declined
from the previous year and was 1.8 against the target
of <2.0 (2.1). Group LTIFR (lost time injuries per million
working hours) was 0.8 against the target of <1.2 (1.1).
The rate of all work-related accidents (total recordable
injuries and first-aid treated injuries per million working
hours) was 10.1 (11.9).
Proactive safety action frequency was 11,029 (8,185).
This includes reported hazard observations, SBOs, and
other preventive safety actions per million working hours.
Our long-term
target
is zero
accidents.
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Work-related injuries by region, accident and employee type
Work-related injuries1)
TRIFR 1)
LTIFR 2)
Total recordable injuries 3)
Fatalities
Lost time injuries
Restricted work injuries
Medically treated injuries
Group
BA Europe BA Americas
BA Fe Cr
Employees
Contractors
1.8
0.8
37
0
17
2
18
2.1
1.1
27
0
14
2
11
0.3
1
6
0
2
0
4
0.6
2.4
4
0
1
0
3
1.4
0.7
29
0
15
1
13
0.4
0.1
8
0
2
1
5
1) Total recordable injury frequency includes fatalities, lost time injuries, restricted work injuries and medically treated injuries, per million
working hours.
2) Lost time injuries including fatalities and lost time injuries, per million working hours.
3) Includes fatalities, lost time injuries, restricted work injuries and medically treated injuries.
20
15
10
5
0
2018*
2019*
2020*
2021
2022
Lost time injuries
Restricted work injuries
Medically treated injuries
First aid treated injuries
1) Per 1 million working hours.
* Including discontinued operations
2018*
2019*
2020*
2021
2022
1.7
0.8
1.4
0.3
1.4
0.3
1.5
1.5
0.7
1.3
0.1
0.6
0.8
0.1
0.9
15.4
12.0
11.3
9.5
6.9
Lost time
injuries
Restricted
work
injuries
Medically
treated
injuries
First aid
treated
injuries
18
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Outokumpu Annual report 2022 The main direct causes for work-related injuries were
the use of forbidden or inappropriate work methods,
temporary carelessness and defects in machines and lack
of operational procedures.
Health and well-being
Outokumpu encourages its employees to take care of
their physical health by offering various exercise benefits
and discounts to sports and well-being services. Different
health support programs are also run across our sites. In
addition, occupational hygiene measurements are being
carried out at the Outokumpu sites to ensure a healthy
working environment.
The number of occupational diseases diagnosed in the
Group was 0 (0).
Total injury frequency
rate was
1.8
per million working
hours in 2022.
Sharing best practices in
the cross-learning program
As a part of our updated safety strategy, a new cross-learning program
was started at Outokumpu during 2022. In the new program, members of
Outokumpu’s safety network visit other sites with the aim of sharing best safety
practices, increasing knowledge and helping the organization to improve our
safety performance.
“I am very proud of the honesty and transparency of our different teams. Big
thanks also to operations, maintenance, reliability, safety and all the other teams
involved in this project. Working as a team and with this positive attitude we can
make sure all Outokumpu employees and contractors work in a safe workplace
free of accidents”, says Oihana Ramos, VP – Health & Safety.
During the year, altogether 13 cross-learning visits were conducted. Key finding
from these visits relate to implementing safety standards, handling of SBOs,
utilization of digital tools and best practices in safety walks.
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Outokumpu Annual report 2022 In good company
Our people are engaged in their work, and our priorities are clear. Our
vision is to build a working culture on people's success, where everyone
can be themselves and utilize their full potential at work.
Going forward with the new business lines
On July 1, we announced the new business area Europe
organization and related appointments. With the two
distinct business lines – business line Advanced Materials
and Stainless Europe – business area Europe will
strengthen our position as the customer’s first choice in
sustainable stainless steel.
The split into the two business lines has brought more
transparency and visibility into our operations. In practice,
it has meant closer collaboration between operations,
supply chain and sales functions. We are closely working
together and aligning the operations of our sites to ensure
alignment within the European markets. This provides our
clients an easy access to the whole range of products,
while offering us more flexibility within our organization to
simplify the operating model and strengthen our business
orientation.
The management teams of the new business lines were
formed emphasizing the diversity of the team members.
During the first months, management teams have spent a
lot of time together getting to know each other and visiting
actively our sites in different countries to know the new
organization and our people. Internal webinar discussions
have been arranged regularly to engage and inform
everyone.
With the launch of the new organization, we were able to
utilize our existing talent pool and offer new, interesting
positions to Outokumpu team members. It has been
wonderful to see our people flourish in the new roles and
be proud of what they do. The new organization has meant
new ways of working and has required quick adoption
ability of the team members, but it has started very well in
good cooperation on all levels.
Going forward, the new organization will require new
capabilities and versatile talents to be able to respond to
the developing business needs. The new working model
has already been pressure-tested during the third quarter
with volumes being low. Agility and ability to react fast in
the changing market environment are keys to the success.
Enhancing leadership and the
excellence of our teams
We have continued investments in our leadership’s
capabilities having significant impact on our business
performance and our team members’ well-being at work.
After the pandemic, it has been important to bring
colleagues together. Multiple management teams have
participated in Team Excellence workshops to increase
their performance as a team.
Our Step-Change in Leadership Excellence program
continued across the organization. The program develops
leaders at all leadership roles. In the Americas, especially
our shift-leaders have actively participated in the License
to Lead shift-leader program.
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The split into the two business lines has meant closer cooperation
between operations, supply chain and sales functions, and also new
opportunities to our people.
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Outokumpu Annual report 2022 Our well-established training programs continued at all
levels. For example, with the Sales Academy and its Way
to the Customer training, we are further enhancing our
sales organization. This Outokumpu-specific training
offers tools for efficient sales discussions and harmonizes
the way Outokumpu is presented to the customers. Our
Finance Academy concentrates on developing the core
competencies of our finance team to be able to act as a
trust-worthy and influential business partner.
All programs will be offered to the teams also in 2023
and will be complemented with new parts aligned with
business requirements.
Developing our talents and future leaders
The key target of our talent management is to ensure that
we have enough of potential in our talent pipeline to grow
into our key leadership positions globally.
In our global and process-driven organization, key roles
require international and cross-functional experience
accompanied by agility and excellent leadership skills.
During 2022, we were able to rotate more than 80% of our
young talents and high potentials to key positions.
We have established extensive programs and development
opportunities to grow our talent and different talent
pools: young talents, those with high potential, and
top leadership.
Leap – our Global Opportunity program – is a 2-year
program which we offer to our young talents who are
interested in moving into leadership roles very fast. We
provide the opportunity to grow networks and global
understanding of the company and fast-track career as
international leaders. One ambition is to increase the
number of females in our leadership pipeline. The program
has been designed to provide customized experiences
with systematic mentoring and individual training plans.
For the selection process, we use various assessments
and panel interviews to make the best decisions based on
objective criteria.
Hybrid working model
is the new normal
After the national pandemic guidances for remote working ending in many countries,
we could finally get back to the offices and meet colleagues in a familiar environment.
To encourage teams to meet each other regularly, weekly coffee meetings are
arranged on several locations. Informal meetings offer a great opportunity to meet-
and-greet, introduce new team members and share topical information.
We want to be as flexible as possible but maintain the good elements of working
together. Employees, whose tasks are suitable for remote work, have the possibility
for hybrid working. At our operational sites, securing the production defines the
possibilities for remote work.
The hybrid model means a balanced combination of office work and remote work.
Remote work is agreed between the manager and the team members. Face-to-face
work in the office is important regarding team spirit, collaboration and connecting to
company and its priorities.
Early indications show that the hybrid working model approach is well received. In all
cases we emphasize trust and flexibility.
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Outokumpu Annual report 2022 In June, Leap professionals finally started their 24-months
program with the first assignment. Rotations in other
functions and countries are planned for the participants
every 6 to 12 months, to grow their experience, develop
an end-to-end understanding of our business, gain in
agility, and become international leaders.
Continuous employee listening
Our vision is to build a working culture on our team
members’ success, where everyone can be themselves
and utilize their full potential at work. With continuous
employee listening, we want to make sure that we
always have up-to-date understanding of our employees´
experiences and commitment to work, and our strategic
common goals.
To support the agile decision making and development, we
have moved towards forward looking feedback culture and
continuous pulse surveys. People pulse surveys are short
and real-time driving for timely actions. Engagement is the
basis of all people surveys, complemented with topical
themes and employee life-cycle surveys. Key questions
are rotated smartly to see the trends and development in
the long run.
The new tool and approach were introduced in 2022
with two short pulse surveys for all employees. The first
pulse survey was conducted about strategy awareness &
engagement and the second one about safety awareness.
We can be particularly proud of the overall results:
the Engagement Index of Outokumpu team members
increased to as high as 79. This is a great result above
the average of the benchmarked companies and well
in-line with the Organizational Health Index (OHI) used in
previous years.
The people pulse surveys will be conducted on a regular
basis quarterly. We want to give everyone a voice – that is
the only way we know where our organization is strong and
where further development is needed.
Outokumpu ways of working
We operate
safely. Always.
We work safely, comply with our cardinal safety rules, assess
potential risks and take appropriate actions to mitigate them.
We leverage the power
of one Outokumpu.
We work together, share and combine our knowledge, across
functions and regions to create best value for our customers.
We
deliver.
We live up to our promises with clear roles and clear accountabilities.
We have a passion for continuous improvement.
We grow people and
value diversity.
We foster diversity and create work environment that
allows all team members to contribute and develop.
We act
sustainably.
We are driven by creating sustainable impact,
environmentally, socially and economically.
We are
a trusted partner.
We are a reliable and trusted partner towards all our stakeholders, our
customers, employees, investors and the communities we operate in.
Strengthening diversity, equity, and inclusion
We at Outokumpu believe that diversity, equity, and
inclusion are essential for us to continue being successful
in the future. Our people live across several continents
and represent different nationalities, cultures and
backgrounds, religions, genders, sexual orientation, and
age groups. A healthy variety of employees from different
backgrounds and cultures provides us with the balance of
voices and diversity of thought that we need.
In 2022, we completed our first global inclusion survey to
understand where to focus our actions to foster a culture
in which all employees feel welcome and that they are
equally heard and have equal opportunities. The global
results highlight our strengths: inclusion is on average at a
high level and is driven by peers who respect and support
each other and who feel that they can be themselves
at work and their work is meaningful. Women and men
perceive Outokumpu as equally inclusive.
Looking at areas where we need to improve, the
perception of inclusion between different employee groups
is mixed. We must focus our actions on fostering a culture
that is welcoming and safe for all, regardless of visible
or invisible differences. We will also work on being more
transparent on how we reward, promote, and hire people
and to check for bias in these processes to strengthen
equity in all.
Results of the survey were cascaded to the organization
through local action plans. For example, in Avesta,
Sweden, we are hosting monthly meetings in all process
groups in operations to offer employees the opportunity
to get information and to ask their questions creating
participation. In Castelleone, Italy, we are committed to
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Outokumpu Annual report 2022 increasing diversity by sourcing for new talent pools and
reviewing the possibility to accommodate new restrooms
and dressing rooms to hire more women in operations.
In Tornio, Finland, special attention is put on increasing
understanding about inappropriate behaviors and other
actions strengthening inclusion such as organizing
family days and team days. In the Americas, we continue
to expand recruiting efforts to improve relationships
with colleges, universities and alumni organizations
placing focus on diverse populations attracting qualified
candidates where underrepresentation exists.
The core of our journey is to strengthen our inclusive
working culture. In 2023, we will organize training for
all employees to understand how we can, with our
everyday behavior, foster a workplace where everyone
feels welcome, safe, and respected regardless of their
background. We will align diversity, equity and inclusion
with our existing leadership model, training programs and
tools as well as arrange specific training for leaders.
Our processes and policies guide our ways of working
and decision making. We are reviewing our processes
for hiring, promoting, and rewarding to ensure equity in
all. For example, we have established interview panels
to increase objectivity in our hiring decisions. We are
also acting to attract and engage more diverse talent to
Outokumpu.
Finally, to measure our progress in strengthening diversity,
equity and inclusion, we are tracking the diversity of our
employees with a special focus on leadership teams and
will organize a yearly pulse survey to track inclusion.
Building a culture of continuous dialogue
Our team members’ performance is led and evaluated
with the annual My Performance Commitment process
(MPC). Target setting starts with the definition of the
business targets at the beginning of the year. Based
on the business targets, cascaded throughout the
organization, each employee and manager agree on the
individual targets contributing to the company targets at
the right level.
Our goals for diversity,
equity and inclusion
Outokumpu’s ambition towards 2025 – for our personnel and leadership – is to
represent the diverse societies we operate in and serve. Our Board of Directors have
approved the following DE&I targets towards 2025:
Diversity targets: increase diversity in leadership
- Add 100 diverse leaders to leadership teams by the end of 2025
- Minimum of 30% of diverse leaders in all international business area/business line/
function management teams by the end of 2025
Equity targets: ensure equal access to opportunities
- Correct any biases in recruitment and promotion processes by the end of 2022
- Full equality on compensation (verified by an external certification) by the end of
2023
Inclusion targets: strengthen culture where everyone feels welcome
- Enforcing the culture of zero tolerance for inappropriate behavior
- 60% agreement score on all areas of inclusion and across all diverse
employee groups
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The Outokumpu behaviours – integrity, delivery and growth
– are incorporated in the annual performance plans. Both
performance based and behavioural targets are weighted
equally, having the same impact on salary reviews and
incentive calculations. Development targets are set to
strengthen employee skills, competencies and behaviors.
team members were given visibility to their individual
pay grades and comparatio supporting our principles
of transparency and openness. We will expand this
successful pilot to other countries next year. A Group-wide
pay analysis is planned for 2023 to identify possible pay
gaps and take corrective actions.
During 2022, the mid-year reviews of the performance
process were replaced by continuous dialogues. These
continuous dialogues consist of regular one-to-one
discussions between the manager and the team member
during the year. Continuous dialogue increases managers’
visibility into team members’ activity and achievements
and supports employee engagement and well-being
at work.
Our ESG ambitions are included in our incentive plans.
Safety has been a key target in our short-term incentive
plans for many years already, and as of 2022, our SBTi
target of reducing our CO2 emissions per ton of stainless
steel produced has been included in our performance
share plan. In 2023, we will also include a diversity target
in our short-term incentive plan for all employees in
managerial positions.
98% of employees in applicable countries had a regular
performance development discussion with their manager.
The remaining 2% are mostly on parental or other
long-term leave. In countries where local contracts or
regulations do not make it possible to have performance
development discussions, Outokumpu follows the
local procedures.
At the end of the year, we launched a new Continuous
Feedback feature in our global HR platform, providing
possibility to give or receive feedback from any colleague
within the company. This voluntary tool helps employees
to develop in their daily work and interaction with
others. For the managers, it offers better visibility to
their team members’ accomplishments, strengths and
development areas.
We will further continue our efforts in building a culture of
continuous dialogue and feedback in 2023.
Extraordinary profit sharing and pay transparency
In 2022, we made significant progress towards more
equitable and transparent pay. In business area
Americas, all white-collar employees participated in
virtual training sessions for a better understanding on
the pay and compensation principles at Outokumpu. The
In addition to the global incentive programs, Outokumpu’s
Board of Directors decided to pay an extraordinary
additional bonus to reward our team members for the
solid financial performance in 2022. Thanks to the flexible
payment schedule, we were able to support the individuals
and their families in the challenging times faced during
the year. Exceptional cost-of-living payments were also
made in three European countries impacted the most by
the war in Ukraine and record-high inflation.
Smooth collaboration between the
management and employees
To ensure good cooperation and understanding of our
different employee groups, we are committed to informing
and consulting our employees and their representatives.
The Outokumpu Personnel Forum is an important
information channel between our personnel and
management in the European operations. The Forum is
based on the European Works Council Directive. Due to
the pandemic, this year’s meeting in Italy was the first
face-to-face meeting since 2019.
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Our people by region
Finland
Germany
Sweden
The United Kingdom
Other Europe
Europe
The United States
Mexico
South America
Americas
Asia/Rest of the world
Group total
* Including discontinued operations
2022
2,415
2,018
1,542
105
677
6,757
963
815
8
1,786
48
8,591
2021
2,394
2,043
1,566
93
750
6,846
947
804
80
1,831
50
8,727
2020*)
2,517
2,326
1,888
502
747
7,980
1,010
786
84
1,880
55
9,915
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Outokumpu Annual report 2022 Personnel Forum appoints the Group Working Committee,
which is responsible for the operative cooperation
between the management and employees. During the
year, the committee was able to convene face-to-face
once and three times virtually.
In 2022, the number of employees decreased by 82
globally (2021: 506). Outokumpu’s working hours,
minimum notice periods, vacation times, wages, and other
working conditions are consistent with the applicable local
laws. Outokumpu maintains a consistent policy of freedom
of association. All Outokumpu employees are free to join
trade unions according to the local rules and regulations.
In 2022, 78% of the Group’s employees were covered by
collective agreements (2021: 78%). In total, 29 days in
2022 were lost due to strikes (2021: 16).
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Over 100 voluntary projects
all around the world
To celebrate the commitment of our people and the world-class response rate
in our global employee survey in 2021, we wanted to share the good with the
communities and people around us during this year.
More than hundred diverse voluntary projects have been sponsored in our
neighboring communities all around the world as part of our social responsibility.
The focus has been on projects linked to sustainability both from environmental
and social aspects.
Selected projects, chosen by the local steering groups, varied from supporting
children, elderly people, and minority groups, to building better surroundings
for communities and organizing events or to increase the safety or
environmental awareness.
To mention few of the numerous projects, in Vilnius, Lithuania, we sponsored
planting trees, and taught the elderly people to use mobile devices and internet.
In Avesta, Sweden, one of the projects improved first aid preparedness on a local
riding club. Our Asian colleagues in Singapore, Thailand and Vietnam, arranged
cleaning activities on near-by beaches and parks.
Outokumpu Annual report 2022 Stakeholder engagement
We take our social responsibility as a corporate citizen
seriously. We recognize that our operations have an impact
both on a local level and on the wider society.
One of our ways of working is being a reliable and trusted
partner towards our stakeholders: our customers,
employees, investors, suppliers, and the communities
we operate in. For us to be able to achieve our vision of
being the customer's first choice in sustainable stainless
steel, we maintain a dialogue with our stakeholders to
understand what they expect from us.
We conduct a regular materiality analysis to keep up-to-
date on the expectations of our stakeholders. In 2022,
we also participated in the Reputation & Trust survey
in Finland to examine the general public’s view on our
reputation.
Read more about our suppliers and our employees.
Customers
In the stainless steel market, Outokumpu is known for the
high quality of our products, our comprehensive product
portfolio, and our technical expertise. Our customers
represent several industries, which means that we have a
strong and balanced customer base spread across the globe
and a range of industries. Our customers use our stainless
steel to construct buildings and infrastructure, produce
energy, and manufacture appliances and cars, for example.
We work to solve the challenges our customers face and
work together with them to find new application areas
where stainless steel can be used. Our innovations date
back to the time when stainless steel was first invented.
Today, our customers are more and more interested
in lowering the carbon footprint of their products, in
environmental aspects, and in their entire value chain.
In 2022, we launched a new emission-minimized Circle
Green product line and a product-specific carbon footprint
based on continuous production data as the first stainless
steel producer in the industry to do so. The product-
specific carbon footprint allows our customers to use
the exact footprint of our products in their own carbon
footprint calculations.
We collect feedback from our customers as a part of
the sales process. They are mostly satisfied or very
satisfied with their business relationship with us. In their
opinion, our strengths are quickly reacting to requests,
understanding customer needs and being easy to reach.
One improvement area continues to be our delivery
performance.
In 2022, customer cooperation continued in hybrid ways,
with both face-to-face meetings and remote cooperation.
We also resumed visiting fairs, where our new virtual
mill tour allowed our customers to visit our operations in
Tornio, Finland at the same time as visiting our booth.
Outokumpu takes several measures to ensure the safe
use of our products. We offer safety information sheets for
stainless steel in the EU and provide material safety data
sheets for the US market. For ferrochrome products, we
instruct our customers on safe use. We also comply with
relevant product requirements such as REACH, RoHS and
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ELV, and we strictly control that there is no contamination
of radioactive material in the steel. No health and safety
incidents caused by our products were reported to us
in 2022.
We are a significant member of our communities and, in many
cases, one of the few big private-sector employers in the area.
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Outokumpu Annual report 2022 Communities
Outokumpu’s production sites are often located in
relatively small towns where we are a significant member
of those communities and, in many cases, one of the
few big private-sector employers in the area. Many of our
production sites have long and interesting histories: some
of our sites in Finland, Germany and Sweden have been
producing metal products for decades or even centuries.
We recognize that our decisions might have a major
impact on communities, our personnel and local suppliers
and service providers.
Our sites engage regularly with local community
representatives, especially on the topics of employment,
environment, energy, or sponsoring. We also maintain
continuous cooperation with local schools and
universities, NGOs, our neighbors and other companies.
Ongoing permit processes are one important topic that
is discussed with local stakeholders. Based on these
discussions with the neighboring communities and with
authorities, no significant negative impacts on local
communities have been identified.
In 2022, we were again able to organize family day events
at our sites and they were again very well received,
allowing the families of our team members to see our
operations for themselves. Outokumpu organizes open-
door events also for our neighbors at our production sites.
Before focusing on stainless steel, Outokumpu operated
mines both in Finland and elsewhere. The decision to
focus on stainless was taken some twenty years ago,
and Outokumpu currently operates one mine, the Kemi
chrome mine, which is an integral part of our stainless
steel production, as it is chrome that makes steel
stainless. In 2022, Outokumpu continued to monitor its
old mine sites in Finland, both those where Outokumpu
still has obligations and those where they have ended.
In Enonkoski, Finland, Outokumpu investigated the
mine area and will apply for an environmental permit to
restore the area. Outokumpu has environmental permits
at a few old mines. In 2022, two minor environmental
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Restoring old Enonkoski
mine area
Outokumpu investigated the current situation at one of its old mines in
Enonkoski, Finland, in 2021, and decided in 2022 to restore the old mining
area as far as necessary. To do so, we will apply for an environmental permit. In
this way, we will know the current situation well enough to plan for restoration.
Before applying for the environmental permit, we will thoroughly investigate the
current situation of the Enonkoski mine, and a field survey was started in the
fall. The research will include water system, tailings ponds and their covering
structures, the water routes and overflow areas, ground water pipes and tailing
sand areas. Surface water and its quality in the nearby water bodies will be
measured in approximately 20 research spots. Samples will be taken also in
the beginning of 2023.
In the second phase, the research will be extended for instance to ground
sediments and groundwater quality. Investigating the current situation will take
some 1–2 years. After that, we will know what kinds of restoration measures are
needed and can apply for an environmental permit.
permit breaches were observed: in Hammaslahti annual
average of leachate pH value and in Kotalahti annual
average of leachate iron concentration did not meet the
environmental permits' requirements.
Information on old mines
List of Outokumpu’s operating sites
Non-governmental organizations
Non-governmental organizations, or NGOs, are an
important stakeholder group for Outokumpu: they provide
us external views on expectations towards big companies
like Outokumpu and our impact on the nature and society.
For example, regarding climate change, the dialogue has
helped both sides to understand its urgency and related
actions and policies. Other recurring topics are ongoing
permit processes and other environmental issues. We
are thankful for NGOs as they highlight any issues in our
operating environment.
Since a Finnish NGO, Finnwatch, assessed critically our
supply chain sustainability monitoring and purchasing,
we have continued a dialogue with them, and Finnwatch
has thanked Outokumpu for the actions taken, such as
human rights impact assessment and committing to the
UN guiding principles on business and human rights,
and calls for a further increasing the transparency of the
supply chain. In 2022, we continued to strengthen our
monitoring: our team was strengthened, and we launched
a separate Supplier Code of Conduct and human rights
policy.
Read more on our supply chain
Associations, memberships and public affairs
Outokumpu is a member of many international
organizations and associations, such as the International
Chamber of Commerce (ICC), the European Steel
Association (Eurofer), the International Chromium
Development Association (ICDA), EUROALLIAGES and
EUROSLAG. We are actively involved in and support the
work of these associations. For example, we provide
relevant information to decision-makers and experts
We are a
trusted partner
towards our
stakeholders.
for the development of the business environment and
legislation.
Outokumpu also participates in the work of trade
organizations and is a member of industrial federations
and associations in Finland, France, Germany, Italy, the
Netherlands, Sweden, the UK, the US and Australia. These
organizations advance industry views and contribute to
national development. Outokumpu is also a member of
the Sustainable Mining network in Finland and committed
to the Finnish Sustainable Mining standard, based on the
Canadian initiative Towards Sustainable Mining.
We conduct our public affairs through industry
associations like Eurofer towards governing bodies and
regulators. Outokumpu participates in different working
groups in these associations, where the aim is to provide
expertise to help decision-makers. In these forums,
members share best practices and obtain benchmark
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Outokumpu Annual report 2022
data relating to, for example, the environment, R&D,
product life cycles, product and chemical safety, and
occupational safety. Members also contribute their own
data for use in the industry reports, such as the ICDA’s
safety and sustainability reporting.
In 2022, Outokumpu’s membership fees and other
contributions to the associations amounted to
EUR 728,000.
Sponsoring and support
In sponsorships, Outokumpu prioritizes connections to
stainless steel, sustainability, talent, and education.
Local sponsorship follows the same guidelines. Locally
we sponsor for instance significant local projects, sports
associations, and artworks by donating stainless steel.
Outokumpu does not take part in or otherwise support
political activities, whether they are local, national or
international.
Outokumpu also makes discretionary donations for the
common good as a responsible corporate citizen. These
donations are approved by the Leadership Team or by the
Board of Directors. In 2022, Outokumpu’s shareholders
approved in the Annual General Meeting the suggestion
by our Board of Directors to donate up to EUR 1,000,000
to support relief efforts in Ukraine and neighboring
countries. Half of this sum was donated to UNICEF and
half to the Red Cross.
Outokumpu supports research related to its field
of industry and maintains a close cooperation with
educational institutes. We offer apprenticeships to local
colleges and offer student placements also in the form of
one-year programs. We also introduce our operations to
schoolchildren and local students.
Outokumpu has also been among the founders of a
number of technological, research and educational funds.
These funds support and promote university-level research
and teaching and business opportunities. Examples
include the Technology Industries of Finland Centennial
1,000,000 euros
to relief work in Ukraine
We were shocked by the Russian attack on Ukraine, and thankful when our
shareholders approved the suggestion by our Board of Directors to donate up to
1,000,000 euros to relief work in Ukraine. Half of this sum went to UNICEF and half
to the Red Cross.
Before that, our employees wanted to help Ukrainian refugees by engaging in
various support actions and individual initiatives in the neighboring countries, and
Outokumpu donated also smaller amounts locally. In Poland, we have for example
made a local donation for medical assistance to support transportations of medical
supplies to Ukraine. “We talk about our direct neighbors – a neighboring country
to which our people have a lot of connections, both private and business,” says
Krzysztof Kurjański who heads our service center in Poland. “Our employees
in Poland have been very active in this situation, engaging in various supporting
actions and individual initiatives, such as providing transportation for Ukrainian
refugees and collecting, for example, toys for kids. The scope of support exceeds
anything we have experienced before.”
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Outokumpu Annual report 2022 Foundation and the Fund for the Association of Finnish
Steel and Metal Producers.
In 2022, Outokumpu spent some EUR 1,061,000 in
sponsoring.
Investors and shareholders
Outokumpu’s share is a so-called people’s share in
Finland, with households and private investors owning
more than a quarter of its outstanding shares. The
largest shareholder is Solidium Oy, the Finnish-state
owned investment company, who owned 15.5% of the
outstanding shares at year-end. The share of international
institutions’ ownership slightly decreased during the year
and reached a level of 30.8% at the end of 2022.
Outokumpu continued its regular and active
communication with investors and analysts throughout
the year. The key topics in 2022 were the unprecedented
situation in the energy market, increased cost inflation,
the Russian attack on Ukraine and its consequences
as well as the overall market environment including
raw material and stainless steel price development.
Other topics included Outokumpu's second phase of
the strategy and related financial targets, strengthened
balance sheet, normalized EBITDA level, capital allocation
and sustainability.
In 2022, after the global COVID-19 pandemic subsided,
Outokumpu again started to meet its investors and
analysts physically, but certain conferences, seminars
and roadshows were still arranged as virtual events.
The Annual General Meeting was held at the company
headquarters in March 2022 under special arrangements.
In June, Outokumpu arranged its Capital Markets Day
2022 physically in Helsinki, Finland. The event was also
broadcasted as a live webcast and close to 250 people
participated in the event virtually. In the event, Outokumpu
announced that it had completed the first phase of its
strategy ahead of time and reached both financial targets.
The company also announced the second phase of its
strategy, related financial targets and the new dividend
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policy. In the second phase of the strategy, there is an
increased focus on shareholder returns and according to
the new dividend policy, Outokumpu aims to distribute a
stable and growing dividend to be paid annually.
In connection with the Capital Markets Day 2022, we also
took our institutional investors, analysts and bankers
on a site visit to our Kemi mine and Tornio operations in
Finland. Another site visit was arranged in September,
when Outokumpu participated in Nordea’s US site tour for
Principal shareholders on December 31, 2022
Solidium Oy
Varma Mutual Pension Insurance
Company
Ilmarinen Mutual Pension Insurance
Company
The Social Insurance Institution of Finland
Elo Mutual Pension Insurance Company
State Pension Fund
Mandatum Life
Danske Invest Finnish Equity Fund
Nordea Life Assurance Finland Ltd.
Equity Fund Evli Europe
OP Life Assurance Company Ltd.
Helander Hannu-Jukka
Nordea Pro Finland Fund
Sinituote Oy
Säästöpankki Kotimaa - Equity Fund
OP-Finland Small Firms Fund
Laakkonen Mikko Kalervo
Insurance Company Fennia Life
Etola Erkki Olavi
Seligson & Co Equity Fund
Shares
%
70,793,208
15.50
21,938,403
4.80
12,629,316
9,298,652
5,875,000
5,500,000
5,136,645
4,047,186
3,130,615
2,362,903
2,311,047
1,672,800
1,633,043
1,588,560
1,541,975
1,379,229
1,156,000
1,039,153
1,000,000
959,288
154,993,023
2.76
2.04
1.29
1.20
1.12
0.89
0.69
0.52
0.51
0.37
0.36
0.35
0.34
0.30
0.25
0.23
0.22
0.21
33.95
Nominee accounts held by custodian
banks
Treasury Shares
Other Shareholders
140,552,290
12,739,837
148,589,298
30.76
2.79
32.50
In our Capital Markets Day 2022, we announced that we had
completed the first phase of our strategy ahead of time.
Shareholders by group on
December 31, 2022
Nominee registered and non-Finnish
holders 31.13%
Finnish institutions, companies and
foundations 26.99%
Solidium Oy¹⁾ 15.5%
Households 26.38%
Total
456,874,448 100.00
1) Solidium Oy is wholly owned by the Finnish state
Source: Innovatics
72/220
Legend
Nominee registered and non-Finnish holders
Finnish institutions, companies and
foundations
Solidium Oy¹⁾
Households
Value in %
31.13%
26.99%
15.5%
26.38%
19
Outokumpu Annual report 2022 Finnish institutional investors, taking them to our Calvert
mill in Alabama.
Market capitalization and share price development
3,000
During 2022, Outokumpu participated in eight seminars or
roadshows and had 57 one-on-one meetings with investors.
On top of that, we arranged four breakfast meetings with
Finnish institutional investors after every quarterly result
and four pre-silent conference calls, which were open for
everyone to participate.
In November, Outokumpu Board of Directors approved a
share buyback program of up to EUR 100 million under the
authorization of the Annual General Meeting 2022. The
maximum number of shares to be repurchased under the
program is 20 million, representing approximately 4.4%
of the company’s total number of shares. The program
commenced on November 7, 2022, and ends no later than
on March 24, 2023.
Through the share buyback program, Outokumpu seeks to
mitigate and manage the dilutive impact of the company’s
outstanding convertible bonds. The repurchased shares
will be initially held by Outokumpu as treasury shares and
may be used to meet its obligations under the convertible
bonds. Alternatively, Outokumpu may decide to cancel
any or all of the repurchased shares and reduce its
capital accordingly. The share repurchases will be funded
by using funds from the unrestricted equity. Prior to the
announcement Outokumpu held 4,164,711 of treasury
shares, representing 0.91% of the company’s total number
of shares.
At the end of the year, the total share capital was EUR 311
million. All shares in Outokumpu carry equal voting and
dividend rights. On December 31, 2022, the total number
of Outokumpu shares was 456,874,448. Outokumpu had
acquired 8,575,126 million shares under the share buyback
program by the end of 2022. As a result, the number of
treasury shares held by Outokumpu rose to 12,739,837
shares (Dec 31, 2021: 4,302,471 shares).
Outokumpu’s shares are listed on the Nasdaq Helsinki
Large Cap list under the trading code OUT1V and
2,500
2,000
1,500
1,000
500
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Monthly trading volume, million shares
Annual review
6
5
4
3
2
1
0
100
80
60
40
20
0
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Jan Feb Mar Apr May Jun
Jul Aug Sep Oct Nov Dec
Governance
Month-end market capitalization, €/million
Share price, €/share
Source: Nasdaq
Outokumpu share price development in 2022
Dividend/share, €
Remuneration report
Financial year
140
120
100
80
60
40
20
0
20
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
Jan Feb Mar Apr May
Jun
Jul Aug Sep Oct Nov Dec
21
2018
2019
2020
2021
2022*
Outokumpu
Nasdaq Helsinki
Dec 30, 2021 = 100
Dividend per share
Extra dividend
* Proposal by the Board of Directors. The extra dividend
of EUR 0.10 per share is a one-time extra dividend that
is proposed to be distributed to the shareholders for the
exceptionally good result of the account period.
incorporated into the Finnish book-entry securities
system. Outokumpu’s shares are also traded on various
alternative platforms.
2018
2019
0.15
0.00
In 2022, Outokumpu’s share price was EUR 6.48 at its
highest and EUR 3.51 at its lowest (2021: EUR 6.01 at
its highest and EUR 3.36 at its lowest). The share price
closed at 4.73 at the end of the year, decreasing 14%
from the closing period of EUR 5.50 at the end of 2021.
The market capitalization was EUR 2,161 million at the
end of the year, compared to the level of EUR 2,513 million
at the end of 2021.
2020
0.00
2021
0.15
0.25
2022*
During 2022, the average daily trading volume in Outokumpu
shares on Nasdaq Helsinki was 2.8 million shares. 721
million Outokumpu shares were traded in total on Nasdaq
Helsinki during the year (2021: 880 million shares).
22
23
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Outokumpu Annual report 2022 Ethics and compliance
At Outokumpu, we conduct business with high integrity. We are committed to
complying with all applicable laws and regulations and to making sustainable, ethical
judgements as part of our daily work. Responsible and ethical business practices
are owned by everyone at Outokumpu, and it is up to all of us to do the right thing!
Close co-operation with business areas,
group functions and governance bodies
The implementation of Outokumpu’s group-wide ethics
and compliance (E&C) program continued efficiently in
close co-operation with business areas, group functions
and E&C governance bodies during 2022. As part of these
activities, the global E&C team started a visibility tour to
increase understanding of E&C matters through direct
engagement with internal stakeholders. During the tour,
several Outokumpu sites were visited, and numerous
E&C discussions and training sessions were held with
colleagues globally. Please see more information about
the E&C visibility tour on the next page.
In addition to the E&C visibility tour, close co-operation
continued with the E&C governance bodies, including the
Compliance Steering Group, Compliance Network and the
newly established Group Data Protection Network.
Trade sanctions compliance as a priority
Outokumpu is committed to complying with all applicable
laws and regulations, including applicable sanctions
regulations, and we expect our suppliers, sub-suppliers
and other business partners to comply with these
requirements as well.
Within the trade compliance area, Outokumpu has a Know
Your Business Partner process in place, on the basis of
which business partners are identified and monitored
based on risk. Sanctions monitoring is a part of this
process, and Outokumpu conducts enhanced case-by-
case and regular compliance screenings in order to ensure
that we comply with applicable sanctions regulations and
do not conduct business with any party in breach of these
regulations. Outokumpu is also constantly monitoring and
following and is committed to complying with export and
import restrictions arising from applicable export control
and sanctions regulations. Furthermore, our employees
are regularly being trained on the adherence to sanctions
regulations.
Due to the Russian invasion of Ukraine, Outokumpu
strengthened its actions within sanctions compliance
during 2022 and, for instance, conducted enhanced
compliance screenings as a matter of priority in order
to ensure that all applicable sanctions regulations are
complied with. In addition, the assessment of the different
elements of Outokumpu’s sanctions compliance program
was in focus. In general, E&C risks, including risks related
to corruption, are assessed and reviewed annually.
Competition law compliance as
a continuous focus area
Outokumpu is committed to complying with applicable
competition laws and regulations and is continuously
investing significant efforts in this area. Outokumpu’s
global E&C team continued to support and give daily
advice to business areas and group functions in their
competition law related questions to help ensure constant
attention and strict adherence to applicable competition
laws. In 2022, the key focus was on the assessment
of different elements of Outokumpu’s competition law
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Responsible and ethical business practices are owned
by everyone at Outokumpu.
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Outokumpu Annual report 2022 compliance program. In addition, several competition law
compliance face-to-face and webinar trainings were held
for various target groups as part of the E&C visibility tour.
Additionally, in 2022, 96% of administrative employees
completed the competition law compliance eLearning.
Engaging trainings and communication
Training and communication are key elements of
Outokumpu’s group-wide E&C program as it is important
that our employees know how to comply with and interpret
the rules as part of their daily decision-making. In addition
to the relaunch of the competition law compliance
eLearning, 97% of administrative employees completed
our Code of Conduct eLearning and 99% of administrative
employees completed Anti-Corruption eLearning. These
eLearnings were complemented by numerous other face-
to-face and webinar training sessions, among other forms
of efforts to increase awareness and understanding of
these matters globally.
We encourage everyone to speak up!
At Outokumpu, we encourage open and transparent
communication. We also encourage everyone to speak
up if any concerns arise. There are several ways to report
concerns, which are mentioned in Outokumpu’s Code of
Conduct, including the SpeakUp channel. Outokumpu’s
SpeakUp channel is an externally hosted channel where
concerns can be reported confidentially and anonymously,
to the extent allowed by applicable laws and regulations.
Speaking up was a topical matter for Outokumpu
employees in 2022 as part of the E&C related trainings
and communications. In addition, the implementation
of the requirements deriving from the EU Whistleblower
Protection Directive and consequent local laws and
regulations continued in 2022 in close co-operation
between the E&C team and the internal audit team. More
information about misconduct reporting and internal
investigations at Outokumpu can be found in our review by
the Board of Directors, Corporate Governance statement
and website.
Making ethics and compliance
visible to colleagues globally
Responsible and ethical business practices are owned by everyone at
Outokumpu. Outokumpu's global E&C team invests significantly into various
training and communication efforts on a regular basis to help ensure that
our employees globally know how to apply E&C rules and principles in their
daily decision-making. At Outokumpu, E&C related trainings are given both
through mandatory eLearnings as well as face-to-face trainings, webinars and
discussions.
In 2022, the training and communication element was in increased focus. The
global E&C team visited several of our sites and met teams also online. There
were training sessions organized about several E&C topics, such as our Code
of Conduct, competition law compliance, anti-corruption, sanctions compliance
as well as the importance of speaking up. As part of these visits and trainings,
the E&C team engaged with colleagues globally and had lively discussions on
topical E&C matters. In addition to the training sessions, engaging E&C related
communication was distributed regularly through the company’s intranet and in
other ways.
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Outokumpu Annual report 2022 Research and development
R&D is a global function working together with all Outokumpu sites and
functions. R&D is the provider of leading technical expertise in the group.
As the core of our R&D mission, we create a culture of innovation and development.
This enables Outokumpu being the leader of sustainable stainless steel.
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The first phase of R&D strategy was finalized in 2022.
A solid foundation was set in both R&D must-win battles,
sustainable production process technologies and future
products and customer applications. The R&D team
continued working in the three R&D centers located
in Avesta, Sweden, in Krefeld, Germany and in Tornio,
Finland focusing on the execution of the R&D programs.
In 2022, Outokumpu’s R&D expenditure totaled EUR 15
million, 0.16% of net sales (2021: EUR 14 million and
0.19%, 2020: EUR 21 million and 0.4%).
Sustainable production process technologies
By 2030, Outokumpu aims to reduce its total emission
intensity by 30% from the 2020 baseline. This requires
development of new technologies and more efficient
production.
In 2021, we embarked on the research program Towards
Carbon Neutral Metals (TOCANEM) financed by Business
Finland. In 2022, this research program ran with full
speed collaborating with leading research institutes to
address fundamental development needs: The biocoke
project has proceeded to a phase where Outokumpu is
planning for a significant investment in Tornio.
Another key topic in 2022 was the development of a
roadmap related to alternative heating technologies
to reduce CO2 emissions. Further ongoing projects are
related to the utilization of different types of waste.
Another pillar is the development of completely new
Our R&D team includes three R&D centers in Avesta, Sweden, in Krefeld, Germany and Tornio,
Finland, focusing on the execution of our R&D programs.
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Outokumpu Annual report 2022 production technologies related to different process
steps. Modeling and simulation tools are widely used in
these activities.
Future products and customer applications
Megatrends drive stainless steel demand growth and
motivates R&D to develop new steel grades and improve
existing grades for new applications. The focus is on the
Outokumpu’s Pro product family for demanding end-use
and offering sustainable solutions for high customer
satisfaction. To strengthen our high temperature material
offering two new grades reached the development phase
in our productization process. A new martensitic Dura
4419N grade with outstanding combination of corrosion
and wear resistance was introduced for the knife industry.
Under the Swedish strategic innovation program for
Metallic Materials seven projects covering various topics
were approved for funding.
External research collaboration
Outokumpu has an extensive network of external R&D
collaboration partners, including top class universities
and institutes, technology suppliers and customers.
Outokumpu actively participates in both national and
international collaborative R&D projects and programs.
“Our emission reduction
targets require
development of new
technologies and more
efficient production.”
Calculating product
specific carbon footprint
as we go
In 2022, Outokumpu became the first stainless steel producer to
provide a product-specific carbon footprint on its stainless steel
products. In addition to customer value, the product-specific carbon
footprint brings full transparency to our sustainability work.
“As the global leader in sustainable stainless steel, we are the
forerunner to push the whole industry forward. At the same
time when customers are paying more attention to cutting down
emissions, they are asking for more specific information about the
carbon footprint for each product and solution. Now customers
can utilize the data to calculate the product carbon footprints
of their products and provide more sustainable solutions to the
market”, says Stefan Erdmann, Chief Technology Officer & Group
Sustainability at Outokumpu.
The distinct feature of the calculation model Outokumpu is using is
based on continuous follow-up of production data. Basically, it is a
massive data mining exercise.
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Outokumpu Annual report 2022
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About reporting
Outokumpu's sustainability
reporting is prepared with reference
to the GRI Standards.
“In sustainability reporting,
we report on the material
developments of continuing
sites and changes in 2022.
Sustainability information is
also available on our website.”
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Outokumpu Annual report 2022 Scope of the report
Outokumpu has published its sustainability review as part
of the Annual Report 2022. Sustainability information is
also available at www.outokumpu.com/sustainability.
Outokumpu Oyj reports on the material developments
of continuing sites and changes in 2022 as part of the
Annual Report. The reported data includes all continuing
sites. Additional information is published on the
company’s website. The Annual Report 2022, including
Sustainability Review, was published in March 2023.
All financial figures presented have been rounded, and
consequently the sum of indi vidual figures may deviate
from the presented aggregate figure. Key figures have
been calculated using exact figures. Using the GRI
guidelines as a basis, economic responsibility figures have
been calculated as follows:
Outokumpu’s report has been prepared with reference to
the GRI Standards 2021. The materiality assessment from
2021 and continuous communication with stakeholders
were the basis for the decision on material topics and
relevant disclosures.
The independent practitioner’s assurance report on the
limited assurance conclusion is available on page 87 in
the Sustainability Review. The Financial Statements 2022
have been audited, and the auditor’s report is available
after the FInancial statements.
Measurement and estimation methods
Economic responsibility
Most figures relating to economic responsibility presented
in this report are based on the consolidated financial
statements issued by the Outokumpu Group and
collected through Outokumpu’s internal consolidation
system. Financial data has been prepared in accor-
dance with International Financial Reporting Standards
(IFRS). Outokumpu’s accounting principles for the Group’s
consolidated financial statements are available in note 2
to the consolidated financial statements.
Direct economic value generated
Direct economic value generated includes all revenues
received by Outokumpu during the financial year. The
sources of revenue include sales invoiced to customers,
net of discounts and indirect taxes, revenues reported as
other operating income (including gains from the disposal
of Group assets), and revenues reported as financial
income, mainly dividend and interest income.
Economic value distributed
Operating costs include the cost of goods and services
purchased by Outokumpu during the financial year.
Employee benefit expenses include wages and salaries,
termination benefits, social security expenses, pension
and other post-employment and long-term employee
benefits, expenses from share-based payments and
other personnel expenses. Taxes paid to the government
include income taxes. Deferred taxes are excluded from
the figure. Payments to providers of capital include
interest costs on debt and other financial expenses
during the financial year. Capitalized interest is deducted
from this figure. The dividend payout is included in the
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Outokumpu Annual report 2022 payments to providers of capital according to the proposal
by Outokumpu’s Board of Directors.
Community investments consist of donations to and
investments in beneficiaries external to the company.
Local suppliers
In this report, vendors are defined as local if they are
located in the same country as the Outokumpu location.
Significant locations for suppliers are production units
that have a melt shop, ie. Avesta, Sweden; Calvert, the
US; and Tornio, Finland.
Environmental responsibility
All energy and environmental informations are based on
the operational control. Outokumpu’s climate change
target is based on science and approved by the Science
Based Target initiative. The target includes CO2eq
intensity of direct and indirect emissions of electricity
and upstream emissions. Emissions are consolidated on
production control.
The green house gas measuring and reporting is following
the GHG Protocol Corporate Standard and Value Chain
Standards. Site falling under the European emission
trading system (EU ETS) report the direct emission
according to the verified EU ETS requirements.
CO2eq emissions of electricity are calculated and
monitored by the emissions factor of Outokumpu’s
electricity mix of 93 kg CO2eq/MWh (2021: 124 kg
CO2eq/MWh), given by the electricity supplier for the used
electricity and calculated as weighted average. It includes
33% of electricity use in EU market which is coming with
guarantees of origin from ownerships in power production.
In addition, the location-based electricity emissions are
disclosed. They are calculated by the published country-
specific emissions factors of the electricity generation of
2020 or 2021 if available.
- For alloys: by emissions factors of the life-cycle
assessment of relevant association.Emission factor
of ferronickel was calculated with 40% from supplier
specific emissions and 60% of LCA e-factor published in
2021. Emissions of sold ferrochrome are not allocated
to the stainless steel production of the company.
- E-factor for lime and dolomite are calculated with
71% from supplier specific emissions. For used
gases, electrodes and coke: by emissions factors of
ISO 14404.
- For upstream emissions of light fuel oil: by emissions
factors of WorldSteel Association.
- For internal and product transport: by typical distances
and type of transport with the well-to-wheel emissions
according to the EEA report 2/2022 of the European
Environmental Agency for the European transport and
with the published e-factors of US EPA for US transport.
- For business travel: for the cars, trains and flights by
CO2eq reports of the service provider.
Upstream transport was assessed on data of
environmental product declaration of 2020, to be at about
3% of the scope 3 emissions but excluded from scope
3 emissions.
The recycled content according to ISO 14021 (recycled
steel content) is calculated as the sum of pre and post
consumer scrap related to crude steel production.
Additionally, we report on the recycled material content
including all recycled metals from treated own waste
streams entering the melt shop.
Energy efficiency is defined as the sum of specific fuel
and electricity energy of all processes calculated as
energy consumption compared to the product output
of that process. It covers all company productions:
ferrochrome with 15%, melt shop, hot rolling and cold
rolling processes. Used heat values and the consumption
of energy are taken from supplier’s invoices.
CO2eq emissions outside the company (scope 3), except
electricity, are covered by more than 95%. They are
calculated as follows:
Water withdrawal is measured for groundwater surface
and sea water, taken from municipal suppliers and
estimated for rainwater amount.
Waste generation details on company’s typical waste
categories of hazardous and non-haz ardous classification
are reported on webtool data. In 2022, waste is reported
as generated, diverted from landfill and landfilled. The
offsite and onsite recycling and recovery are reported in
the table. Waste treated is counted as landfilled waste.
Customers’ CO2 savings are calculated with the difference
of world’s stainless steel footprint of 6.12 tonnes CO2eq
per tonne crude steel with 40% scrap recycling and
30% of nickel pig iron production and Outokumpu’s
footprint of 1.70 tonnes CO2eq per tonne steel and
company’s production.
Social responsibility
Health and safety figures
Health and safety figures reflect the scope of
Outokumpu’s operations as they were in 2021.
Safety indicators (accidents and preventive safety actions)
are expressed per million hours worked (frequency).
Safety indicators include Outokumpu employees, persons
employed by a third party (contractor) or visitor accidents
and preventive safety actions. A workplace accident is
the direct result of a work-related activity and it has taken
place during working hours at the workplace.
Accident types
- Lost time injury (LTI) is an accident that caused at least
one day of sick leave (excluding the day of the injury
or accident), as the World Steel Association defines it.
One day of sick leave means that the injured person has
not been able to return to work on their next scheduled
period of working or any future working day if caused
by an outcome of the original accident. Lost-day rate is
defined as more than one calendar day absence from
the day after the accident per million working hours.
- Restricted work injury (RWI) does not cause the
individual to be absent, but results in that person being
restricted in their capabil ities so that they are unable to
undertake their normal duties.
- Medically treated injury (MTI) has to be treated by a
medical professional (doctor or nurse).
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Outokumpu Annual report 2022 - First aid treated injury (FTI), where the injury did not
require medical care and was treated by a person
themselves or by first aid trained colleague.
- Total recordable injury (TRI) includes fatalities, LTIs,
RWIs and MTIs, but FTIs are excluded.
- All workplace accidents include total recordable injuries
(TRI) and first aid treated injuries (FTI)
Proactive safety actions
Hazards refer to events, situations or actions that could
have led to an accident, but where no injury occurred.
Safety behavior observa tions (SBOs) are safety-based
discussions between an observer and the person being
observed. Other preventive safety action includes
proactive measures.
Sick-leave hours and absentee rate
Sick-leave hours reported are total sick leave hours
during a reporting period. Reporting units provide data on
absence due to illness, injury and occupational diseases
on a monthly basis. The absentee rate (%) includes the
actual absentee hours lost expressed as a percentage of
total hours scheduled.
Employee benefit expenses
Employee benefit expenses include wages and salaries,
termination benefits, social security expenses, pension
and other post-employment and long-term employee
benefits, expenses from share-based payments and other
personnel expenses.
Administrative employees
Administrative employees include all white collar
employees that were active as of December 31, 2022.
For Code of Conduct eLearning administrative employees
include also newly hired managers of operators (hired
since January 1, 2022).
Training days per employee
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Financial year
Bonuses
A bonus is an additional payment for good performance.
These figures are reported without social costs or
fringe benefits.
Personnel figures
Rates are calculated using the total employee numbers at
the end of the reporting period. The calculations follow the
requirements of GRI Standards. The following calculation
has been applied e.g.
Safety indicators
include
our employees,
contractors and
visitors.
Hiring rate = New Hires / total number of permanent
employees by year-end
Days lost due to strikes
The number of days spent by an employee in training
when each training day is counted as lasting eight hours.
Average turnover rate = (Leavers + New Hires) / (total
number of permanent employees by year-end × 2)
The number of days lost due to strikes is calcu lated by
multiplying the number of Outokumpu employees who
have been on strike by the number of scheduled working
days lost. The day on which a strike starts is included.
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Outokumpu Annual report 2022 Statement of use
GRI 1 used
Outokumpu Oyj has reported with reference to the GRI Standards 2021 for the period from 01.01.2022 to 31.12.2022.
GRI 1: Foundation 2021
Applicable GRI Sector Standard
No applicable GRI Sector Standard
GRI standard
Disclosure
Omission
Location in Annual report 2022
Assured
General disclosures
GRI 2: General Disclosures
2-1
2-2
2-3
2-4
2-5
2-6
2-7
2-9
2-10
2-11
2-12
2-13
2-14
2-16
2-19
2-22
2-25
2-26
2-27
2-28
2-29
2-30
Organizational details
Entities included in the organization’s
sustainability reporting
Reporting period, frequency and contact
point
Restatements of information
External assurance
Activities, value chain and other business
relationships
Employees
Governance structure and composition
Nomination and selection of the highest
governance body
Chair of the highest governance body
Role of the highest governance body in
overseeing the management of impacts
Delegation of responsibility for managing
impacts
Role of the highest governance body in
sustainability reporting
Communication of critical concerns
Remuneration policies
Statement on sustainable development
strategy
Processes to remediate negative impacts
Mechanisms for seeking advice and
raising concerns
Compliance with laws and regulations
Membership associations
Approach to stakeholder engagement
Collective bargaining agreements
Corporate Governance Statement CG 90, back cover
Scope of the report SR 79
Scope of the report SR 79, back cover
Scope of the report SR 79
Scope of the report SR 79, Assurance report SR 87-88
We are Outoukumpu AR 4, Value creation AR 11, Stainless steel market AR 12-16
Our people SR 62-67
Corporate Governance Statement CG 90-103
Corporate Governance Statement CG 98
Corporate Governance Statement CG 91
Corporate Governance Statement CG 95-97
Corporate Governance Statement CG 95-97
Corporate Governance Statement CG 95-97, Review by the Board of Directors FS 125
Corporate Governance Statement CG 104-108
Remuneration statement CG 111-113
Review by the Board of Directors FS 124-127
Human rights SR 57, Ethics and compliance SR 74
Human rights SR 57, Ethics and compliance SR 74
Human rights SR 57, Ethics and compliance SR 74, Review by the Board of Directors FS 127
Stakeholder engagement SR 70-71
Stakeholder engagement SR 68-73
In good company SR 67
x
x
x
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Outokumpu Annual report 2022 Material topics
GRI 3: Material topics
3-1
3-2
Process to determine material topics
List of material topics
GRI 201: Economic performance
201-1
201-2
Direct economic value generated and
distributed
Financial implications and other risks and
opportunities due to climate change
GRI 203: Indirect economic impacts
Significant indirect economic impacts
203-2
GRI 204: Procurement practices
204-1
GRI 205: Anti-corruption
205-2
Proportion of spending on local suppliers
Communication and training about anti-
corruption policies and procedures
GRI 206: Anti-competitive behavior
206-1
Legal actions for anti-competitive
behavior, anti-trust, and monopoly
practices
GRI 207: Tax
207-2
207-4
GRI 301: Materials
301-1
301-2
301-3
GRI 302: Energy
302-1
302-3
302-4
GRI 303: Water and effluents
303-1
303-2
303-3
303-4
303-5
GRI 304: Biodiversity
Tax governance, control, and risk
management
Country-by-country reporting
Materials used by weight or volume
Recycled input materials used
Reclaimed products and their packaging
materials
Energy consumption within the
organization
Energy intensity
Reduction of energy consumption
Interactions with water as a shared
resource
Management of water discharge-related
impacts
Water withdrawal
Water discharge
Water consumption
Sustainability at Outokumpu SR 29-33
Sustainability at Outokumpu SR 29-33
Key figures AR 5, Value creation AR 11
Climate change SR 36-41, Review by the Board of Directors FS 124-128, Risks and opportunities
AR 26
Stakeholder engagement SR 68, Value creation AR 11, Sustainability data tool (website)
Sustainable supply chain SR 53
Ethics and compliance SR 74
Ethics and compliance SR 74, Review by the Board of Directors FS 127
Corporate Governance Statement CG 96
Sustainability data tool (website)
Sustainability data tool (website)
Circularity SR 45-47, Sustainability data tool (website)
Stakeholder engagement SR 68
Energy efficiency in focus SR 43-44, Sustainability data tool (website)
Energy efficiency in focus SR 43-44, Sustainability data tool (website)
Energy efficiency in focus SR 43-44, Sustainability data tool (website)
Environmental impacts minimized SR 48-50
Environmental impacts minimized SR 48-50
Information on dissolved
solids is not available
Information on dissolved
solids is not available
Environmental impacts minimized SR 48-50
Environmental impacts minimized SR 48-50
Environmental impacts minimized SR 48-50
x
x
x
x
x
x
x
x
x
x
x
x
x
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Outokumpu Annual report 2022 Environmental impacts minimized SR 48-50
Climate change SR 36-41
Climate change SR 36-41
Climate change SR 36-41
Climate change SR 36-41
Climate change SR 36-41
Circularity SR 45-47
Circularity SR 45-47
Circularity SR 45-47
Circularity SR 45-47
Sustainable supply chain SR 53-55
Sustainable supply chain SR 53-55
304-1
GRI 305: Emissions
305-1
305-2
305-3
305-4
305-7
GRI 306: Waste
306-1
Operational sites owned, leased,
managed in, or adjacent to, protected
areas and areas of high biodiversity value
outside protected areas
Direct (Scope 1 ) GHG emissions
Energy indirect (Scope 2 ) GHG emissions
Other indirect (Scope 33 ) GHG emissions
GHG emissions intensity
Nitrogen oxides (NOx), sulfur oxides (SOx),
and other significant air emissions
Waste generation and significant waste
related impacts
Waste generated
Waste diverted from disposal
Waste directed to disposal
306-3
306-4
306-5
GRI 308: Supplier environmental assessment
308-1
New suppliers that were screened using
environmental criteria
Negative environmental impacts in the
supply chain and actions taken
308-2
GRI 401: Employment
401-1
GRI 403: Occupational health and safety
403-1
Occupational health and safety
managementsystem
Hazard indentification, risk assessment,
and incident investigation
Worker participation, consultation, and
communication on occupational health
and safety
Worker training on occupational health
and safety
Workers covered by an occupational
health and safety management system
Work related injuries
GRI 404: Training and education
404-2
Programs for upgrading employee skills
and transition assitance programs
Percentage of employees receiving regular
performance and career development
reviews
GRI 405: Diversity and equal opportunity
405-1
Diversity of governance bodies and
employees
403-2
403-4
403-5
403-8
403-9
404-3
New employee hires and employee
turnover
In good company SR 67, Sustainability data tool (website)
Safety SR 59-61
Safety SR 59-61
Safety SR 59-61
Safety SR 59-61
Safety SR 59-61
Safety SR 59-61
In good company SR 62-67
In good company SR 66. Details of gender and employee category not available
Review by the Board of Directors FS 127, Sustainability data tool (website)
Number of hours worked
not reported
Information on governance
bodies by age groups is
not reported. BoD not
reported by age group
as not reasonable. Other
indicators of diversity are
not reported.
x
x
x
x
x
x
x
x
x
x
x
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Outokumpu Annual report 2022 GRI 406: Non-discrimination
406-1
Incidents of discrimination and corrective
actions taken
GRI 407: Freedom of association and collective bargaining
407-1
Operations and suppliers in which the
right to freedom of association and
collective bargaining may be at risk
GRI 408: Child labor
408-1
Operations and suppliers at significant
risk of incident of child labour
GRI 409: Forced or compulsory labor
409-1
Operations and suppliers at significant
risk of forced and compulsary labor
GRI 411: Rights of indigenous peoples
411-1
Incidents of violation involving rights of
indigenous people
GRI 413: Local communities
413-2
Operations with significant actual and
potential negative impacts on local
communities
GRI 414: Supplier social assessment
414-1
414-2
New suppliers that were screened using
social criteria
Negative social impacts in the supply
chain and actions taken
GRI 415: Public policy
415-1
Political contributions
Corporate Governance statement CG 104-108
Sustainable supply chain SR 53-55, no risk within own operations
Sustainable supply chain SR 53-55, no risk within own operations
Sustainable supply chain SR 53-55, no risk within own operations
Sustainable supply chain SR 53-55, Human rights SR 57-58
Environmental impacts minimized SR 48-50, Stakeholder engagement SR 68-73
Sustainable supply chain SR 53-55
Sustainable supply chain SR 53-55
Outokumpu does not make any donations to political parties or groups, see Code of Conduct
https://www.outokumpu.com/en/sustainability/sustainability-downloads, Stakeholder
engagement SR 71
Company's own indicators
Resource efficiency Recycled material content and recycled
Circularity SR 45-47
Energy
(steel) content acc. Iso 14021
Energy efficiency
Climate change
By-products
Science Based Target
Slag use rate
Energy efficiency in focus SR 43-44, Sustainability data tool (website), Review by the Board of
Directors FS 126
Climate change SR 36-41, Sustainability data tool (website)
Circularity SR 45-47, Sustainability data tool (website), Review by the Board of Directors FS 126
Annual review
Sustainability review
Sustainability at Outokumpu
Environment
People & society
Reporting requirements
Governance
Remuneration report
Financial year
x
x
x
x
x
x
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Outokumpu Annual report 2022 ResponsibleSteel content index*
ResponsibleSteel principle
Location in Sustainability Review 2022
1. Corporate Leadership
2. Social, Environmental and Governance Management Systems
3. Responsible Sourcing of Input Materials
4. Decommissioning and Closure
5. Occupational Health and Safety
6. Labour Rights
7. Human Rights
8. Stakeholder Engagement and Communication
9. Local Communities
10. Climate Change and Greenhouse Gas Emissions
11. Noise, Emissions, Effluents and Waste
12. Water Stewardship
13. Biodiversity
Sustainability at Outokumpu SR 29-33
Sustainability at Outokumpu SR 29-33
Sustainability Performance in 2022 SR 34
Sustainable Supply Chain SR 53-55
In a good company SR 62-67
Ethics and compliance in 2022 SR 74
Sustainable Supply Chain SR 53-55
Not applicable to Outokumpu due to no plans to decommission or close sites
We operate safely, always SR 59-61
In a good company SR 62-67
Sustainable Supply Chain SR 53-55
Impact on human rights SR 57-58
Stakeholder engagement SR 68
Stakeholder engagement SR 68
Decarbonizing for the climate SR 36
Energy efficiency in focus SR 43-44
Circularity at our heart SR 45-47
Environmental impacts minimized SR 48-50
Environmental impacts minimized SR 48-50
Environmental impacts minimized SR 48-50
* Outokumpu has not yet been certified by the ResponsibleSteel initiative but this table indicates which part of the Sustainability Review 2022 contains information on sustainability work related to the
ResponsibleSteel Principles and related requirements.
Annual review
Sustainability review
Sustainability at Outokumpu
Environment
People & society
Reporting requirements
Governance
Remuneration report
Financial year
86/220
Outokumpu Annual report 2022 Independent practitioner’s
limited assurance report
To the Management of Outokumpu Oyj
We have been engaged by the Management of Outokumpu
Oyj (hereinafter also the “Company”) to perform a limited
assurance engagement on Selected sustainability
information for the reporting period 1 January 2022
to 31 December 2022, disclosed in Outokumpu Oyj’s
Sustainability Review 2022 and in Outokumpu Oyj’s online
sustainability tool available on Outokumpu’s website.
Selected sustainability information
The selected sustainability information within the scope of
assurance covers:
- The economic, social and environmental sustainability
indicators as identified in the GRI Content Index.
- EU taxonomy KPIs for climate change mitigation and
climate change adaptation as disclosed in Outokumpu
Oy’js Sustainability Review 2022.
- All of the indicators in the online sustainability tool
available on the Company’s website on 2 March 2023.
Any changes made to the online tool made after the
publishing date are not covered by this assurance
report.
Management’s responsibility
The Management of Outokumpu Oyj is responsible for
preparing the Selected sustainability information in
accordance with the Reporting criteria as set out in
Outokumpu Oyj’s reporting instructions described in
Outokumpu Oyj’s Sustainability Review 2022, the GRI
Standards of the Global Reporting Initiative, Regulation
(EU) 2020/852 and Commission Delegated Regulation
2021/2178, as well as own reporting instructions
(collectively reporting criteria).
The Management of Outokumpu Oyj is also responsible
for such internal control as the management determines
is necessary to enable the preparation of the Selected
sustainability information that are free from material
misstatement, whether due to fraud or error.
Practitioner’s independence, other ethical
requirements and quality control
We have complied with the independence and other
ethical requirements of the International Code of Ethics
for Professional Accountants (including International
Independence Standards) issued by the International
Ethics Standards Board for Accountants (IESBA Code),
which is founded on fundamental principles of integrity,
objectivity, professional competence and due care,
confidentiality and professional behavior.
PricewaterhouseCoopers Oy applies International
Standard on Quality Control 1 and accordingly
maintains a comprehensive system of quality control
including documented policies and procedures
regarding compliance with ethical requirements,
professional standards and applicable legal and
regulatory requirements.
Practitioner’s responsibility
Our responsibility is to express a limited assurance
conclusion on the Selected sustainability information
based on the procedures we have performed and
the evidence we have obtained. We conducted our
limited assurance engagement in accordance with the
International Standard on Assurance Engagements
(ISAE) 3000 (revised) “Assurance Engagements
Other than Audits or Reviews of Historical Financial
Information” and, in respect of greenhouse gas emissions,
International Standard on Assurance Engagements (ISAE)
3410 “Assurance Engagements on Greenhouse Gas
Annual review
Sustainability review
Sustainability at Outokumpu
Environment
People & society
Reporting requirements
Governance
Remuneration report
Financial year
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Outokumpu Annual report 2022 Statements”. These Standards require that we plan and
perform the engagement to obtain limited assurance
about whether the Selected sustainability information is
free from material misstatement.
In a limited assurance engagement, the evidence-
gathering procedures are more limited than for a
reasonable assurance engagement, and therefore less
assurance is obtained than in a reasonable assurance
engagement. An assurance engagement involves
performing procedures to obtain evidence about
the amounts and other information in the Selected
sustainability information. The procedures selected
depend on the practitioner’s judgment, including an
assessment of the risks of material misstatement of the
Selected sustainability information.
Our work consisted of, amongst others, the following
procedures:
Limited assurance conclusion
Based on the procedures we have performed and the
evidence we have obtained, nothing has come to our
attention that causes us to believe that Outokumpu Oyj’s
Selected sustainability information for the reporting period
ended 31 December 2022 are not properly prepared, in
all material respects, in accordance with the Reporting
criteria.
When reading our limited assurance report, the
inherent limitations to the accuracy and completeness
of sustainability information should be taken into
consideration.
Our assurance report has been prepared in accordance
with the terms of our engagement. We do not accept,
or assume responsibility to anyone else, except to
Outokumpu Oyj for our work, for this report, or for the
conclusions that we have reached.
- Interviewing the senior management of the Company.
- Conducting three site visits; in Finland, Sweden and the
Helsinki 28 February 2023
United States of America.
PricewaterhouseCoopers Oy
- Interviewing employees responsible for collecting and
reporting the selected information on sustainability
indicators at the Group level.
- Assessing how Group employees apply the reporting
instructions and procedures of the Company.
- Testing the accuracy and completeness of the
information from original documents and systems on a
sample basis.
- Review of the EU Taxonomy related disclosures.
- Testing the consolidation of information and performing
recalculations on a sample basis.
- Considering the disclosure and presentation of the
Selected sustainability information.
Tiina Puukkoniemi
Partner,
Authorised Public
Accountant (KHT)
ESG Reporting &
Assurance
Janne Rajalahti
Partner,
Authorised Public
Accountant (KHT)
Annual review
Sustainability review
Sustainability at Outokumpu
Environment
People & society
Reporting requirements
Governance
Remuneration report
Financial year
88/220
Outokumpu Annual report 2022 Governance
Outokumpu complies with the laws
and regulations applicable to a Finnish
public company, the company’s Articles
of Association and the Corporate
Governance Policy.
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Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
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Outokumpu Annual report 2022 Corporate Governance Statement 2022
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
Officer (CEO), have the ultimate responsibility for the
management and operations of the Outokumpu Group.
Outokumpu Oyj is domiciled in Finland, and our headquarters are
located in Helsinki.
The latest Corporate Governance Statement and other
updated corporate governance information can be found
on the Group’s Corporate Governance website.
The General Meeting of Shareholders convenes at least
once a year. In accordance with the Finnish Companies
Act, the General Meeting of Shareholders is the highest
decision-making body of the company. The Act states
that certain important decisions such as amendments
to the Articles of Association, approval of the financial
statements, increase or decrease of share capital,
decisions on dividends, and the election of the Board of
Directors and the auditors, are the exclusive domain of
the General Meeting of Shareholders. In addition, the
Annual General Meeting makes advisory resolutions on
the Remuneration Policy and the Remuneration Report.
90/220
Regulatory and
structural framework
Outokumpu Oyj, the Group’s parent company, is a public
limited liability company, listed on Nasdaq Helsinki and
incorporated and domiciled in Finland. Its headquarters
are located in Helsinki. In its corporate governance and
management, Outokumpu Oyj complies with the laws
and regulations applicable to a Finnish public company,
the company’s Articles of Association and the Corporate
Governance Policy approved by the company’s Board
of Directors.
Outokumpu follows the Finnish Corporate Governance
Code, effective as of January 1, 2020. The Finnish
Corporate Governance Code is issued by the Finnish
Securities Market Association and adopted by
Nasdaq Helsinki.
The governing bodies of the parent company Outokumpu,
i.e., the General Meeting of Shareholders, the Board
of Directors, and the President and Chief Executive
Our latest Corporate
Governance statement and
updated corporate governance
information can be found at
www.outokumpu.com/governance.
Outokumpu Annual report 2022 Board of Directors
Composition and operations of the Board of Directors December 31, 2022
All Board members are independent of the company. Board of Directors’ CVs are also available at our webpages
Work experience
CEO: Metsäliitto Cooperative 2004–2017
President and CEO: Metsä Group 2006–2018
Chairman: Metsä Board Corporation 2005–2018
Chairman: Metsä Fibre Oy 2006–2017
Chairman: Metsä Tissue Corporation 2004–2017
Executive Vice President and Member of the Group Executive
Management: Nordea AB and predecessors 1994–2004
Member of the Board of Management: OKOBANK 1987–1994
Vice President: Citicorp Investment Bank Ltd 1986–1987
Several management positions: Citibank Plc 1981–1986
Positions of trust
Member of the Board of Directors: Stora Enso March 2022–
Vice Chairman of the Board of Directors: Nordea Bank Abp
2019–March 2022
Chairman of the Supervisory Board: Varma Mutual Pension
Insurance Company 2015–2019
Vice Chairman of the Board: Nokian Tyres Plc 2018–2021
Chairman of the Board: Finland Chamber of Commerce 2012–
2016
Chairman of the Board: Finnish Forest Industries Federation
2009–2011
Vice Chairman of the Board: Confederation of Finnish Industries
(EK) 2009–2011, 2013–2014
Mr. Jordan holds several positions of trust in foundations and
non-profit associations.
Work experience
Divisional CEO, EMEA: Aliaxis 2022–
Executive Vice President, Head of Stora Enso Paper, member of
the Group Leadership team 2014–2022
Senior Vice President, Paper Sales, Printing and Living: Stora
Enso 2013–2014
Senior Vice President, Office Paper Sales, Printing and Reading:
Stora Enso 2012–2013
Director, Customer Service Centre West, Publication Paper: Stora
Enso 2010–2012
Several managerial positions in the paper business, 1996–2010
Business analyst, Jaakko Pöyry Consulting, Singapore 1994–
1996
Positions of trust
Member of the Supervisory Board: Wienerberger AG, May 2021–
September 2022
Board member: Climate Leadership Coalition 2019–2022
Board member (2017–2022), Vice Chair (2019–2020) and Chair
(2020–2022): EURO-GRAPH asbl
Board member: Finnish Forest Industries Federation 2015–2022
Kari Jordan
Chairman of the Board
of Directors
b. 1956, Finnish citizen
M.Sc (Econ.), Vuorineuvos
(Finnish honorary title)
Outokumpu Board
member 2018–
Chairman of the Board 2018–
Chairman of the
Remuneration Committee
Independent of the
company and its
significant shareholders.
Kati ter Horst
Vice Chairman of the Board
of Directors
b. 1968, Finnish citizen
M.Sc. (Econ.), MBA
(International Business)
Outokumpu Board
member 2016– and Vice
Chairman 2022–
Member of the
Remuneration Committee
Independent of the
company and its
significant shareholders.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
91/220
Outokumpu Annual report 2022
Work experience
Chief Executive Officer: Salzgitter AG 2011–2021
Vice Chairman, Executive Board: Salzgitter AG 2007–2011
Chief Financial Officer: Salzgitter AG 2001–2011
Executive Board Member: Salzgitter AG and Preussag Stahl AG
1996–2001
General Representative and Head of Central Corporate Planning:
Preussag Stahl AG 1995–1996
Positions of trust
Member of the EIB Group Climate and Environment Advisory
Council: 2021–
Chairman of the German Steel Industry Employer’s
Association 2020–
Member of the Presidential Board: Federation of German
Industries (BDI) 2018–2021
Member of the Senate (2014–2016) and Chairman of the
Senate: Fraunhofer Society 2016–2022
Member of the Supervisory Board: Aurubis AG 2009–2021
Member of the Supervisory Board: TÜV Nord AG 2008–
Member of the Supervisory Board: Öffentliche Versicherung
Braunschweig (Insurance) 2002–2022
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
Work experience
Ambassador of Finland: London 2015–2019
Ambassador of Finland: Berlin 2011–2015
Director General, Europe: Ministry for Foreign Affairs of Finland
2008–2011
Deputy Director General, Americas and Asia: Ministry for Foreign
Affairs 2007–2008
Chief Policy Adviser, Team Lead of Trade Policy and International
Relations: Confederation of Finnish Industries, EK 2005–2006
Director General, Americas and Asia: Ministry for Foreign Affairs
2003–2005
Deputy Director General, Americas and Asia: Ministry for Foreign
Affairs 2002–2003
Deputy Director General, Trade Policy and Economic Cooperation:
Ministry for Foreign Affairs 2000–2001
Deputy Director General, the EU Secretariat: Ministry for Foreign
Affairs 1996–2000
Member of the Cabinet of the Finnish Commissioner: EU
Commission, Brussels 1995–1996
Positions of trust
Member: Finnish High Court of Impeachment 2012–2015
Member of the Board: Finnish Institute of International Affairs
2010–2014
Member of the Supervisory Board: Finnfund 2005–2006
Member of the Board: Finnfund 2002 and deputy member 2000–
2001, 2003–2005 and 2007–2009
Ms. Luostarinen has in addition held several positions, starting
in 1981, in the Foreign Service in Helsinki, at the Permanent
Mission of Finland to the UN in New York and at the Permanent
Delegation of Finland to the EU in Brussels
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Heinz Jörg Fuhrmann
Member of the Board
of Directors
b. 1956, German citizen
PhD, Metallurgy, University
of Berlin, Germany
Master's Degree, Metallurgy,
RWTH Aachen University,
Germany
Honorary Professor, RWTH
Aachen University, Germany
Outokumpu Board member 2021–
Member of the Remuneration
Committee
Independent of the company
and its significant shareholders.
Päivi Luostarinen
Member of the Board
of Directors
b. 1955, Finnish citizen
LL.M. University of Helsinki,
Finland
Outokumpu Board
member 2021–
Member of the
Audit Committee
Independent of the
company and its
significant shareholders.
Outokumpu Annual report 2022
Petter Söderström
Member of the Board
of Directors
b. 1976, Finnish citizen
M. Sc. (Econ.), Hanken School
of Economics
Outokumpu Board
member 2022–
Member of the
Audit Committee
Independent of the company
Vesa-Pekka Takala
Member of the Board
of Directors
b. 1966
Finnish citizen
M.Sc. (Econ.)
Outokumpu Board
member 2019–
Chairman of the
Audit Committee
Independent of the
company and its
significant shareholders.
Work experience
Investment Director and Member of the Management Team:
Solidium Oy 2009–
Project Leader and Partner: Leimdörfer Finland Oy 2008–2009
Associate Director and Partner: Mandatum & Co Oy 2002–2008
Senior Associate: PricewaterhouseCoopers Oy 2000–2002
Positions of trust
Member of the Nomination Board (2018-2020) and Chairperson
of the Nomination Board: TietoEVRY 2020–
Member of the Board of Directors and Member of the Audit
Committee: Neles 2020–2021
Member of the Nomination Board: SSAB AB 2019–2021
Chairperson of the Nomination Board: Metso 2018–2020
Member of the Nomination Board: Telia Company AB 2017–2018
Work experience
Deputy Managing Director: Metsäliitto Cooperative 2017–
Chief Financial Officer (CFO): Metsä Group 2010–
Chief Financial Officer (CFO) and Substitute to CEO, Member of
the Group Executive Committee: Outotec Oyj 2009–2010
Chief Financial Officer (CFO), Member of the Group Executive
Committee: Outotec Oyj 2006–2009
Executive Vice President, Corporate Controller, Member of the
Group Executive Committee: Outokumpu Oyj 2005–2006
Senior Vice President, Corporate Controller: Outokumpu Oyj
2001–2005
Vice President, Corporate Controller: Outokumpu Oyj 1998–2001
Positions of trust
Board member: Metsä Fibre Oy 2021–
Board member: Metsä Tissue Oy 2018–
Board member: Metsä Spring Oy 2018–
Chairman of the Board: Metsä Group Treasury Oy 2013–
Board member (2017–2021) and Chairman (2021–) of the
Economy and Tax Committee: Finnish Forest Industries
Member of the Delegation: the Helsinki School of Economics
Foundation 2014–
Board member, the Economy and Tax Committee: Confederation
of Finnish Industries (EK) 2013–2016
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
93/220
Outokumpu Annual report 2022 Work experience
Chairman and CEO 2012–2013 and CEO 2013–2016:
Constellium
Chairman of the Board and CEO: FCI SA 2008–2012
Chief Operating Officer: FCI SA 2007–2008
Group Chief Executive: Wagon Plc. 2004–2007
Senior Executive Vice President and President of the Aluminium
Conversion Sector: Pechiney 2002–2004
Executive Vice President and President of the Exhaust Systems
Business Group: Faurecia 1999–2002
Chairman and CEO: GFI Aerospace (now LISI Aerospace) 1995–
1999
CEO of Group subsidiaries Cefival and Specitubes 1990–1995
and several operational and staff positions 1982–1989:
Vallourec Group
Positions of trust
Vice Chairman of the Board and Lead Independent Director
(2021–), Chairman of the Nomination, Remuneration and
Governance Committee: Vallourec Group
Chairman of the Board: Société Bic SA 2018–2021
Board member (2015–), member of the Audit Committee (2018–2019)
and the Nomination and Compensation Committee (2019–): Verallia
Founder and Co-President: The Vareille Foundation 2014–
Member of the Strategic Committee: CentraleSupelec 2008–2022
Lead Director and Vice President of the Board: Société Bic SA
2016–2018
Board member and member of the Audit Committee: Société Bic
SA 2009–2016
Board member: CentraleSupelec 2008–2019
Chairman: European Aluminium Association 2015–2016
President: Alumni Association of the Ecole Centrale 2011–2013
In addition, Mr. Vareille has been a Member of the Board of
Directors of diverse organizations such as the Advisory Board of
the Confederation of British Industry, the European Committee of
the MEDEF (Confederation of the French Industry) and the GIFAS
(French Aerospace Industries Association).
Work experience
Director, Global Chassis Purchasing, Ford Motor Company 2016–
2018
Director, Global Power Train Components Purchasing, Ford Motor
Company 2012–2016
Director, Ford of Europe Program Purchasing, Ford Motor
Company 2005–2011
Director, Implementation Team, Ford Motor Company 2004–
2005
Director, Team Value Management, Strategy & Business
Development, Ford Motor Company 2002–2003
Positions of trust
Independent board member and member of Audit Committee and
Remuneration Committee: Surface Transforms Plc 2021–
Independent non-executive board member, Standards &
Regulation Board: Royal Institution of Chartered Surveyors 2020–
Member of the Advisory Board: Nexcel, a BP/Castrol automotive
technology start-up company 2019–2020
Member of the Strategic Advisory Board: Ford/Michelin 2016–
2018
In addition, Ms. Woodhouse has held several additional roles on
committees and operating boards.
Pierre Vareille
Member of the Board
of Directors
b. 1957, French citizen, Knight
of the Legion of Honour in
July 2003
M.Sc. (Ecole Centrale Paris), BA
(Econ.) (Sorbonne University),
Degree in Controlling and
Finance (Institut de Contrôle
de Gestion)
Outokumpu Board member 2018–
Member of the Remuneration
Committee
Independent of the company and
its significant shareholders.
Julia Woodhouse
Member of the Board
of Directors
b. 1958, British citizen
BA (hons) History
Outokumpu Board
member 2019–
Member of the
Audit Committee
Member of the ESG Advisory
Council 2021–
Independent of the
company and its significant
shareholders.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
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Outokumpu Annual report 2022
The Board assesses the independence of the Board
members and records the outcome in the Board minutes.
All members of the Board of Directors were independent
of the company and its significant shareholders on
December 31, 2022, excluding one Board member who
was independent of the Company but not of one of its
major shareholders.
Outokumpu shares and share-based
rights (parents or subsidiaries) owned
by each director and their controlled
corporations on December 31, 2022
Board member
Kari Jordan
Heinz Jörg Fuhrmann
Kati ter Horst
Päivi Luostarinen
Petter Söderström
Vesa-Pekka Takala
Pierre Vareille
Julia Woodhouse
Total
Number of shares
300,000
11,667
39,609
11,667
6,336
44,269
56,496
31,515
501,559
Operations and appointment of
the Board of Directors
The general objective of the Board of Directors is to
direct Outokumpu’s business and strategies in a manner
that secures a significant and sustained increase in the
value of the company for its shareholders and to ensure
that the company acts as a reliable and trusted partner
towards all its stakeholders. To this end, the members
of the Board are expected to act as a resource and to
offer their expertise and experience for the benefit of the
company. The tasks and responsibilities of the company’s
Board of Directors are determined pursuant to the Finnish
Companies Act as well as other applicable legislation.
The Board of Directors has the general authority to decide
and act in all matters not reserved for other corporate
governance bodies by law or under the provisions of
the company’s Articles of Association. The general task
of the Board of Directors is to organize and oversee
the company’s management and operations and it
has the duty at all times to act in the best interest of
the company.
The Board of Directors has established the rules of
procedure that define its tasks and operating principles in
the Charter of the Board of Directors. The main duties of
the Board of Directors are as follows:
With respect to directing the company’s
business and strategies:
- Decide on Outokumpu’s strategy and the long-term
targets of the Outokumpu Group (the “Group”) and
monitor their implementation;
- Decide on annual business plans and monitor
their implementation;
- Decide on any other commitments by any of the Group
companies that are out of the ordinary either in terms of
value or nature, taking into account the size, structure,
and field of the Group’s operations.
With respect to organizing the company’s
management and operations:
- Nominate and dismiss the CEO and his/her deputy, if
any, monitor his/her performance and decide on the
CEO’s terms of service, including incentive schemes,
on the basis of a proposal made by the Board’s
Remuneration Committee;
- Nominate and dismiss the members of the Outokumpu
Leadership Team and to define their areas of
responsibility based on a proposal by the Board’s
Remuneration Committee;
- Decide on annual limits for the Group’s capital
- Monitor the adequacy and allocation of the Group’s top
expenditure, monitor related implementation, review
performance and decide on changes;
- Decide on any major and strategically significant
investments and monitor their implementation;
- Decide on any major and strategically important
business acquisitions and divestments and monitor
their implementation;
management resources;
- Decide on any significant changes to the Group’s
business organization;
- Decide on the Group’s ethical values and modes
of activity
- Ensure that policies outlining the principles of corporate
governance are in place;
- Decide on the Group’s external financing and treasury
- Ensure that policies outlining the principles of managing
matters as follows and as further defined in the
Board Charter;
i. All financing arrangements, which exceed €20 million,
or which have a fixed tenor exceeding ten years or
which are organized by way of public offerings by any
Group company;
ii. All major guarantees and pledges on behalf of non-
Group parties; and all guarantees and pledges on
behalf of Group companies which exceed €20 million;
by any Group company;
iii. Any major short-term derivatives or long- term
derivatives, or any derivatives not done for
hedging or liquidity management purposes; by any
Group company;
iv. Any other significant financing and treasury
transactions which are otherwise out of the Group’s
normal course of business;
the company’s insider issues and related party
transactions are being observed;
- Ensure that the company has guidelines for any other
matters that the Board deems necessary and that fall
within the scope of the Board’s duties and authority.
With respect to the preparation of matters to be
resolved by the General Meetings of Shareholders:
- Establish a dividend policy and issue a proposal to the
Annual General Meeting on dividend distribution;
- Make a proposal to the Annual General Meeting
concerning the election of an external auditor and
auditing fees;
- Make proposals to the Annual General Meeting
concerning the company’s Remuneration Policy and
Remuneration Report; and
- Make other proposals to General Meetings
of Shareholders.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
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Outokumpu Annual report 2022
With respect to internal control and risk management:
- Discuss and approve interim reports and
annual accounts;
- Monitor significant risks related to the Group’s
operations and the management of such risks;
- Ensure that adequate policies for risk management are
in place;
- Monitor financial position, liquidity, and debt
maturity structure;
- Monitor the Group’s control environment;
- Monitor and assess how agreements and other legal
acts between the company and its related parties meet
the requirements of the ordinary course of business and
arm’s length terms; and
- Reassess its activities on a regular basis.
In 2022, the Board of Directors assessed its ways of
working and performance with support from an external
service provider. The assessment results were presented
to the Shareholders’ Nomination Board.
According to the company’s Articles of Association, the
Board of Directors constitutes a quorum when more than
half of its elected members are present. A decision by the
Board of Directors shall be the opinion supported by more
than half of the members present at a meeting. In the
event of a tie, the Chairman shall have the casting vote.
The Annual General Meeting elects the Chairman, Vice
Chairman and other members of the Board of Directors
for a term expiring at the close of the following Annual
General Meeting. The entire Board of Directors is,
therefore, elected at each Annual General Meeting.
A Board member may be removed from office at any
time by a resolution passed by a General Meeting of
Shareholders. Proposals to the Annual General Meeting
concerning the election of Board members that have been
made known to the Board of Directors prior to the Annual
General Meeting will be made public if such a proposal is
supported by shareholders holding a minimum of 10% of
all the company’s shares and voting rights and the person
being proposed has consented to such nomination.
Under the company’s Articles of Association, the Board
shall have a minimum of five and a maximum of twelve
members. A Board consisting of eight members was
elected at the Annual General Meeting 2022. Board
meetings will be held as regularly as deemed necessary,
but at least five times every year. In 2022, the Board
of Directors had 22 meetings, and the attendance rate
was 98%.
Breakdown of individual attendance
at Board meetings
22 meetings in 2022
Kari Jordan
Heinz Jörg Fuhrmann
Kati ter Horst
Päivi Luostarinen
Eeva Sipilä, until March 31, 2022
Petter Söderström, as of March 31, 2022
Vesa-Pekka Takala
Pierre Vareille
Julia Woodhouse
Attendance
22/22
21/22
21/22
22/22
4/5
17/17
22/22
21/22
22/22
Diversity principles of the Board of Directors
Diversity of the Board of Directors supports the vision
and long-term objectives of the Group. Outokumpu
recognizes the importance of a diverse Board, taking age,
educational and international background, professional
expertise, experience from relevant industrial sectors
as well as a well-balanced gender representation into
account. The Shareholders’ Nomination Board shall take
the diversity principles into consideration when preparing
its proposals to the Annual General Meeting and the
progress in achieving set objectives shall be disclosed
annually. The objective of a well-balanced Board structure
in terms of gender representation was achieved in 2022.
The review by the Board of Directors is available in the
Financial year section in the Annual report.
Composition and operations of
the Board committees
The Board of Directors has set up two permanent
committees consisting of Board members and has
confirmed the rules of procedure for these committees.
Both committees report to the Board of Directors.
Audit Committee
The Audit Committee consists of a minimum of three
Board members. At least one of the Committee members
shall have an appropriate education and special expertise
in corporate finance, accounting or auditing. The rules of
procedure for and responsibilities of the Audit Committee
have been established in the Audit Committee Charter
approved by the Board of Directors. The task of the Audit
Committee is, in greater detail than is possible for the
Board as a whole, to deal with matters relating to financial
statements, the company’s financial position, auditing
work, internal controls and compliance matters, the scope
of internal and external audits, fees paid to the auditors,
the Group’s tax position, the Group’s financial policies,
monitoring and assessing related party transactions and
other procedures for managing Group risks. In addition,
the Audit Committee prepares a recommendation to the
Board of Directors concerning the election of an external
auditor and auditing fees at a General Meeting. The
Audit Committee met five times during 2022, and the
attendance rate was 100%.
Breakdown of individual attendance
at Audit Committee meetings
5 meetings in 2022
Päivi Luostarinen
Eeva Sipilä
Petter Söderström, as of March 31, 2022
Vesa-Pekka Takala
Julia Woodhouse
Attendance
5/5
1/1
4/4
5/5
5/5
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
96/220
Outokumpu Annual report 2022
Remuneration Committee
The Remuneration Committee consists of the Chairman
of the Board and a minimum of two additional Board
members. The task of the Remuneration Committee
is to prepare proposals to the Board concerning the
appointment of the company’s top management and
principles relating to the compensation they receive
as well as the company’s Remuneration Policy and
Remuneration Report. The terms of service and
benefits of the Leadership Team members other
than the CEO, are determined and approved by the
Remuneration Committee.
The Committee’s rules of procedure are further defined
in the Remuneration Committee Charter, approved by the
Board. The Remuneration Committee met eight times
during 2022, and the attendance rate was 100%.
Breakdown of individual attendance at
Remuneration Committee meetings
8 meetings in 2022
Kari Jordan
Heinz Jörg Fuhrmann
Kati ter Horst
Pierre Vareille
Attendance
8/8
8/8
8/8
8/8
Temporary working groups
To handle specific tasks, the Board of Directors can also
set up temporary working groups consisting of Board
members. These working groups report to the Board
of Directors. No temporary working groups were set up
in 2022.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
97/220
Outokumpu Annual report 2022
Shareholders’ Nomination Board
Outokumpu’s Annual General Meeting in 2012 resolved to
establish a Shareholders’ Nomination Board to annually
prepare proposals to the Annual General Meeting for the
election, composition, and compensation of the members
of the Board of Directors.
obligation), presents no later than on August 31 a written
request to that effect to the Chairman of the company’s
Board of Directors, then the holdings of such shareholder
and other parties shall be summed up for the purposes of
determining the holdings of the largest shareholders.
The Annual General Meeting has adopted a Charter of the
Shareholders’ Nomination Board, last revised in 2019,
which regulates the nomination and composition, and
defines the tasks and duties of the Nomination Board.
In case two or more shareholders own an equal number
of shares and, as a consequence, the four largest
shareholders cannot be determined, the status of these
shareholders among the four largest shareholders shall be
resolved by drawing lots.
The Nomination Board
prepares proposals for
composition and
compensation of the
members of the Board.
The Nomination Board consists of five members. Four
of the members represent the company’s four largest
shareholders and the Chairman of the company’s
Board of Directors, acts as the fifth member of the
Nomination Board.
The representatives of the four largest shareholders of the
company are annually appointed to the Nomination Board.
The largest shareholders of the company are determined
on the basis of the shareholders’ register of the company
and the ownership situation at the closing of Nasdaq
Helsinki’s last trading day in August. The company’s
shareholders’ register only consists of shareholders who
are directly registered in the Finnish book-entry system.
Accordingly, to be eligible for membership in the
Nomination Board, a nominee-registered shareholder
needs to register the respective shareholding directly in
the Finnish book-entry system for at least the said date.
The Chairman of the Board of Directors shall request
the four largest shareholders of the company each to
nominate one member to the Nomination Board. Should
a shareholder wish not to use its nomination right, the
right transfers to the next largest shareholder who would
otherwise not have a nomination right.
The term of office of the members of the Nomination
Board expires annually when a new Nomination Board
has been appointed. A shareholder may change its
representative in the Nomination Board mid-term, should
there be a weighty cause for such a change.
Decisions of the Nomination Board shall be unanimous. If
unanimity cannot be reached, members of the Nomination
Board shall present their own proposals to the Annual
General Meeting individually or jointly with other members
of the Nomination Board.
In case a shareholder, who under the Finnish Securities
Markets Act has an obligation to announce changes in its
shareholdings and to sum up its holdings together with the
holdings of certain other parties when doing so (flagging
Shareholders with the right to appoint representatives to
the Nomination Board in 2022 were Solidium Oy, Varma
Mutual Pension Insurance Company, Ilmarinen Mutual
Pension Insurance Company, and the Social Insurance
Institution of Finland.
These shareholders nominated the following individuals
as their representatives in the Nomination Board: Reima
Rytsölä, CEO at Solidium Oy, Pekka Pajamo, CFO at Varma
Mutual Pension Insurance Company, Jouko Pölönen,
President and CEO at Ilmarinen Mutual Pension Insurance
Company, and Outi Antila, Director General at The Social
Insurance Institution of Finland. Reima Rytsölä was
elected Chairman of the Nomination Board, and Kari
Jordan, Chairman of the Outokumpu Board of Directors,
served as the fifth member of the Nomination Board.
The Nomination Board convened three times, and the
attendance rate was 100%. The Nomination Board has
submitted its proposals regarding the Board composition
and director compensation to Outokumpu’s Board
of Directors, and the Board has incorporated these
proposals into the notice convening the Outokumpu 2023
Annual General Meeting of Shareholders.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
98/220
Outokumpu Annual report 2022 Executive Management
Biographical details of the CEO and the Leadership Team on December 31, 2022
Work experience
President and CEO: Posti Group Corporation (formerly Itella
Corporation) 2012–2019
President and CEO: Pöyry PLC 2008–2012
Executive Vice President, Strategy, member of the UPM Executive
Team: UPMKymmene Corporation, Helsinki, Finland 2006–2008
President: UPM North America, Chicago, USA 2004–2005
President of Sales: UPM North America, Chicago, USA 2002–
2003
Managing Partner: Jaakko Pöyry Consulting, New York, USA
2000–2001
Engagement Manager: McKinsey & Co, Atlanta, USA 1997–1999
Director, Business Development UPM Paper Divisions, Helsinki,
Finland 1994–1996
Positions of trust
Vice Chairman (2019–2020) and Board member: Outokumpu
2012–2020
Vice Chairman (2016–2018) and Board member: Service Sector
Employers PALTA 2013–2019
Chairman: Realia Group 2017–2020
Board member: East Office of Finnish Industries 2012–2019
Chairman: American Chamber of Commerce (AmCham Finland)
2009–2014
Board member: Ilmarinen Mutual Pension Insurance Company
2014–2016
Board member: Federation of Finnish Technology Industries
2011–2012
Supervisory Board member: Finnish Fair Corporation 2014–2019
Supervisory Board member: Ilmarinen Mutual Pension Insurance
Company 2013
Board member: Botnia Oy 2006–2008
Work experience
Executive Vice President & CFO: Ahlström-Munksjö 2018
Chief Financial Officer: Munksjö 2015–2017
Chief Financial Officer: Vacon 2013–2015
Senior Vice President, Finance, IT and M&A, Building and Living:
Stora Enso 2012–2013
Senior Vice President & Group Controller: Stora Enso 2009–2012
Various finance and managerial positions: Stora Enso 2000–
2009
Positions of trust
Board member (2017–) and Audit Committee Chair (2018–):
Uponor
Heikki Malinen
President and CEO
b. 1962, Finnish citizen
M.Sc. (Econ.), MBA (Harvard)
President and Chief Executive
Officer 2020–
Chairman of the Outokumpu
Leadership Team 2020–
Responsibility: Group
management, legal and
compliance, safety and health
and business area Europe
Employed by the Outokumpu
Group since 2020.
Pia Aaltonen-Forsell
CFO
b. 1974, Finnish citizen
M.Soc.Sc. (Econ.), MBA
Chief Financial Officer 2019–
Member of the Outokumpu
Leadership Team 2019–
Responsibility: Financial and
business controlling, treasury,
mergers and acquisitions,
taxation, internal controls and
internal audit, investor relations,
general procurement, strategy
and Transformation Office
Employed by Outokumpu Group
since 2019.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
99/220
Outokumpu Annual report 2022
Positions of trust
Member of the board and Vice Chairman: ISER Germany 2016–
Thomas Anstots
President – business line,
Advanced Materials
b. 1962, German citizen
M.Sc. (Mechanical Engineering)
President – business line,
Advanced Materials 2022–
Member of the Leadership
Team 2020–
Responsibility: Business line
Advanced Materials within
business area Europe
Employed by Outokumpu
since 2012.
Work experience
Executive Vice President, Commercial, Business Area Europe
2020–2022
Senior Vice President, Head of Sales, Business Area Europe:
Outokumpu 2019–2020
Senior Vice President, Sales North: Outokumpu 2014–2018
Vice President, Sales Central and Service Center Operations:
Outokumpu 2013
General Manager: Nirosta Service Center, Inoxum, ThyssenKrupp
Nirosta 2010–2012
Managing Director Technology: Service Center Group,
ThyssenKrupp Nirosta 2005–2009
Vice President, Business Processes and Applications:
ThyssenKrupp Nirosta 2002–2004
Plant Manager, Finish Departments: ThyssenKrupp Nirosta
1998–2001
Various Manager and Senior Manager Positions in Cold Rolling
Mill Production, Thyssen Edelstahl/Krupp Thyssen 1989–1997
Work experience
Senior Vice President and CTO: Outokumpu 2018–2020
Technical Managing Director: Aluminium Norf GmbH 2015–2018
Vice President; Global Research and Development: Novelis Inc
2011–2015
General Manager; Business Unit Can Europe: Novelis AG 2009–
2011
General Manager: Novelis Deutschland GmbH 2007–2009
Sales Director Painted Products: Novelis Europe 2006–2007
Various operational and managerial positions: Novelis and Alcan
1993–2006
Positions of trust
Board member: German Steel Association
(Wirtschaftsvereinigung Stahl) 2020–
Stefan Erdmann
Chief Technology Officer
b. 1972, German citizen
M.Sc. (Eng.)
Chief Technology
Officer 2020–
Member of the Leadership
Team 2020–
Responsibility: Research and
development, technology,
sustainability, investment
steering and IT
Employed by Outokumpu
since 2018.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
100/220
Outokumpu Annual report 2022 Work experience
Senior Vice President, Business Area Ferrochrome: Outokumpu
2018–2020
Senior Vice President – Tornio Stainless and Ferrochrome
Operations: Outokumpu 2016–2018
Senior Vice President – Tornio Stainless Operations: Outokumpu
2012–2016
Vice President – Tornio Stainless Business Excellence:
Outokumpu 2010–2012
General Manager – Tornio Cold Rolling Plant: Outokumpu 2006–
2010
Various operations and R&D positions: Outokumpu 1990–2006
Positions of trust
Board member: Technology Industry Employers of Finland 2021–
Board member: Association of Finnish Steel and Metal
Producers 2020–
Chairman of Board: Chamber of Commerce in Lapland 2020–
2021
Council member: International Chromium Development
Association 2019–
Board member: EuroAlliages 2018–
Work experience
Executive Vice President – Human Resources and Organization
Development: Outokumpu 2016–2020
Executive Vice President – Human Resources, IT, Health and
Safety: Outokumpu 2013–2016
Executive Vice President – Human Resources and Health, Safety
and Sustainability: Outokumpu Oyj 2013
Group HR Director: SAG Group GmbH 2012
Operating Partner: Humatica AG 2010–2012
Group HR Director: Clariant International AG 2002–2008
VP Executive Policies: EADS (former DaimlerChrysler Aerospace
AG) 1999–2002
Senior Consultant: Towers Perrin 1993–1998
Martti Sassi
President – business
area Ferrochrome
b. 1964, Finnish citizen
M.Sc. (Eng.)
President, Business Area
Ferrochrome 2020–
Member of the Leadership
Team 2020–
Responsibility: Business
area Ferrochrome
Employed by Outokumpu
since 1990.
Johann Steiner
Chief Human
Resources Officer
b. 1966, German citizen
M.Sc. (Econ.)
Chief Human Resources
Officer 2020–
Member of the Outokumpu
Leadership Team 2013–
Responsibility: Human
resources, Group
communications and Global
Business Services (GBS)
Employed by Outokumpu
since 2013.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
101/220
Outokumpu Annual report 2022 Work experience
Executive Vice President, Operations, Business Area Europe
2020–2022
Senior Vice President, Tornio Operations: Outokumpu 2018–
2020
Vice President, Quarto Plate: Outokumpu 2015–2018
General Manager Production: Outokumpu Degerfors 2010–2015
Various operational positions: Outokumpu 2002–2010
Positions of trust
Board member: Swedish Steel association (Jernkontoret) 2015–
Niklas Wass
President – business line,
Stainless Europe
b. 1977, Swedish citizen
M.Sc. (Environmental Science)
President – business line,
Stainless Europe 2022–
Member of the Leadership
Team 2020–
Responsibility: Business line
Stainless Europe within business
area Europe
Employed by Outokumpu
since 2002.
Tamara Weinert
President – business
area Americas
b. 1965, German citizen
MBA, M.Sc.
President, Business Area
Americas 2021–
Member of the Leadership
Team 2020–
Responsibility: Business
area Americas
Employed by Outokumpu
since 2012.
Work experience
Acting President, Business Area Americas: Outokumpu 2020–
2021
SVP, Sales South & Overseas, Business Area Europe: Outokumpu
2016–2020
SVP, Finance & Control, Business Area Europe: Outokumpu
2013–2016
VP, Investor Relations: Outokumpu 2012–2013
Director Treasury, Risk Management, Insurance & Investor
Relations: Inoxum 2012
Director, Head of Corporate & Structured Finance: Vattenfall
2010–2012
Treasurer: N.V. Nuon 2008–2010
Risk Management: N.V. Nuon 2000–2008
International postings in India, Pakistan, Singapore, Russia,
Netherlands, the US and Finland.
Positions of trust
Board member: BCA, the Business Council of Alabama 2022
Board member: American Iron and Steel Institute 2020–
Member of the Board of Directors: Mobile Chamber of
Commerce, Alabama, US 2021–
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
102/220
Outokumpu Annual report 2022 Outokumpu shares and share-based rights
(parents or subsidiaries) owned by Leadership
Team members and his/her controlled
corporations on December 31, 2022
Organization structure on Dec 31, 2022
Members of the leadership team
Heikki Malinen
Pia Aaltonen-Forsell
Thomas Anstots
Stefan Erdmann
Martti Sassi
Johann Steiner
Niklas Wass
Tamara Weinert
Total
Number of shares
President and CEO Heikki Malinen
45,459
10,950
76,909
40,000
17,196
155,444
18,443
30,489
394,890
Finance
Human resources
Technology and sustainability
Europe
Americas
Ferrochrome
CEO and deputy to the CEO
The President and Chief Executive Officer (CEO) is
responsible for the company’s operational management,
in which the objective is to secure significant and
sustainable growth in the value of the company for
its shareholders.
The CEO prepares decisions and other matters for the
meetings of the Board of Directors, develops the Group’s
operations in line with the targets agreed with the Board
of Directors, and ensures the proper implementation of
Board decisions. The CEO is also responsible for ensuring
that the existing legislation and applicable regulations are
observed throughout the Group. The deputy to the CEO,
if one has been appointed, is responsible for attending to
the CEO’s duties in the event that the CEO is prevented
from doing so. Currently, no deputy to the CEO has
been appointed.
Leadership Team and Business Area Boards
The Outokumpu Leadership Team, chaired by the CEO,
is a reporting and decision-making forum for steering
and managing Outokumpu’s corporate agenda. The
Outokumpu Leadership Team consists of the CEO, his/
her deputy (if one has been appointed) and other key
members of senior management. The Group Functions
Board is a sub-section of the Outokumpu Leadership
Team and a monitoring and decision-making forum for
the corporate affairs of the Group Functions. The Group
Functions Board is chaired by the CEO. Decisions taken by
the Group Functions Board are reported to the Outokumpu
Leadership Team.
Each Outokumpu business area is steered by a Business
Area Board, chaired by the CEO. The Business Area Boards
consist of the CEO, the CFO, the Head of the respective
business area and selected other key members of
senior management.
Outokumpu Leadership
Team is a reporting
and decision-making
forum for steering our
corporate agenda.
The decision-making authorities of the Leadership Team
and the Business Area Boards follow from the authority of
the CEO. It is the duty of these bodies to run and develop
the Group’s operations in line with the strategy and
targets set by the Board of Directors.
The Leadership Team and the Business Area Board
meetings are convened by the CEO. Minutes shall be kept
for each meeting.
The Leadership Team, the Group Functions Board and the
Business Area Boards typically meet once a month.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
103/220
Outokumpu Annual report 2022 Internal controls and risk management
According to the Finnish Limited Liability Companies Act
and the Finnish Corporate Governance Code, the Board of
Directors is responsible for ensuring that the company’s
internal controls are appropriately organized. As a listed
company, the Group has to comply with a variety of
regulations. Furthermore, it is important to ensure that
key operational and reporting targets are met. Outokumpu
has developed a system of internal controls and
implements it throughout the company. The main purpose
of the internal control system is to provide management
and the Board of Directors with reasonable assurance
regarding the achievement of objectives relating to
the Group’s operations, reporting and compliance. The
internal control system consists of the Internal Control
Policy and related instructions, common ways of working
with clearly defined roles and responsibilities and IT
system supported processes.
The risk management policy approved by the
company’s Board of Directors defines the objectives,
approaches, and areas of responsibility in the Group’s
risk management activities. The risk management
process consists of the following five core stages: 1) risk
identification, 2) risk evaluation, 3) mitigation actions, 4)
control activities, and 5) risk reporting. Read more about
risks and opportunities.
Internal control
provides management
reasonable assurance.
Internal controls over financial reporting
The purpose of this section is to provide shareholders
and other stakeholders with a description of how the
internal controls over financial reporting are organized
at Outokumpu.
Outokumpu’s Internal Control Policy defines main roles,
responsibilities, principles, and objectives for the Group’s
internal control system. Outokumpu applies the COSO
Internal Control – Integrated Framework (2013) as main
guidance for the internal control system.
The Board of Directors is ultimately responsible for
overseeing the system of internal controls and the CEO,
supported by other members of executive management, is
responsible for implementing and maintaining an efficient
system of internal controls. Components of the system
include control environment, risk assessment, control
activities, information and communication as well as
monitoring activities.
Outokumpu’s financial reporting follows International
Financial Reporting Standards (IFRS) as adopted by
the EU. The Outokumpu Accounting Principles are
Outokumpu’s application guidance on IFRS. Outokumpu
also complies with the regulations regarding financial
reporting published by the Financial Supervisory
Authority (FIN-FSA), Nasdaq Helsinki, and the European
Securities and Markets Authority (ESMA). The objective
of internal controls over financial reporting at Outokumpu
is to provide reasonable assurance that the financial
reporting and the preparation of financial statements
are in accordance with applicable laws, regulations, and
internal requirements.
Information and
communication
Monitoring
activities
Outokumpu's
Internal Control
System
Control
activities
Control
environ-
ment
Risk assesment
Control environment
The foundation of Outokumpu’s control environment
consists of policies, standards, processes, and structures
that provide the basis for the internal control system
across the organization and define the ways in which
Outokumpu operates. The performance management as
well as the risk management and internal control process
are key management activities in enabling an efficient
control environment. Throughout the Group’s operations,
the planning activities and the setting of compliance,
operational and financial targets are executed in
accordance with Outokumpu’s overall business targets.
Management monitors related achievements. Risks or
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
104/220
Outokumpu Annual report 2022 Key Policies relevant to internal controls
- Approval Policy
Defines the relevant authorization levels and
thresholds within the Outokumpu Group. Applies
to the internal approval of contracts and other
commitments made by the Business Areas and
Group Functions of the Outokumpu Group.
- Risk Management Policy
Describes the risk management principles and
main rules followed by the Outokumpu Group.
- Code of Conduct
Sets out the ethical standards and provides
guidelines for a common way of working.
- Internal Audit Charter
Describes the main principles and rules followed
by the Outokumpu Group in relation to Internal
Audit’s assignment and underlying values.
- Internal Control Policy
Defines main roles, responsibilities, principles,
and objectives for Outokumpu’s internal
control system.
- Treasury Policy
Defines objectives and main principles
for Treasury as well as the distribution of
related tasks and responsibilities within the
Outokumpu Group.
- Acceptable Use of IT Policy
Outlines the guidelines of constraints and
practices that a user must agree to for access
to Outokumpu’s network, the internet, and
other resources.
- Identity and Access Management Policy
Enables the right individuals to access the right
resources at the right times for the right reasons.
- Corporate Responsibility Policy and Ethics
Statement
Aims to guarantee that companies work ethically,
considering human rights as well as the social,
economic and environmental impacts.
- Outokumpu Accounting Principles (OAP)
Sets out the accounting principles and disclosure
requirements that must be followed by all legal
companies and reporting units in reporting their
financial information to the Group.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
threats are handled through regular reporting and status
review meetings.
the risks for the most relevant parts of the financial
reporting process.
Risk assessment
Risk assessment involves a dynamic and iterative process
for identifying and evaluating risks to achieve predefined
objectives and it provides the foundation for determining
how risks will be managed.
The risks related to the financial reporting are managed
according to Outokumpu’s risk management policy.
The risks related to financial reporting are identified
and evaluated in risk workshops or similar, addressing
Control activities
The objective of control activities is to prevent,
discover, and correct potential errors and deviations.
Control activities also aim to ensure that authorization
structures are designed and implemented in such a way
that incompatible tasks (e.g. one person performing a
critical activity and being responsible for controlling that
activity) are segregated. Control activities are performed
at all levels of the organization, at various stages within
business processes, and within the key technologies, e.g.
ERP systems.
Control activities for the financial reporting consist
of different kinds of measures and include reviews of
financial reports by Group and business area management
teams, the reconciliation of accounts, analyses of the
logic behind reported figures, forecasts compared to
reported figures, and analyses of the Group’s financial
reporting processes, among others. A key component is
the monitoring of monthly performance against financial
and operational targets. These types of control activities
take place at different levels of the organization.
105/220
Outokumpu Annual report 2022 Information and communication
Group-wide policies and principles are available to
all Outokumpu’s employees. Instructions relating to
financial reporting are communicated to all of the parties
involved. The main communication channels employed
are regular controller meetings, Outokumpu’s intranet,
other easily accessible databases, and email. Finance
Leadership Team meetings are organized regularly to
share information and discuss issues of topical interest to
the Group.
Furthermore, Outokumpu has established Group Functions
Board and steering groups in which financial reporting
and internal control issues are discussed and reviewed.
These groups typically consist of senior members of
management and substance experts. Outokumpu’s
objective is to ensure that common financial processes
and reporting practices are followed throughout the Group
and that effective internal controls relating to financial
reporting are established.
Monitoring activities
The organization evaluates and communicates internal
control deficiencies in a timely manner to the parties
responsible for taking corrective action, including
executive and senior management, and the Board
of Directors, as appropriate. Both management in
Outokumpu’s group companies and the accounting and
controlling functions are responsible for the follow-up
and monitoring of internal controls connected with
financial reporting. Overall development and monitoring
of the internal control process and platform, as well as
control testing, are performed by the Group's internal
control function. The internal audit function monitors that
an appropriate control environment exists across the
Group. Risk management, the compliance function, and
Outokumpu’s auditors are also engaged in the review of
control activities. The findings of the review procedures
as well as maturity of the system of internal controls are
reported to the Board Audit Committee and the Group
Functions Board on a regular basis.
Control activities highlights
- During 2022, implementation of the digital
platform for risk and control management
continued by stabilizing the process and
adding more units and functions into
the scope.
- Strengthening of segregation of duties
management (SoD) continued in 2022 as
per development roadmap by governance
and process modelling and through the SoD
risk identification. Furthermore, the SoD risk
reporting development was started.
- Outokumpu further developed its financial
reporting process by increasing efficiencies
and effectiveness in financial closing
processes through process and timeline
harmonization, documenting financial
reporting related risks, and increasing the
coverage of internal controls in the financial
reporting process area.
- Preparations for the next rollout of the new
ERP system together with other related IT
systems continued.
Internal audit
The mission of internal audit is to provide an independent
and objective assurance, control, and consulting function
designated to add value, improve operations, and monitor
and support the organization in the achievement of its
objectives.
Through a systematic, disciplined approach, internal
audit determines whether governance and compliance
processes, the internal control system, and the risk
and control management process, as designed and
represented by the Board of Directors and the Outokumpu
Leadership Team, are effective and efficient.
Group internal audit, with the third-line roles in risk
management, performs audits according to the audit
plan approved by the Board Audit Committee. Internal
audit monitors, together with the compliance function,
adherence to Group principles, policies, and instructions,
and leads investigations into fraudulent and noncompliant
behaviors and activities.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
Key activities in 2022
- In 2022, internal audit performed nine
audits, in line with the audit plan. The
results of the audits as well as progress in
related actions are reported to the relevant
management, the Board Audit Committee,
and the external auditor.
- Total of 45 misconduct reports were
recorded in 2022 (2021: 40), most of the
reports leading to recommendations for
management actions.
Planned key activities for 2023
- In 2023, from 8 to 10 site and thematic
audits are expected
106/220
Outokumpu Annual report 2022 Ethics and compliance
Outokumpu is strongly committed to the highest ethical
standards and complies with the applicable laws and
regulations of the countries in which it operates as well
as with the agreements and commitments it has made.
Outokumpu’s Code of Conduct sets out these ethical
standards and provides guidelines for common ways
of working with the aim of ensuring that all Outokumpu
employees live up to Outokumpu’s ethical standards.
The persons discharging managerial responsibilities
in Outokumpu, in the meaning of the Market Abuse
Regulation, include members of the company’s Board of
Directors, the CEO, and other members of the Outokumpu
Leadership Team (“the Management”). The Management
together with the persons or companies closely
associated with a member of the Management constitutes
the so called “Notifying Persons”. Outokumpu maintains a
non-public list of the Notifying Persons.
Outokumpu’s legal and compliance function is responsible
for managing and continuously developing Outokumpu’s
group-wide ethics and compliance program. Outokumpu’s
ethics and compliance program is described in more detail
in the Sustainability review. The legal and compliance
function reports to the CEO and to the Outokumpu
Leadership Team as well as directly to the Board Audit
Committee on ethics and compliance related matters.
Ethics and compliance related matters are also regularly
handled in the Compliance Steering Group, consisting of
the CEO, CFO, Head of HR, Head of Internal Controls and
Internal Audit, General Counsel and Head of Compliance.
The Compliance Steering Group met four times in 2022. In
addition, a global network of compliance contact persons
and several data protection governance bodies support
the implementation of the ethics and compliance program
in the business areas and group functions.
Insider management
The company’s Insider Rules, the Finnish insider laws and
regulations, including the EU Market Abuse Regulation,
constitute the primary legal framework for the insider
issues relevant to the Group and its employees.
Furthermore, the Regulation on EU Energy Market Integrity
and Transparency sets forth similar requirements as
the Market Abuse Regulation on dealing with inside
information relating to wholesale energy products. As the
company is a participant in the wholesale energy market,
the company’s Insider Rules apply to such energy-related
inside information, as applicable.
Outokumpu applies a restricted period of thirty (30)
calendar days before the announcement, as well the day
of the announcement, of an interim financial report and a
year-end report – so called “Closed Window”. During this
period, the Management, the persons subject to trading
restrictions and any legally incompetent persons under
their custody shall not conduct any transactions, on
his/her own account or for the account of a third party,
directly or indirectly, relating to the company’s shares
or debt instruments, or derivatives or other financial
instruments linked thereto. Separate, non-public, project-
specific insider registers are maintained for insider
projects. Persons defined as project-specific insiders are
those who, in the course of their duties in connection
with a project, receive inside information concerning
the Group which, if or when realized, is likely to have a
significant effect on the value of the company’s publicly
traded securities.
The company has the obligation to inform the public
as soon as possible of inside information that directly
concerns the company, unless the company has decided
that the publication of the inside information shall
be delayed, in accordance with the applicable insider
regulations. The publication of inside information shall be
made in accordance with the company’s Disclosure Policy.
Outokumpu’s Head of Legal and Compliance function
is responsible for the coordination and supervision of
insider topics.
Related party transactions
The Second Shareholders’ Rights Directive (EU), the
International Accounting Standards IAS 24, the Companies
Act and the Securities Markets Act as well as the Finnish
Corporate Governance Code constitute the primary legal
framework in the related party transaction principles
relevant to the Outokumpu Group and its related parties.
Definition of related parties and maintenance
of the list of related parties
Outokumpu Oyj’s related parties are determined in
accordance with the International Accounting Standards
(IAS 24) and they include, i.a., the Group subsidiaries,
members of the parent company’s Board of Directors and
the Leadership Team as well as their related persons and
companies. The company’s legal and compliance function
maintains a non-public list of Outokumpu Oyj’s related
parties, which is updated on a regular basis.
Evaluating related party transactions
A related party transaction is any transaction which is
conducted between the Outokumpu Group and a related
party of Outokumpu Oyj. Transactions between a company
and its related parties are allowed, provided that they
promote the purpose and interests of the company and
are commercially justified.
Any transactions that are not conducted in Outokumpu
Group’s ordinary course of business or are not
implemented under arms-length terms require specific
approval according to the Outokumpu Group’s Approval
Policy. Any such transactions are escalated for review on
the Group’s executive level and cross-checked against
the related parties. Any related party transactions that
are not conducted in Outokumpu Group’s ordinary course
of business will require a decision by Outokumpu’s Board
of Directors and a transaction which would be deemed
material for Outokumpu’s shareholders will also have to
be publicly disclosed. The decision making of the Board
of Directors also takes provisions on conflicts of interest
into account as board members cannot participate
in deciding a matter concerning themselves. Board
members also have a conflict of interest and cannot
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
107/220
Outokumpu Annual report 2022 participate in decisions concerning a transaction with
one of their related parties if that transaction is not part
of the company’s ordinary course of business or is not
implemented under arms-length terms.
Monitoring and reporting related party transactions
Outokumpu’s Audit Committee monitors the evaluation
process. Related party transactions are reported to the
Audit Committee on a regular basis. Outokumpu’s finance
and control functions monitor related party transactions
regularly in arrears as a part of the company’s reporting
and control procedures. Information on transactions
concluded between the company and its related parties is
disclosed annually in the company’s consolidated financial
statement.
Auditors
Under its Articles of Association, the company shall have
a minimum of one and a maximum of two auditors. The
auditors must be Authorized Public Accountants (KHT) or
accounting firms whose mainly responsible auditors are
Authorized Public Accountants (KHT). The auditors shall be
independent of the company.
The Board of Directors has the duty to make a proposal
to the Annual General Meeting as to the election and
fees of the auditor. The Annual General Meeting elects
the auditors for a term of office ending at the close of the
next Annual General Meeting. A proposal to the Annual
General Meeting on the election of auditors that has been
made known to the Board of Directors prior to the Annual
General Meeting will be made public if it is supported
by shareholders holding a minimum of 10% of all the
company’s shares and voting rights and the person or
company proposed has consented to such nomination.
The company’s auditors submit the statutory auditor’s
report to the company’s shareholders in connection
with the company’s financial statements. The auditors
also report their findings to the Board Audit Committee
on a regular basis and at least once a year to the full
Board of Directors. The parent company, Outokumpu
Oyj, is audited by PricewaterhouseCoopers Oy, and
the responsible auditor is Janne Rajalahti, Authorized
Public Accountant. PricewaterhouseCoopers Oy is also
responsible for overseeing and coordinating the auditing
of all Group companies.
PricewaterhouseCoopers Oy was elected as the Group
Auditor in the Annual General Meeting held on March
31, 2022 and has been the Auditor of Outokumpu
for six consecutive terms. Both Outokumpu and
PricewaterhouseCoopers Oy emphasize the requirement
stipulating that the auditor be independent of the
company being audited. The PwC Network Independence
policy is based on the International Ethics Standards
Board for Accountants’ (IESBA) Code of Ethics for
Professional Accountants.
Outokumpu’s Board Audit Committee continuously
monitored the non-audit services purchased by the
Group from PricewaterhouseCoopers at the global level.
In 2022, the auditors were paid fees totaling EUR 2.7
million, of which the non-auditing services accounted for
EUR 0.2 million.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders’ Nomination Board
Executive Management
Internal controls and risk
management
Remuneration report
Financial year
108/220
Outokumpu Annual report 2022 Remuneration
report
Annual review
Sustainability review
Governance
Remuneration report
Dear shareholder
Remuneration and performance
Remuneration policy
Fees of the Board of Directors
Remuneration of the CEO
Financial year
Based on results, our Performance
Share Plan reached target level for
the first time in several years. We
continue to review our remuneration
framework to ensure they support
value delivery for our stakeholders.
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109/220
Outokumpu Annual report 2022 Dear Shareholder,
on behalf of the Board, I am pleased to present
Outokumpu’s Remuneration Report for 2022.
This report has been prepared according to the Corporate
Governance Code 2020 and approved by the Board of
Directors. It will be presented to the Annual General
Meeting in March 2023.
The report presents in a clear and transparent way
how Outokumpu rewarded the Board members and
the President and CEO for 2022. The materialized
remuneration is in line with the Remuneration Policy of the
governing bodies of Outokumpu, approved at the Annual
General Meeting in 2020.
In 2022, the Annual General Meeting elected Petter
Söderström as a new Board member. Petter’s astute
investor perspective and vast experience in financial
analysis provide an excellent addition to the experience
Sustainability continues
to be at the core of our
operations, and in 2022 we
introduced a CO2 emission
reduction target in our long-
term management incentive.
Annual review
Sustainability review
Governance
Remuneration report
Dear shareholder
Remuneration and performance
Remuneration policy
Fees of the Board of Directors
Remuneration of the CEO
Financial year
and capabilities of our Board of Directors. In the autumn,
an independent party conducted a thorough assessment
of the Board of Directors’ capabilities and performance,
providing assurance as well as valuable insights.
Following excellent results in 2021, strong performance
continued in 2022 despite a softening market,
exceptionally high imports from Asia, and an energy crisis
in Europe. For the second year in a row, we delivered
record level profitability. We also progressed determinedly
with our strategy, concluding the first phase six months
ahead of schedule and ramping up the second phase.
Having two customer-differentiated business lines in
Europe, Advanced Materials and Stainless Europe, is
proving to be a successful move in serving the specific
needs of the two customer groups.
Sustainability continues to be at the core of our
operations, and therefore in 2022 we introduced a CO2
emission reduction target in our long-term incentive
program, the Performance Share Plan. We also agreed on
long-term ambitions for diversity, equity and inclusion and
added a diversity target for managers in our short-term
incentive plan for 2023, alongside safety which is still a
top priority.
Based on the exceptional business results, the CEO will
receive a short-term incentive close to the maximum
level set in the Remuneration Policy. In addition, the
Performance Share Plan reached target level for the first
time in several years and share rewards will be paid to the
CEO and management during the first quarter of 2023.
Going forward, we will continue to review our remuneration
framework to ensure they support value delivery for our
stakeholders.
Kari Jordan
Chairman of the Board of Directors
110/220
Outokumpu Annual report 2022
Introduction – how remuneration relates to Outokumpu’s performance
Annual review
Sustainability review
Governance
Remuneration report
Dear shareholder
Remuneration and performance
Remuneration policy
Fees of the Board of Directors
Remuneration of the CEO
Financial year
Outokumpu’s Remuneration Policy from 2020 sets the
framework for the remuneration of the Board of Directors
and the CEO.
This remuneration report for 2022 follows the
Finnish Corporate Governance Code and the
applicable legislation.
The report presents how the policy was applied in
2022 and how remuneration aligns with the successful
delivery of sustainable business results according to the
company’s long-term strategy. Pay for performance is
one of Outokumpu’s guiding principles for remuneration.
It is applied in practice via incentive plans, both short-
term and long-term, so that remuneration follows
business performance.
Outokumpu’s Annual General Meeting on March 31, 2022
approved the remuneration report 2021 in an advisory
vote. 243,832,375 shares and votes, representing
approximately 53% of all shares and votes in the
company, participated in the voting. 156,961,014 votes,
representing approximately 64% of the votes cast, voted
for the remuneration report. In this remuneration report
2022, we increased the transparency of our disclosures,
notably on performance measures in incentive plans.
For 2022, the CEO remuneration was in line with the
framework and principles set forth in the Remuneration
Policy. The remuneration of the employees follows
the same principles, which include shareholder value
creation as the underlying focus of the reward strategy,
competitive remuneration, business strategy aligned
incentives, and pay for performance. In line with this
last principle, exceptional performance provided
correspondingly higher rewards for all employees.
The table and graphs on the next page show how the
Board member fees and the CEO remuneration have
developed compared to the average remuneration of
employees and to Outokumpu’s financial results over the
last five years.
Pay for performance
is one of our guiding
principles for
remuneration.
111/220
Outokumpu Annual report 2022 Outokumpu performance and CEO remuneration 2018–2022
Adjusted EBITDA, € million
1,500
1,200
900
600
300
0
2018*
2019*
2020*
2021
2022
Operating cash flow, € million*
800
600
400
200
0
2018
2019
2020
2021
2022
* Including discontinued operations
*Including discontinued operations
* Including discontinued operations
2018*
2019*
2020*
485
263
250
2021
980
2022
1256
2018
2019
2020
2021
2022
214
371
322
597
778
Development of remuneration and financial development over the past five years
Board of Directors 1), €
CEO 2), €
Employee average 3) 4),€
Adjusted EBITDA4), € million
2022
898,200
1,965,022
66,013
1,256
2021
780,600
795,840
62,677
980
658,400
1,264,729
53,637
250
1) Total remuneration paid to the Board of Directors, including annual remuneration and meeting fees for all members.
24
2) Total remuneration paid to the CEO, including salary, employee benefits and incentives.
2020
2019
2018
705,800
2,534,480
53,922
263
25
576,200
2,705,913
52,159
485
3) Personnel expenses without indirect employee costs and termination benefits, divided by the average number of employees during the year.
In 2018–2020, the employee headcount was used for the calculation. For 2021 onwards, the calculation is based on the full-time equivalent
(FTE). The average remuneration has increased due to the higher incentive accruals as well as higher utilization of our resources.
4) 2018–2020 including discontinued operations.
CEO remuneration, €
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2018
2019 2020* 2021
2022
Base salary + benefits
Short-term incentive¹⁾
Long-term incentive¹⁾
1) Paid incentives are entered in the graph on the year
when they are paid. Usually, they relate to the
performance in the previous year(s).
* Roeland Baan until April 2020 (including incentives
that year), Heikki Malinen since May 2020
2018
2019
2020*
2021
2022
Base salary + benefits
1,075,835 1,074,495
988,520
795,840
900,322
Short-term incentive¹⁾
700,997
347,782
276,209
Long-term incentive¹⁾
929,081
1,112,203
0
0
0
1,064,700
0
26
Annual review
Sustainability review
Governance
Remuneration report
Dear shareholder
Remuneration and performance
Remuneration policy
Fees of the Board of Directors
Remuneration of the CEO
Financial year
112/220
Outokumpu Annual report 2022
Remuneration Policy briefly
The Remuneration Policy sets the remuneration framework
and principles for the governing bodies, the Board of
Directors and the President and CEO of Outokumpu.
The remuneration of the Board of Directors is decided by
the Annual General Meeting based on the proposal by the
Shareholders’ Nomination Board. The CEO’s remuneration
is decided by the Board of Directors based on preparation
by its Remuneration Committee and in accordance with
the policy presented to the AGM.
The adjacent table describes the content of the
policy briefly.
For short-term and long-term incentives, similar principles
apply also for all the Outokumpu employees included in
the schemes.
Remuneration element,
purpose, and link to strategy
Fixed fee
Ensures that Outokumpu can attract
and retain Board members with the
experience and skills necessary in a large
and complex business operating in a
global competitive environment, enabling
to set and monitor the company strategy.
Fixed compensation
Compensates for the job responsibilities
and reflects the competencies,
knowledge, and experience of the
individual.
Applied
to
Board of
Directors
Key features of the policy
The Shareholders’ Nomination Board is responsible for presenting a
proposal for remuneration of the members of the Board of Directors to
the Annual General Meeting.
President
and CEO
The fixed monthly salary is reviewed annually as part of the review of
the CEO’s total compensation package.
The Board of Directors will consider various factors when determining
changes in the fixed compensation, including individual contribution,
business performance and alignment with external market levels.
Pension and other benefits
Enable focus on job responsibilities by
releasing the individuals from the worry of
organizing other aspects of their lives.
President
and CEO
Short-term incentives
Support the achievement of Outokumpu’s
annual financial and strategic targets.
President
and CEO
Long-term incentives
Align the interests with the shareholders
and retain by creating a long-term equity
interest. Promote shareholder value
creation and the achievement of long-
term strategic targets.
President
and CEO
Rights to a supplementary pension plan are assessed on a case-
by-case basis. The current President and CEO is not eligible for
supplementary pension.
Other benefits follow the applicable company policy and may be
amended from time to time. They can include for example a mobile
phone, a company car, housing, and insurance policies.
Performance measures, weights, and targets for the selected measures
are set annually by the Board of Directors to ensure they support
the strategy. These may change from year to year to reflect business
priorities and typically include Outokumpu’s financial performance,
safety, and individual strategic targets.
After year-end, the Board of Directors determines the extent to which
each of the targets were achieved and the final pay-out level.
Outokumpu’s long-term incentive program consists of annually
commencing long-term incentive plans with a three-year performance
period. Performance measures, weights, and targets are set by the
Board of Directors to ensure they support the strategy and typically
include financial measures.
After the end of the performance period the Board of Directors
measures the achievement level of performance targets and confirms
the final pay-out level.
Shareholding requirement
Ensures alignment of the interests of
the President and CEO with that of
shareholders.
President
and CEO
The CEO should accumulate and once achieved, hold a shareholding
in Outokumpu corresponding to their annual gross base salary. The
shareholding is expected to be accumulated out of rewards received
under the share-based incentive schemes of Outokumpu.
Annual review
Sustainability review
Governance
Remuneration report
Dear shareholder
Remuneration and performance
Remuneration policy
Fees of the Board of Directors
Remuneration of the CEO
Financial year
113/220
Outokumpu Annual report 2022 Fees of the Board
of Directors
Outokumpu’s Board members are compensated for their
time, commitment, knowledge, and required experience
for contributing to the long-term financial performance
and success of the company. As of March 2022, Petter
Söderström joined the Board of Directors as a new
member. Eeva Sipilä left the Board of Directors at the
Annual General Meeting in 2022.
Observing general market trends and in accordance
with the proposal by the Nomination Board, the Annual
General Meeting 2022 decided to increase the annual
remuneration of the Board of Directors as presented in
the adjacent table.
40% of the annual remuneration is paid in the
company’s own shares using treasury shares or shares
to be purchased from the market at a price formed in
public trading and in accordance with the applicable
insider regulations.
If a Board member, on the date of the Annual General
Meeting, owns shares of the company, which based on
the closing price of that day represent a value exceeding
the annual remuneration, he or she can opt to receive the
remuneration in cash.
The annual fee is paid once a year, and in addition to the
annual remuneration, all the members of the Board of
Directors are paid a fee for each meeting they attend. The
members of the Board are not entitled to any other share-
based rewards. The Board members are not eligible for
any pension schemes.
Set fees of the Board of Directors
€
Chairman
Vice Chairman
Board members
Meeting held in the country of residence
Meeting held outside the country of residence
169,000
93,500
72,500
163,000
91,600
71,100
600
600
600
1,200
2022
2021
Annual remuneration
Meeting fee
Annual remuneration
Meeting fee
Sustainability review
Annual review
Remuneration and meeting fees of the Board of Directors paid in 2022 and 2021
Members of the leadership team
Kari Jordan, Chairman
Eeva Sipilä, Vice Chariman until March 31, 2022
Kati ter Horst, Vice Chariman from April 1, 2022
Heinz Jörg Fuhrmann, Member2)
Päivi Luostarinen, Member2)
Petter Söderström, Member3)
Vesa-Pekka Takala, Member
Pierre Vareille, Member
Julia Woodhouse, Member
Total
Members of the leadership team
Kari Jordan, Chairman
Eeva Sipilä, Vice Chariman until March 31, 2022
Kati ter Horst, Vice Chariman from April 1, 2022
Heinz Jörg Fuhrmann, Member2)
Päivi Luostarinen, Member2)
Petter Söderström, Member3)
Vesa-Pekka Takala, Member
Pierre Vareille, Member
Julia Woodhouse, Member
Total
Paid in 2022
Annual compensation paid in 2022
Share portion
Cash portion
Meeting fees1)
169,000
91,600
43,037
43,037
43,037
55,504
43,037
43,037
29,463
29,463
29,463
37,996
29,463
29,463
185,308
531,292
21,000
4,200
22,200
22,200
19,200
14,400
19,200
27,000
32,2004)
181,600
Paid in 2021
Annual compensation paid in 2022
Share portion
Cash portion
Meeting fees1)
66,243
37,226
28,894
28,894
28,894
28,894
28,894
28,894
276,832
96,757
54,374
42,206
42,206
42,206
42,206
42,206
42,206
404,368
12,600
12,000
12,600
6,600
8,400
12,000
13,800
21,4004)
92,400
1) Meeting fees are entered in the table on the year when they are paid and include committee meeting fees.
2) Appointed as a Board member on March 31, 2021.
3) Appointed as a Board member on March 31, 2022.
4) Meeting fees include 7,000 € meeting fees for the ESG (environmental, social and governance) Board.
Governance
Remuneration report
Dear shareholder
Remuneration and performance
Remuneration policy
Fees of the Board of Directors
Remuneration of the CEO
Financial year
600
600
600
1,200
Total
190,000
4,200
113,800
94,700
91,700
86,900
112,700
99,500
104,700
898,200
Total
175,600
103,600
83,700
77,700
79,500
83,100
84,900
92,500
780,600
114/220
Outokumpu Annual report 2022 Remuneration of the CEO
The remuneration of the CEO consists of a base salary,
benefits and an annually determined short-term incentive
plan. In addition, the CEO participates in long-term
incentives comprising performance share plans launched
on a yearly basis.
Following the excellent results achieved since he took
office, the CEO’s monthly gross base salary was raised by
16% to EUR 75,397 in April 2022, totaling EUR 900,322
including short-term benefits for the full year 2022.
This reflects the market salary level for this type of
responsibilities and this size of a company, and recognizes
that the CEO performed well above expectations, bringing
in record level results in 2021 and successfully de-risking
the company.
In 2022, the CEO’s short-term incentive earning
opportunity remained unchanged at 50% of the annual
gross base salary on a target level and 100% on a
maximum level. The short-term incentive to be paid in
2023 reflects the achievement of the pre-defined targets
for 2022: Group adjusted EBITDA, safety, and strategy
implementation. Group adjusted EBITDA broke new record
levels. Total Recordable Incident Frequency Rate (TRIFR)
reached the ambitious target of 2.0, which is exceptional
in this industry. The first phase of the strategy was
successfully completed ahead of time, bringing significant
improvement in commercial excellence, cost and capital
discipline and lean and agile organization, as well as
achieving both its financial targets, EUR 250 million
EBITDA run-rate improvement and net debt to EBITDA
ratio to below 3.0. Altogether, EUR 871,388 of short-term
incentives will be paid to the CEO in spring 2023 for 2022,
which is 95% of the maximum.
Management and employees belonging to the short-
term incentive scheme will also receive correspondingly
high pay-outs, conditioned to their respective individual
performance levels.
The CEO’s long-term incentive earning opportunity is
at most 150% of the annual gross base salary at the
time of payment. In 2022, the CEO was not paid any
long-term incentive, since the threshold level of the
Performance Share Plan 2019–2021, return on operating
capital compared to the peers, was not met. However,
for the Performance Share Plan 2020–2022, the same
performance target was reached, and therefore, the
executives participating in the plan will receive 100% of
the shares granted at target level. For the CEO, that means
130,451 gross shares.
The members of Outokumpu’s Leadership Team, including
the CEO, are expected to own Outokumpu shares they
receive in the company’s share-based incentive programs
corresponding to at least the value of their annual gross
base salary. Half (50%) of the net shares received from
the share-based incentive programs must be used to fulfil
that ownership recommendation.
The service contract of the CEO is valid until further
notice. He is entitled to a severance payment of twelve
(12) months, and the notice period is six (6) months for
both parties. CEO Heikki Malinen has the right to retire at
the age of 65. He participates in the Finnish TyEL pension
system, and there is no supplementary pension plan at
place.
Remuneration of the CEO
Base salary and benefits1)
Short-term incentives 2)
Long-term incentives 2)
Total Remuneration
1) Excluding post-employment benefits.
Due in 2023
Paid in 2022
Paid in 2021
N/A
871,388
See table on the next page
N/A
900,322
1,064,700
0
1,965,022
795,840
0
0
795,840
2) Paid incentives are entered in the table on the year when they are paid. Usually, they relate to the performance in the previous year(s).
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Financial year
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Outokumpu Annual report 2022 Share-based remuneration of the CEO
Long-term incentive plan
Maximum number of shares granted (gross)
Grant date
Number of shares earned (gross)
Number of shares delivered (net) 1)
Share delivery date
Share price at delivery
Due in 2023
Paid in 2022
Paid in 2021
PSP 2020-2022
195,677
May 15, 2020
130,451
71,902
February, 2023
Not known yet
PSP 2019-2021
97,000
May 15, 2020
0
0
–
–
PSP 2018-2020
43,000
May 15, 2020
0
0
–
–
1) Paid incentives are entered in the table on the year when they are paid. Usually, they relate to the
performance in the previous year(s).
Shareholding of the CEO
Shareholding recommendation
Shares owned on December 31
Closing share price on December 31, €
Value of the shares on December 31, €
Value of the shares in % of annual base salary
2022
2021
100% of individual
annual gross base salary
45,459
4.73
215,021
23%
100% of individual annual
gross base salary
45,459
5.50
250,025
31%
CEO's earning opportunity and performance measures
in the short-term incentive plans in 2022
Earning opportunity in % of gross annual base salary1)
Threshold
Target
Maximum
Performance measures in 2022
Group Adjusted EBITDA in 2022
Group safety: Total Recordable Incident
Frequency Rate = 2.0
Strategy implementation: EUR 250 million
EBITDA run-rate improvement and net debt to
EBITDA ratio to below 3.0.
Total (sum of the products of each target
weight and payout level)
Payout, %
0.5%
50%
100%
Payout, %
100%
Payout, €
4,586
458,625
917,250
Payout, €
733,800
Weight
Achievement
Maximum
80%
10%
Target
50%
45,863
10%
Maximum
100%
91,725
100%
95%
871,388
1) Prorated to the different salary levels during 2022, i.e., 3/12 * 819,000 + 9/12 * 950,000 = 917,250 €.
The actual base salary paid during 2022 differs from this prorated annual base salary because of accrued
holiday pay not yet paid.
CEO's earning opportunity and performance measures
in the long-term incentive plans in 2022
Earning opportunity
Threshold 1)
Target 1)
Maximum 1)
Grant 2)
Grant date
Payout year
Performance measures
Criteria
Weight
Criteria
Weight
PSP 2020–2022
PSP 2021–2023
22%
44%
67%
130,451
May 15, 2020
2023
25%
50%
75%
168,800
March 15, 2021
2024
PSP 2022–2024
25%
50%
75%
85,300
March 15, 2022
2025
Return on operating capital,
average Q4/2022–Q3/2022,
compared to peers
100%
Return on capital
employed in 2023
100%
–
–
–
–
Return on capital employed,
average 2022–2024
80%
CO2 emissions per ton of crude
steel, 2024 SBTi target
20%
1) Expressed in percentage of annual gross base salary at the time of grant. In PSP 2020–2022, the levels
were prorated to time in position during the performance period: 32/36 months.
2) Number of gross shares at target level. The number of shares was determined using the share price at the
time of plan approval: EUR 2.66 for PSP 2020–2022, EUR 2.31 for PSP 2021–2023, and EUR 5.57 for
PSP 2022–2024.
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Financial year
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Outokumpu Annual report 2022 Financial
year 2022
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Year 2022 was a historic one
for Outokumpu. Our result was
the best in our history. We also
reached an important milestone
of being net debt free.
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Outokumpu Annual report 2022 Review by the Board
of Directors
The year 2022 was a historic one for
Outokumpu. Our adjusted EBITDA increased to
EUR 1.3 billion (EUR 1.0 billion), which is the
best result in the company’s history. Stainless
steel deliveries declined from the previous year,
while higher realized prices for stainless steel
supported profitability. As a result of strength-
ened profitability, our ROCE increased to 22.6%
(17.6%) and earnings per share to EUR 2.40
(EUR 1.21). We also reached an important
milestone of being net debt free at the end of
2022. This is a remarkable achievement and
was made possible by our diligent strategy
execution and the exceptionally strong market
environment for the past two years. Outokumpu
is now financially stronger than ever and more
resilient to withstand changing conditions.
In 2022, Outokumpu completed the first phase
of its strategy, where the aim was to de-risk the
company. By the end of the second quarter,
both financial targets, a net debt to adjusted
EBITDA ratio below 3.0 and an EBITDA run-rate
improvement of EUR 250 million, were reached.
As a result, Outokumpu launched the second
phase ahead of schedule. The aim of the
second phase is to strengthen Outokumpu’s
core, and this phase will last until the end of
2025. We aim to improve our EBITDA run-rate
by another EUR 200 million and keep our net
debt to adjusted EBITDA ratio at below 1.0
in normal market conditions. There is also
an increased focus on shareholder returns in
the second phase and, in 2022, Outokumpu
updated its dividend policy and launched its
first share buyback program ever.
The operating environment in 2022 was
exceptionally volatile. The war in Ukraine and
its consequences, such as the energy crisis in
Europe, overshadowed the year and created
challenges we overcame as a team. Despite
In 2022, Outokumpu classified the
divested Long Products businesses
as assets held for sale, reported as
discontinued operations. Therefore, all
figures and comments in this report
refer to continuing operations, unless
otherwise stated.
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Outokumpu Annual report 2022 Annual review
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Highlights 2022
Stainless steel deliveries
2,106,000
tonnes
(2,254,000 tonnes)
Adjusted
EBITDA, EUR
1,256
million
(EUR 980 million)
Net result
EUR
1,086
million
(EUR 526 million)
ROCE
22.6%
(17.6%)
Operating cash flow, EUR
incl. discontinued operations
778
million
(EUR 597 million)
the exceptional situation in the energy market,
Outokumpu was able to run its stainless
steel operations successfully throughout the
year, and both business areas Europe and
Americas delivered their best annual results
in history. Business area Europe’s adjusted
EBITDA increased to EUR 680 million (EUR 485
million), while deliveries declined compared
to the previous year. Business area Americas
delivered a record-level adjusted EBITDA of
EUR 384 million (EUR 297 million) with lower
deliveries. Business area Ferrochrome, however,
suffered from the exceptionally high electricity
prices, which resulted in an optimization of
ferrochrome production in the second half of
the year. Business area Ferrochrome’s adjusted
EBITDA amounted to EUR 220 million (EUR 246
million), showing strong profitability but nega-
tively affected by the high electricity prices.
In 2022, our sustainability leadership con-
tinued. Safety performance further improved
from last year’s level, and the share of recycled
content reached an all-time high of 94%. As a
result of our strong sustainability performance,
Outokumpu reduced its CO2 emissions
successfully in line with its SBTi emission
reduction target. Additionally, we launched a
new emission-minimized stainless steel product
called Circle Green, which is the first of its kind
in the industry.
After the balance sheet date in January 2023,
Outokumpu completed the divestment of
the majority of its Long Products business.
This represents a successful closing of the
turnaround program and allows Outokumpu to
focus on its core business of flat stainless steel
and ferrochrome.
Adjusted EBITDA, € million
1,500
1,200
900
600
300
0
2018*
2019*
2020*
2021
2022
* Including discontinued operations
Stainless steel deliveries, 1,000 tonnes
2,500
2,000
1,500
1,000
500
0
2018*
2019*
2020*
485
263
250
2021
980
2022
1256
2018*
2019*
2020*
2021
2022
24
* Including discontinued operations
Net debt, € million*
1,300
1,100
900
700
500
300
100
-10
2018*
2019*
2020*
2021
2022
1,000
tonnes
2,428
2,196
2,121
2,254
2,106
2018
2019
2020
2021
2022
* Including discontinued operations
* Including discontinued operations
119/220
Same as graph #2
€ million
1,241
1,155
1,028
408
-10
2018
2019
2020
2021
2022
29
44
Outokumpu Annual report 2022 Market development
According to CRU’s latest estimates (November
2022), global apparent consumption of stain-
less steel flat products increased marginally
by 0.4% in 2022 compared to 2021. In terms
of demand, while Europe experienced a very
strong first half in 2022, markets in Americas
and APAC showed very low growth rates after
a very positive 2021. Demand in EMEA and
Americas grew by 6.5% and 0.4%, respectively,
while the largest region, APAC, decreased by
0.8%. In Europe, the market cooled down in
the second half of 2022 as consumers felt the
pressure from high inflation and energy prices.
Results
€ million
Sales
Adjusted EBITDA
Adjustments
Loss on disposal of shares in
Group companies and businesses
Litigation provisions
Environmental provisions
Gain on disposal of property
EBITDA
EBIT
Net result
for the financial year
Earnings per share, €
Diluted earnings per share, €
2022
2021
9,494
7,243
1,256
980
–10
2
–
–
1,248
–
–15
–10
12
968
992
674
1,086
2.40
2.22
526
1.21
1.13
Adjusted EBITDA margin, %
Return on capital employed, rolling
12 months (ROCE), %1)
13.2
13.5
22.6
17.6
1) The balance sheet component is including
discontinued operations except for Sept 30 and
Dec 31, 2022, where only the equity component
of discontinued operations is included.
EBIT, € million, and return on capital
employed, %
1000
30.0
Net result, € million,
and earnings per share, €
1200
780
560
340
120
-100
23.0
16.0
9.0
2.0
1000
800
600
400
200
0
2018* 2019* 2020* 2021
2022
-5.0
-200
2018* 2019* 2020* 2021
2022
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
60
50
40
30
20
10
0
-10
In January–December 2022, Outokumpu’s
sales increased to EUR 9,494 million
(EUR 7,243 million) and adjusted EBITDA rose
to EUR 1,256 million (EUR 980 million). As a
result of strong profitability, ROCE improved to
22.6% (17.6%).
Total stainless steel deliveries declined by 7%
in January–December 2022 compared to the
previous year, while realized prices for stainless
steel were at a higher level in both regions,
Europe and Americas. Profitability in 2022 was
negatively impacted by significant cost inflation
in energy and various consumable prices.
Raw material-related inventory and metal
derivative losses, mainly due to negative
timing impacts amounted to EUR 131 million
in January–December 2022 compared to gains
of EUR 63 million in the previous year. Other
operations and intra-group items' adjusted
EBITDA amounted to EUR -28 million (EUR -48
million).
Equity-to-assets ratio and
debt-to-equity ratio, %*
Outokumpu's EBIT increased to EUR 992
million (EUR 674 million) and net result
to EUR 1,086 million (EUR 526 million) in
January–December 2022. Net result in 2022
was positively impacted by the recognition of
the deferred tax asset of EUR 297 million in
the fourth quarter. The final amount of the rec-
ognized deferred tax asset was EUR 56 million
lower than previously estimated and commu-
nicated on December 13, 2022. Valuation
was impacted by EUR/ USD foreign exchange
rate, and updated as part of the year-end tax
reporting process. It was also impacted by
changes in assumptions of ability to use state
tax loss carry-forward and refinement in the
blended tax rate used.
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Capital expenditure and depreciation,
€ million
250
200
150
100
50
0
2018
2019
2020
2021
2022
2018*
2019*
2020*
2021
2022
EBIT € million
Return on capital employed
Net result, € million
Earnings per share, €
Equity-to-asset ratio
Debt-to-equity ratio
Capital expenditure
Depreciation
Outokumpu has redefined its' capital employed and
ROCE definitions in 2022. Comparative information for
2021 has been restated accordingly.
* Including discontinued operations
* Including discontinued operations
* Including discontinued operations
* Including discontinued operations
Capital expenditure definition changed from accrual-based
to cash-based capital expenditure in 2020. Figures for
2019 and 2018 have been restated accordingly.
* Including discontinued operations
120/220
EBIT € million
Return on capital employed
2018*
2019*
2020*
2021
2022
280
33
-55
674
992
7.0
0.8
-1.4
17.6
22.6
Equity-to-asset
Debt-to-equity ratio
ratio
45.9
42.5
40.8
48.3
59.4
45.1
45.1
43.6
13.1
-0.3
2018
2019
2020
2021
2022
Net result, € million
Earnings per share, €
2018*
2019*
2020*
2021
2022
130
-75
-116
526
1086
0.32
-0.18
-0.28
1.21
2.40
31
30
32
Capital expenditure
Depreciation
2018*
2019*
2020*
2021
2022
218
193
180
171
158
204
230
243
249
245
33
Outokumpu Annual report 2022
Strategy execution
Outokumpu launched its three-phased strategy
in November 2020. The first phase, where the
aim was to de-risk the company by the end
of 2022, was completed six months ahead of
schedule. By the end of the first half of 2022,
both financial targets, net debt to adjusted
EBITDA ratio to below 3.0 and EBITDA run-rate
improvement of EUR 250 million were reached.
As a result, Outokumpu launched the second
phase of the strategy ahead of schedule, and it
will last until the end of 2025.
In the second phase, the aim is to strengthen
the core of Outokumpu. The company aims
to improve its EBITDA run-rate by another
EUR 200 million and keep the net debt to
adjusted EBITDA ratio at below 1.0 in normal
market conditions.
The second phase is focused on three key
priorities: sustainability, growth from productivity
and customer focused steering. Outokumpu will
remain capital disciplined also in the second
phase and keep its capital expenditure limited
to EUR 600 million for the next three years.
There is also an increased focus on share-
holder returns.
For the second phase, Outokumpu launched two
customer differentiated strategies for business
area Europe. The company aims to strengthen
cost leadership in high-volume stainless steel
products and global market leadership in
advanced products. In business area Americas,
the initial aim is to improve capacity by 80
kilotons with small investments as announced
in June, 2022. In business area Ferrochrome,
carbon neutrality is a strategic priority.
Outokumpu has a strong strategic initiative
pipeline of more than 1,000 projects with over
300 projects already in progress, following the
rigorous governance and ways of working in the
company's strategy execution.
During the second half, the first financial results
towards the EBITDA improvement target of
EUR 200 million were reached. Outokumpu
improved its EBITDA run-rate by EUR 28
million. Much of the impact in the second half
came through customer focused steering with
early improvements in the digital experiences
Outokumpu is offering to its customers. Yield
improvement projects were also very strong
early contributors and there has been early
successes in the Circle Green products, which
will be broadened with new grades. Outokumpu
has also strongly focused on energy efficiency
projects, which will have a positive impact on
the sustainability and financials.
The second half of 2022 has laid down a
solid foundation to ensure that the target of
strengthening the core will be achieved by the
end of 2025.
Financial position and cash flow,
incl. discontinued operations
€ million
Net debt
Non-current debt
Current debt
Cash and cash equivalents
Net debt
Net debt to adjusted EBITDA
Net cash generated from
operating activities
Capital expenditure,
continuing operations
Capital expenditure
Debt-to-equity ratio, %
Equity-to-assets ratio, %
2022
2021
492
141
644
–10
0.0
778
158
160
–0.3
59.2
597
112
300
408
0.4
597
171
175
13.1
48.3
Operating cash flow (incl. discontinued
operations) amounted to EUR 778 million
in 2022 (EUR 597 million). The annual net
working capital increase was EUR 587 million
as there was a negative impact coming from
all three items, inventories, accounts paya-
bles and accounts receivables (increase of
EUR 266 million).
Inventories amounted to EUR 1,783 million at
the end of December (December 31, 2021:
EUR 1,892 million). In 2022, the total inventory
decrease was EUR 109 million, of which
EUR 185 million relates to the reclassification
of the Long Products inventory asset held
for sale. Therefore, the inventories for the
continuing operations increased by EUR 76
million. During the year, inventories decreased
in volumes while higher metal prices offset
the impact. Capital expenditure amounted to
EUR 158 million in 2022 (EUR 171 million).
Net debt (incl. discontinued operations) turned
negative during the fourth quarter of 2022 and
stood at EUR -10 million at the end of the year
(December 31, 2021: EUR 408 million). The
impact of the EUR 100 million share buyback
program, which was announced in the fourth
quarter is included in the net debt figure.
In addition to EUR 42 million cash impact,
Outokumpu recognized in unrestricted equity
for EUR 100 million and financial liability for
EUR 58 million. Gearing (incl. discontinued
operations) declined to -0.3% (December 31,
2021: 13.1%).
Net financial expenses decreased to EUR 71
million in 2022 (EUR 79 million) and interest
expenses to EUR 44 million (EUR 64 million).
Cash and cash equivalents (incl. discontinued
operations) increased in 2022, and amounted
to EUR 644 million on December 31, 2022
(December 31, 2021: EUR 300 million). Overall
liquidity reserves also increased during the year
and amounted to EUR 1.4 billion at year-end
(December 31, 2021: EUR 0.9 billion). Cash
equivalents include deposits held at call with
financial institution and other short-term, highly
liquid investments with original maturities of
three months or less that are readily convertible
to cash with subject to an insignificant risk of
changes in value.
At the end of 2022, Outokumpu had a total
of EUR 800 million of outstanding committed
credit facilities, which were fully unutilized.
Outokumpu repaid during the year all out-
standing issued commercial papers (December
31, 2021: EUR 58 million).
Outokumpu continued to divest its non-core
assets in 2022. On June 1, Outokumpu divested
its plate services in Castelleone, Italy. On
October 3, the company announced that it has
completed the divestment of its Aalten service
center to Roba Holding. On November 24,
Outokumpu completed the divestment of its
Fortinox subsidiary in Argentina to Mirgor.
Business areas
Outokumpu has three business areas, which
are also Group’s operating segments. The
divested Long Products businesses were
classified as assets held for sale and reported
as discontinued operations at the end of 2022.
More information about the business areas
can be found in note 2.1 in the consolidated
financial statements.
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121/220
Outokumpu Annual report 2022 Europe
Stainless steel
deliveries
Sales
Adjusted EBITDA
1,000 tonnes
€ million
€ million
€ million
Adjustments to
EBITDA
€ million
EBITDA
Operating capital1) € million
Return on
operating capital
%
2022
2021
1,423
6,266
680
–
680
1,864
1,535
4,600
485
12
498
1,721
28.9
20.4
Americas
Stainless steel
deliveries
Sales
Adjusted EBITDA
1,000 tonnes
€ million
€ million
€ million
Adjustments to
EBITDA
€ million
EBITDA
Operating capital1) € million
Return on
operating capital
%
2022
2021
654
2,695
384
742
1,947
297
2
387
990
–15
283
880
32.4
27.2
1) Outokumpu has redefined its operating capital
definition in 2022. Comparative information has
been restated accordingly.
1) Outokumpu has redefined its operating capital
definition in 2022. Comparative information has
been restated accordingly.
In 2022, business area Europe’s sales
increased to EUR 6,266 million (EUR 4,600
million) and adjusted EBITDA to EUR 680
million (EUR 485 million).
In 2022, business area Americas’ sales
increased to EUR 2,695 million (EUR 1,947
million) and adjusted EBITDA to EUR 384
million (EUR 297 million).
Stainless steel deliveries decreased by 12%
compared to the previous year but realized
prices for stainless steel were at a higher level.
Variable costs increased significantly in 2022
due to higher energy and consumable prices,
especially in packaging materials, refractories,
and electrodes, as well as higher freight rates.
Fixed costs also increased due to higher
maintenance and personnel costs, and strategy
phase 2 projects. In 2022, raw material-related
inventory and metal derivative losses amounted
to EUR 36 million (gains of EUR 55 million
in 2021).
Stainless steel deliveries decreased by 7% com-
pared to the previous year, but higher realized
prices for stainless steel and improved product
mix supported profitability. Variable costs
increased significantly due to high inflation in
electricity, gas and other consumable prices
and freight rates. In 2022, raw material-related
inventory and metal derivative losses amounted
to EUR 135 million (gains of EUR 8 million
in 2021).
Business area Europe’s return on operating
capital amounted to 28.9% at the end of 2022
(20.4%).
In 2022, apparent consumption in EMEA
increased by 6.5% compared to 2021 (Source:
CRU, November 2022). EU cold-rolled imports
from the third countries increased to a level
of 35% from the previous year's level of 26%
(Source: EUROFER, January 2023). Also,
distributor inventories in 2022 were higher than
in 2021.
Business area Americas’ return on operating
capital rose to 32.4% at the end of 2022
(27.2%).
Sales by business area,
9,494 € million
In 2022, the apparent consumption increased
by 4% compared to 2021. The share of cold-
rolled imports into the US increased to 26%
compared to 19% in the previous year. (Source:
American Iron and Steel Institute, AISI). Also,
distributor inventories were significantly higher
in 2022 than in 2021.
Ferrochrome
1,000 tonnes
FeCr production
€ million
Sales
€ million
Adjusted EBITDA
EBITDA
€ million
Operating capital1) € million
Return on
operating capital
%
2022
2021
430
633
220
220
867
515
604
246
246
823
20.7
24.8
1) Outokumpu has redefined its operating capital
definition in 2022. Comparative information has
been restated accordingly.
In 2022, business area Ferrochrome’s sales
increased to EUR 633 million (EUR 604
million), while adjusted EBITDA decreased to
EUR 220 million (EUR 246 million).
Ferrochrome production was 17% lower
compared to the previous year due to a
furnace shutdown and the optimization of the
ferrochrome production in the second half of
the year because of the exceptionally high
electricity prices. Profitability was however
supported by higher ferrochrome sales price
and weaker EUR/USD foreign exchange rate.
Variable costs increased significantly in 2022,
mainly due to higher reductant and electricity
prices, and costs related to mine and freight.
Fixed costs increased also as a result of
higher maintenance.
Europe 66%
Americas 28%
Ferrochrome 2%
Other operations 4%
Legend
Value in %
Europe
Americas
Capital expenditure by business area,
158 € million
Ferrochrome
66%
28%
2%
Other operations
4%
Europe 22%
Americas 16%
Ferrochrome 54%
Other operations 8%
Value in %
Legend
Europe
Americas
Ferrochrome
Other operations
22%
16%
54%
8%
34
35
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Outokumpu Annual report 2022
Business area Ferrochrome’s return on
operating capital amounted 20.7% at the end
of 2022 (24.8%).
Discontinued operations: divestment of
majority of the Long Products business
On July 12, 2022, Outokumpu announced
that it had signed an agreement to divest
the majority of its Long Products business
operations to Marcegaglia Steel Group, a
leading industrial group worldwide in the
steel processing sector. Outokumpu focuses
on its core business of flat stainless steel
and ferrochrome.
The prerequisites for the completion of the
transaction were, among other things, the nec-
essary approvals by the competition authorities,
and Outokumpu announced these approvals on
December 14, 2022.
After the balance sheet date on January 3,
2023, Outokumpu announced that it has
completed the divestment. The transaction was
carried out as a share sale and, as a result of
the transaction, melting, rod, and bar opera-
tions in Sheffield, the UK, bar operations in
Richburg, the US, and wire rod mill in Fagersta,
Sweden were sold to Marcegaglia. The trans-
action excluded Outokumpu Long Products AB
units in Degerfors and Storfors, Sweden, and
different options regarding the future of the
units will be evaluated.
The total consideration for the transaction on a
debt and cash free basis was EUR 228 million,
strengthening Outokumpu’s financial position.
Provisional cash proceeds for equity and net
debt item are EUR 224 million, with EUR 5
million paid into an escrow account. Transac-
tion costs are estimated to be approximately
EUR 8 million.
The estimated proceeds, net of cash disposed,
is around EUR 100 million in the first quarter of
2023. The consideration is subject to closing
accounts that are finalized during the first half
of 2023 and release of the escrow account.
Outokumpu recognized in the net result from
the discontinued operations an impairment loss
of EUR 33 million. The accumulated translation
differences, currently estimated at EUR 8
million, will be reclassified into net result from
the discontinued operations at the time of the
disposal.
Starting from the interim report January–Sep-
tember 2022, Outokumpu has classified its
Long Products businesses to be divested
as assets held for sale and reported the
businesses as discontinued operations. The
divestment was completed only after the
balance sheet date.
As in the interim report January–September
2022 the result from the discontinued
operations is reported separately from income
and expenses from continuing operations in
the consolidated income statement and prior
periods have been restated accordingly. The
statement of financial position has not been
restated for prior periods. Assets and liabilities
related to the discontinued operations are
presented as separate line items on the
balance sheet. The statement of cash flows
consists of total group figures, also including
the discontinued operations.
In 2022, sales of the divested Long Products
units (discontinued operations) was EUR 794
million (EUR 466 million) and EBITDA EUR 127
million (EUR 40 million). EBITDA includes
transaction costs related to the divestment of
EUR 4 million.
War in Ukraine
Outokumpu strongly condemns the continued
military aggression by Russia against Ukraine.
The company has undertaken actions
throughout the year to sever connections with
a country that does not honor international
laws or human rights, while taking into account
the contractual situations. Outokumpu has
no employees, production, or service centers
in Russia.
Outokumpu's most important raw material
is recycled steel, and the company stopped
sourcing it from Russia immediately in the first
quarter of 2022. Prompt decisions and robust
actions were taken to stop sales and deliveries
to Russia. The company also took decisive
measures to replace other raw materials of
Russian origin. At the end of 2022, Outokumpu
had replaced Russian origin nickel suppliers
and as of the beginning of 2023, the company
does not buy any nickel of Russian origin for
its operations.
The prolonged war in Ukraine has had far-
reaching consequences for Outokumpu through
the adverse development of the geopolitical
tension and global economy. In particular, the
impacts of the energy crisis in Europe resulting
from the war became severe for Outokumpu
during the second half of 2022. The company
has taken various measures to mitigate
the negative impacts on its business and
operations and to prevent energy costs from
rising. Despite the challenging energy situation,
Outokumpu ran its stainless steel operations
successfully throughout 2022.
Outokumpu has been optimizing its ferrochrome
production since August as a response to the
significantly increased electricity prices. For
the same reason, the company also decided
in October to delay the restart of one of its
ferrochrome furnaces after a planned mainte-
nance break. The furnace will be restarted on
February 15, 2023.
For the Tornio site in Finland, Outokumpu took
further measures in the third quarter to secure
its energy availability to mitigate the negative
impacts of the potential disruption in the gas
and energy market. The company purchased
and stored propane gas in Tornio in preparation
for winter 2023. During the fourth quarter,
Outokumpu finalized most of its capabilities
in order to switch between the energy gases if
needed.
During the continued energy crisis in Europe,
Outokumpu launched an ambitious energy
efficiency improvement program in the fourth
quarter. The company aims to improve its
energy efficiency by 8% by the end of 2024
across the group.
Outokumpu continues to follow the global
energy and gas market closely as well as sanc-
tions and counter measures between Russia
and the EU, the UK and the US. Outokumpu
acquires energy gases from the European
market, for which Russia is one of the indirect
suppliers. Also, indirect supply from Russia
exists for a very limited amount of raw material
and the company is demanding its suppliers to
commit to finding alternative sources globally.
Outokumpu monitors closely the prolonged
situation concerning the war along with geopo-
litical and global economic development. The
established global core team that represents
the main business support functions is steering
and facilitating the co-operation between func-
tions to ensure effective implementation of risk
mitigation actions. As part of the overall risk
mitigation process, Outokumpu has continued
to further strengthen its cyber security.
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Outokumpu Annual report 2022
Outokumpu is committed to complying with
all applicable laws and regulations, including
applicable sanctions regulations. Due to the
Russian invasion of Ukraine, Outokumpu has
continued its actions regarding sanctions
compliance, including the conduct of enhanced
third-party screenings, as a matter of priority.
This ensures that all applicable economic
and individual sanctions related to Russia are
followed and complied with.
Non-financial development
at Outokumpu
The information in this section fulfills the
requirements in the EU Directive and the
Finnish Accounting Act's Chapter 3a on state-
ment of non-financial information. Outokumpu
is also reporting according to the EU taxonomy
framework and with regards to the Task Force
on Climate-related Financial Disclosures
(TCFD) disclosure recommendations. The
taxonomy reporting is based on the delegated
act specifying the technical screening criteria
under which certain economic activities qualify
as contributing substantially to climate change
mitigation and climate change adaptation.
Outokumpu is a leading global producer of
stainless steel, with world-class production
assets in its key markets in Europe and in the
Americas, and has a global sales and service
network close to its international customers.
Stainless steel is a significant contributor to
building a sustainable world. Stainless steel is
used in building and construction, infrastruc-
ture, appliances, transportation, and heavy
industries. It is a strong, corrosion-resistant,
hygienic, and aesthetic material with a high
strength-to-weight ratio and no need for main-
tenance. At the end of its lifecycle, stainless
steel is fully and endlessly recyclable, making
it a key contributor to the circular economy.
Outokumpu’s organization and businesses
are presented in the company’s annual report
and in notes 2.1 and 6.5 of the consolidated
financial statements.
Climate change is one of the three megatrends
driving Outokumpu’s business, together with
economic and population growth and urban-
ization. The properties and the low carbon
profile of Outokumpu’s stainless steel can help
customers to reduce their carbon footprint. The
market for solutions enabling the transition into
a low-carbon society will increase on the way
to 2°C or 1.5°C scenarios for 2050 and give
preference to low carbon profile companies
such as Outokumpu.
In June 2022, Outokumpu launched a new
emission-minimized product line, Circle Green,
which is the first of its kind. It has the smallest
emission intensity in the world, up to 92% lower
carbon footprint than the global average and
64% lower than Outokumpu’s average. The
exceptionally significant emission reduction
was achieved with improvements throughout
the whole stainless steel production chain. The
first batch was produced in Tornio, Finland,
and was delivered to one of our strategic
customers, Fiskars Group, to use for cookware.
Outokumpu acknowledges the recommenda-
tions from the Task Force on Climate-related
Financial Disclosures (TCFD) and the underlying
framework and acknowledges that there are
financial impacts in a 2°C or lower transition
scenario. Outokumpu has performed a stated
policy scenario and sustainable development
scenario analysis in line with the International
Energy Agency Iron and Steel Technology
Roadmap (2020). The financial impact of the
physical and transition risks of climate change
are assessed and included in the general risk
assessment and management of the company.
Outokumpu’s business is based on a circular
economy. Over 90% of the raw material used
in Outokumpu’s stainless steel production is
recycled. By converting scrap and metal waste
into new products the company also protects
virgin resources. Throughout the process,
Outokumpu aims to minimize the environmental
impact of its production.
Outokumpu has an integrated production
process. This includes the company’s own
chrome mine in Kemi, Finland for one of the
main raw materials in stainless steel produc-
tion, ferrochrome operations, melting, hot
rolling and cold rolling, as well as finishing and
service centers.
Outokumpu’s production sites are mainly
located in relatively small cities or towns.
This means that Outokumpu is a significant
contributor to the economies of small local
communities, and often one of the very few
large private-sector employers in the area.
Sustainability strategy
Outokumpu’s vision is to be the customer’s first
choice in sustainable stainless steel. Sus-
tainability at Outokumpu is founded on good
governance and on three pillars: environmental,
economic, and social, which all need to be in
balance. Outokumpu’s sustainability strategy
was updated in May 2021 to further strengthen
Outokumpu’s position as the industry leader in
sustainability.
As part of its ambitious sustainability strategy,
Outokumpu increased its greenhouse gas
emission reduction target to the Science-Based
Target initiative’s (SBTi) 1.5 °C climate
ambition. Outokumpu’s approved short-term
Science Based Target on the way to the 1.5°C
target in 2050 is to reduce scope 1, 2 and 3
greenhouse gas emissions by 42% per tonne
stainless steel by 2030 from a 2016 base
year. This translates into a 30% CO2 emission
reduction compared to the 2020 level.
Outokumpu regularly conducts materiality
analyses to map stakeholders’ expectations
and to assess business impact of the Group
on sustainability. The materiality analysis
is updated every three years and the latest
update was done in 2021. According to the
analysis, Outokumpu’s focus areas for accel-
eration are emission and footprint reduction,
circular economy and waste management,
sustainable supply chain management and
innovative technologies.
The company is a signatory of the United
Nations Global Compact. Outokumpu is
committed to the UN's Sustainable Develop-
ment Goals, with a focus on the following six
objectives: affordable and clean energy, decent
work and economic growth, industry, innovation
and infrastructure, responsible consumption
and production, climate action and partner-
ships for goals.
In the last quarter of the year 2022, a decision
was taken by the EU on the continuation of
the Emission Trading System (ETS) and an
establishing of the Carbon Border Adjustment
Mechanism (CBAM) with the renewal. Free
emission allowances will be phased out during
2026–2034 while the CBAM is phased in. The
decision was taken to include also the main
precursor materials carbon footprint within the
scope of the CBAM, limited to ferromanganese,
ferrochrome, and ferronickel.
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Outokumpu Annual report 2022 During 2022, Outokumpu started the certifica-
tion process for the ResponsibleSteel standard
for its operating sites in business area Europe.
ResponsibleSteel is a standard developed to
recognize steel sites that are being operated
in a responsible manner with the focus on
the most material ESG issues identified and
agreed upon by ResponsibleSteel members
and stakeholders.
Policies and principles of
sustainability management
Outokumpu’s Board of Directors approves
Outokumpu’s sustainability strategy and
targets. On the Group level, sustainability is
managed by the Group sustainability team
headed by the Vice President – Sustainability,
who reports to the Chief Technology Officer,
responsible for the Group sustainability. The
Outokumpu Leadership Team regularly follows
the progress of Outokumpu’s sustainability
agenda. Business areas and functions are
responsible for ensuring that operations within
their own organizations and business lines are
conducted in a responsible manner and that
monitoring, data collection and reporting are
duly carried out. All Outokumpu operating sites
are certified according to quality ISO 9001 and
environment ISO 14001 management systems.
The functioning of the systems is monitored by
both internal and external audits.
Outokumpu’s external ESG Advisory Council
supports Outokumpu in continuous improve-
ment in sustainability. The council consists of
four external advisors. Its role is to challenge
and comment Outokumpu’s ESG strategy,
roadmap development and actions as well as
facilitate dialogue and the exchange of views
between Outokumpu and its stakeholders. More
information about the council can be found on
Outokumpu’s website.
Outokumpu has in place also an internal and
cross-functional ESG core team which drives,
develops and supports the implementation of
the company’s sustainability strategy by giving
executive proposals and drafts for decisions
to Outokumpu’s management, who will then
implement the necessary actions. The team
includes members from Group sustainability,
procurement, communications, compliance, HR
and safety functions.
The most important policies guiding
Outokumpu’s sustainability management are
the Group’s Code of Conduct and the Corporate
Responsibility Policy. Outokumpu’s Code of
Conduct defines common ways of working in
the Group and sets principles for conducting
business in a legal, compliant, and ethical
manner, including zero tolerance for corrupt
practices, and requiring compliance with
applicable laws and regulations, including com-
petition laws and trade sanctions regulations.
The Corporate Responsibility Policy describes
the main principles and rules followed by
Outokumpu in relation to the sustainable
development of the economic, environmental,
and social aspects. Outokumpu also has an
Anti-Corruption Instruction providing detailed
guidance on responsible business practices.
In 2022, Outokumpu published a new Supplier
Code of Conduct which outlines its expecta-
tions for suppliers. Complying with the Supplier
Code of Conduct is considered a minimum
requirement for business engagement with
any of Outokumpu’s business units. During
the year, Outokumpu also published a Human
Rights Policy.
Outokumpu has strict guidelines for safety
through the Outokumpu Safety Principles and
Health and Safety Standards. Additionally,
Outokumpu has ten Cardinal Safety Rules
that are a part of the company’s operating
principles.
Corporate statements, policies and instructions
are the basis of the Outokumpu operating
model in governance, risk, and compliance.
Policies and instructions are implemented
through internal communication, mandatory
training and internal control mechanisms.
Outokumpu currently has five key corporate
policies, which everyone working for Outokumpu
needs to know well:
• Code of Conduct
• Cardinal Safety Rules
• Approval Policy
• Competition Law Compliance Policy
• Acceptable Use of IT Policy
The internal audit function, flanked by external
audits consistently monitors and tests adher-
ence to corporate guidance and standards,
while the sustainability organization follows-up
on environmental performance and legality
on a monthly basis. Regular internal environ-
mental audits by the Group’s environmental
team are performed based on an internal
risk assessment.
Outokumpu applies a risk-based approach in
its supplier management. Risks are assessed
in different stages of the relationship with the
supplier, first during the onboarding of a new
supplier, but also later during the relationship
with the supplier.
Outokumpu monitors its suppliers through
self-assessment, screenings and audits. Most
suppliers also go through a monthly compliance
screening for sanctions. The self-assessments
and audits are based on Outokumpu’s Supplier
Requirements and focused on evaluating the
suppliers’ social and environmental responsi-
bility and quality management. In raw material
procurement, a supplier’s sustainability
performance is assessed by sustainability
platform EcoVadis.
Outokumpu complies with international,
national, and local laws and regulations, and
honors and is committed to international
agreements concerning human and labor rights,
such as International Bill of Human Rights, and
condemns the use of forced and child labor.
Since 2021, Outokumpu has implemented the
UN Guiding Principles on Business and Human
Rights.
All Outokumpu employees are free to join trade
unions according to local rules and regulations.
There is zero tolerance of any form of discrim-
ination, whether it is based on ethnic origin,
nationality, religion, political views, gender,
sexual orientation, age or any other factor.
Outokumpu expects its suppliers and con-
tractors to comply with applicable laws and
regulations as well as Outokumpu’s Supplier
Code of Conduct and to meet the company’s
Supplier Code of Conduct and Requirements.
Outokumpu also aims to ensure that modern
slavery or human trafficking plays no part in its
supply chain or in any part of the business.
Outokumpu’s Supplier Code of Conduct sets
the minimum level for suppliers regarding
sustainability and ethical standards, safety,
environmental considerations, quality manage-
ment and other criteria.
More information about Outokumpu’s sustain-
ability related risks can be found in the Annual
review of this Annual report.
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Outokumpu Annual report 2022 Sustainability targets
The Group’s main sustainability targets are:
steel sectoral decarbonization approach
is available.
Environmental
Environmental performance
• Reducing scope 1, 2 and 3 greenhouse gas
emissions 42% per tonne of stainless steel
by 2030 on 2016 base year. (The target
setting includes biogenic emissions and
removals from bioenergy feedstock.)
• Increasing recycled material content to
92.5% by 2023 (all metallic input from waste
streams, such as scrap, scales or metals
from slag and dust treatment per tonne
stainless steel).
• Improving energy efficiency by 8% by the end
of 2024 compared to January–September
2022 level.
• Reducing the landfilled production waste
other than slag by 0.5% each year by 2023.
Social
• Achieving a total recordable injury frequency
rate of <2.0 per million working hours by
2022. Outokumpu’s long-term target is to
achieve zero-level in injuries.
• Achieving high employee engagement index
rate in the organizational pulse surveys.
• Increasing the share of diverse leaders in
all international leadership teams to 30%
by 2025.
Governance
• All employees trained on Outokumpu’s Code
of Conduct.
The main environmental impacts from stainless
steel production are the use of virgin materials,
direct and indirect CO2 emission, energy, dust
emissions into the air, waste created in the
production process and water discharges from
production plants.
Outokumpu uses efficient dust-filtering systems
that remove 99% of particles, and water is
reused in production as much as possible
and treated at production sites. In addition
to material efficiency through using as much
recycled material as possible, Outokumpu aims
to reduce landfill waste and reuses waste from
its production processes in its own production.
Outokumpu also aims to increase the use of
its by-product slag from its production outside
the company for example in road construction,
concrete production, and water treatment.
In 2022, the use rate of slag (the share of all
slag compared to the used and landfilled slag)
was 86.5% (78.1%). In addition to production
waste, tailing sand from mining is the most sig-
nificant waste item to be deposited in the mine
site. Landfilled waste intensity decreased in
2022. As stainless steel production decreased
from the previous year’s level, less waste was
generated and deposited as compared to the
previous year.
The energy efficiency calculated as a sum of
different process steps decreased by 2.8%
compared to the previous year.
In 2022, CO2 intensity reduced by approxi-
mately 18% from the baseline of 2016 and
reached 44% of the targeted reduction by the
end of 2023.
All Outokumpu sites have environmental
permits that set the basic framework for oper-
ations. In 2022, air emissions and effluents
remained within the permitted limits, and the
seven minor permit breaches in operations that
occurred were temporary, identified, and had
no or only minimal impact on the environment.
There were no significant environmental
incidents during 2022.
Outokumpu’s operations under the EU Emis-
sions Trading Scheme (ETS) will continue to
receive free emissions allocations according
to efficiency-based benchmarks and historical
activity for the next five years. In 2022, the ETS
free emission allowances of Outokumpu were
below emissions within the ETS system, 0.9
million tonnes (1.0 million tonnes in 2021).
Outokumpu is not a party to any significant
legal or administrative proceedings concerning
environmental issues, nor is it aware of any
realized environmental risks that could have a
material adverse effect on its financial position.
Social performance
Outokumpu’s main indicator for safety perfor-
mance is the total recordable injury frequency
rate (TRIFR), which includes fatalities, lost-time
injuries, restricted work injuries, and medically
treated injuries per million working hours. The
Group’s TRIFR improved from the previous year
and was 1.8, against the target level of <2.0
(2.1).
Outokumpu’s personnel on full-time equivalent
basis decreased by 82 during the year and
totalled 8,357 at the end of December 2022
(8,439). Total wages and salaries amounted
to EUR 544 million in 2022 (EUR 499 million).
Indirect employee benefit expenses totalled
EUR 178 million in 2022 (EUR 163 million).
In 2022, Outokumpu continued to accelerate
the development of the supply chain sustain-
ability management. In raw material procure-
ment, a social audit approach was developed.
The onboarding process for raw material sup-
pliers was reviewed and has stronger focus on
sustainability and related risks. During the year,
Outokumpu placed particular focus on supply
chain transparency beyond direct suppliers and
started to document supply chains in a supplier
relationship management tool.
Outokumpu’s long-term target is to achieve
carbon neutrality by 2050 in scope 1
(direct) and 2 (indirect) emissions. Currently,
Outokumpu is the only stainless steel producer
with an approved short-term Science Based
Target towards the 1.5°C scenario following the
general rules of the initiative until the stainless
The level of material recycling (all metallic input
from waste streams, such as scrap, scales or
metals from slag and dust treatment per tonne
stainless steel) was at a record high level at
93.9% (89.6%). The recycled steel content of
our stainless steel, defined according to ISO
14021, was 89.8% in 2022.
Environmental indicators
Scope 1, 2 and 3 (direct and indirect) CO2 emission intensity,
tonnes per tonne of stainless steel
Energy intensity, GJ per tonne stainless steel
Use rate of slag, including slag from ferrochrome production, %
Total landfill waste intensity, tonnes per tonne stainless steel
Recycled material content, %
2022
2021
1.70
10.5
86.5
0.530
93.9
1.76
10.2
78.1
0.561
89.6
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Outokumpu Annual report 2022 sanctions regulations are complied with. In
addition to the sanctions compliance, efforts
were continued in other key E&C areas in
2022, such as in competition law compliance,
anti-corruption and data protection areas.
Key social indicators
2022
2021
83
17
83
17
62
38
84
16
84
16
50
50
Diversity
Employees
male, %
female, %
Managers
male, %
female, %
Board of Directors
male, %
female, %
Safety
Total recordable injury
frequency rate, per million
working hours
EU taxonomy reporting
Companies required to report non-financial
information need to disclose the taxonomy eli-
gibility and for the first time also the alignment
of their economic activities for the year 2022.
EU taxonomy is a classification system for
categorization of sustainable business activities
that could substantially contribute to the EU’s
environmental goals.
Non-financial companies are required to
disclose the share of their sales, and both the
capital and restricted operational expenditure
associated with environmentally sustainable
economic activities as defined in the EU
Taxonomy Regulation (2020/852). Eligible
activities are those that are in scope of the
regulation while an aligned activity is defined
as an eligible economic activity that is making
a substantial contribution to at least one of the
climate and environmental objectives, while
also doing no significant harm to the remaining
objectives and meeting minimum standards on
human rights and labor standards.
Outokumpu representatives from finance,
sustainability and business functions investi-
gated the activities in relation to EU taxonomy,
resulting in the identification of aligned, eligible
and non-eligible activities. The key performance
indicators were calculated by using the
consolidated financial information and further
accounting policies are disclosed after the key
performance indicator table below. Full tables
are available at the end of the Review by the
Board of Directors.
Taxonomy key performance indicators
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1.8
2.1
2022
Sales
Capital expenditure
Restricted operating
expenditure
9,494
153
736
Total
€
million
Eligible
and
aligned %
Non-eligible
and non-
aligned %
91
42
82
85
37
82
9
58
18
15
63
18
2021
Sales
Capital expenditure
Restricted operating
expenditure
7,243
151
615
The preparation of the key performance
indicators requires management to make
judgements, estimates and assumptions on
eligible and aligned economic activities, capital
expenditure allocated to those activities and
related restricted operating expenditure.
Taxonomy sales is presented in accordance
with IFRS, in line with the sales in the Group’s
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externally operated communication channel to
report misconduct confidentially and anony-
mously, if allowed by laws and regulations. The
SpeakUp channel is available as a communica-
tion channel in Outokumpu’s reporting process
if other reporting channels do not feel suitable.
In 2022, 45 reports of potential misconduct
were recorded through the various reporting
channels. These incidents have been assessed
and, if needed, further investigated. Conse-
quently, proper corrective and preventative
measures have been or will be taken.
The implementation of Outokumpu’s group-
wide ethics and compliance (E&C) program
continued efficiently in close co-operation
with business areas, group functions and E&C
governance bodies during 2022. As part of
these activities, the global E&C team started
a visibility tour through site visits and various
online trainings to share insight on topical
E&C matters as well as to increase knowledge
of and discuss about various ethics and
compliance matters, including SpeakUp topics.
In addition to the E&C visibility tour, close
co-operation continued with the E&C govern-
ance bodies.
Outokumpu is committed to complying with
all applicable laws and regulations, including
applicable sanctions regulations. Within the
area of trade compliance, Outokumpu has a
Know Your Business Partner process in place
which describes the risk-based principles and
rules related to establishing and monitoring
relationships with business partners. Sanctions
monitoring is also a part of this process. Due
to the Russian invasion of Ukraine, Outokumpu
strengthened its actions within sanctions
compliance during 2022 and, for instance,
conducted enhanced third-party screenings as
a matter of priority to ensure that all applicable
In the beginning of 2022, Outokumpu initiated
a human rights impact assessment concerning
the supply chain in Guatemala. The purpose of
the assessment was to investigate, identify and
assess the human rights impacts of a supplier’s
operations in Guatemala, focusing on indige-
nous rights-holders. As part of the assessment,
a field visit was completed in the beginning of
March, during which both internal as well as
external stakeholders were involved. Based
on the findings, purchasing from the supplier
was suspended.
As part of its sustainability strategy, Outokumpu
is also focusing on strengthening diversity,
equity and inclusion within the company.
During 2022, a company-wide inclusion survey
was conducted and roadmap and targets for
strengthening diversity, equity and inclusion by
2025 were defined.
Outokumpu encourages all its employees to
raise their concerns. All available reporting
channels are detailed in the Code of Conduct,
including the SpeakUp channel which is an
Personnel on December 31
12,000
10,000
8,000
6,000
4,000
2,000
0
2018*
2019*
2020*
2021
2022
Personnel reported as full time equivalent number.
* Including discontinued operations
* Including discontinued operations
net result
€ million
10,118
10,078
9,602
8,439
8,357
2018*
2019*
2020*
2021
2022
37
Outokumpu Annual report 2022
consolidated financial statements. The
manufacturing of iron and steel is listed as an
eligible economic activity.
The company reports its taxonomy eligibility
and alignment only for the continuing oper-
ations. Additional change compared to last
year’s taxonomy reporting is that all sales from
service centers are excluded from eligibility.
The impact of this change is however insignif-
icant as the Group internal sales from mills
to service centers are still eligible. Since the
service centers are excluded from eligibility,
also restricted operating expenditure and
capital expenditure associated with service
centers has been excluded from eligibility. In
2022, as well as in the previous year, the main
items of sales that are considered non-eligible
include sales of ferrochrome, raw materials,
other services, and energy. Only eligible
activities have been assessed for alignment.
Figures for the previous year 2021 have been
restated to reflect these changes and pre-
sented accordingly.
All steelmaking sites have been assessed and
they fulfill the technical screening criteria for
substantial contribution to climate change
mitigation, which requires that the steel scrap
input relative to product output is not lower
than 70% in the production of high alloy steel.
An assessment was carried out to ensure if the
activities also fulfil the criteria set to determine
that they do no significant harm (DNSH) to the
remaining objectives
• Criteria for DNSH to climate change adapta-
tion: physical risks material to our production
units have been screened and assessed
and are part of the company´s overall risk
management strategy.
• Criteria for DNSH sustainable use and
protection of water and marine resources
and criteria for DNSH to protection and
restoration of biodiversity and ecosystems:
Assessment, permits and plans are in place
for all production sites and all sites meet
current legislation.
• Criteria for DNSH to pollution prevention and
control: Outokumpu’s production sites do
not use any prohibited substances. In a few
activities where substances of concern are
being used, we have either considered them
essential since the use is defined as best
available technology in the Bref documents
or non-material as the activity is insignificant
compared to total eligible sale.
Outokumpu's human rights due diligence
process has been reviewed and is considered
adequate with regards to EU taxonomy
minimum safeguards on human rights and labor
standards.
Taxonomy capital expenditure is presented
and measured as cash-based, in line with the
capital expenditure presented in the Group’s
financial statements. Taxonomy capital expend-
iture consists of purchases of property, plant
and equipment and intangible assets, other
than emission allowances. Leases and equity
investments at fair value through other compre-
hensive income have been excluded from the
amount. Capital expenditure associated with
taxonomy-eligible economic activities has been
considered eligible while capital expenditure
related to business area Ferrochrome, service
centers and directly to corporate functions have
been considered non-eligible.
As all steelmaking activities were considered
aligned, also related capital expenditure was
considered aligned since it is necessary to
uphold the substantial contribution of the
activities. Currently, plans to expand taxono-
my-aligned economic activities, plans to allow
the activities to become taxonomy-aligned,
or individual measures enabling the target
activities to become low-carbon have not been
separately taken into consideration.
Taxonomy restricted operating expenditure
consists of expenses related directly to
maintenance and servicing of assets as well
as research and development expenses. Of the
total taxonomy restricted operating expendi-
ture, the portion supporting taxonomy-eligible
economic activities has been considered
eligible. Expenses related to business area
Ferrochrome, service centers and corporate
functions have been considered non-eligible.
Research and development expenses have
been included in full and considered eligible
except for the part related to manufacturing of
ferrochrome, service centers and corporate.
Only one taxonomy-eligible economic activity
has been identified as relevant and taken
into account in the calculations, together
with one environmental objective. This elim-
inates the risk of double counting related to
different activities and objectives. There are
still considerable uncertainties regarding the
requirements and guidelines provided by the
EU, and Outokumpu continues to develop its
calculations and definitions as new information
becomes available. Outokumpu's taxonomy
disclosure has been part of the limited
assurance by an independent practitioner.
Research and development
Our research and development (R&D) function
provides leading technical expertise for
Outokumpu’s customers and stakeholders
inside Outokumpu. In our R&D, we are creating
a culture of innovation and development
to enable Outokumpu to be the leader of
sustainable stainless steel. We are supporting
our customers in their various and demanding
needs via webinars and direct contacts. We are
offering key insights and first-hand experience
of fabrication, like forming and welding of our
high alloyed grades. As experts, we are helping
our customers to select the right material,
tackling the challenge of corrosion in various
environments. Outokumpu has three R&D
centers, located in Avesta, Sweden, in Krefeld,
Germany and in Tornio, Finland.
In 2022, the first phase of our R&D strategy
was finalized, and the focus was on two must
win battles: sustainable production process
technologies and future products and customer
applications. In 2022, Outokumpu’s total R&D
expenditure amounted to EUR 15 million,
0.16% of net sales (2021: EUR 14 million and
0.19%).
Our actions within sustainable production
process technologies include Outokumpu’s
plans to invest in a biocoke and biomethane
plant in Tornio, Finland. Additionally, we have
developed a roadmap related to alternative
heating technologies to reduce our CO2
emissions in line with our strategy. Another
focus area has been the development of future
technologies. One example is the production
of ferrochrome without the need for carbon,
where several new technologies are tested in
laboratory scale.
In future products and customer applications,
two of our new stainless steel grades reached
the development phase. Also, a new stainless
steel grade with outstanding combination of
corrosion and wear resistance was introduced
for the knife industry.
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128/220
Outokumpu Annual report 2022 R&D had a crucial contribution to the ramp
up of Circle Green as the most sustainable
stainless steel in the world. Key developments
like biocoke or alternative heating technologies
are essential for ramping up Circle Green
beyond today’s capability.
impact Outokumpu through its customers and
suppliers if their businesses and operations are
negatively affected. There are also uncertain-
ties concerning how the planned energy support
schemes in each European member state will
ultimately impact business and markets.
Risks and uncertainties
The prolonged war in Ukraine and related
adverse economic development have increased
the uncertainties and risks to which Outokumpu
is exposed. The far-reaching direct and indirect
consequences of the prolonged war and the
possible further adverse development of
economic and geopolitical tensions could
further impact Outokumpu. The cost and
availability of energy and raw materials, the
weakened economic outlook with indications
on recession, and continued overall high cost
inflation are all considered to be significant
risks to Outokumpu.
As a result of the continued energy crisis in
Europe, electricity prices have been exception-
ally high and volatile. Most affected among
Outokumpu´s entities is business area Ferro-
chrome, due to the high consumption of the
electricity needed in ferrochrome production.
The uncertainty surrounding energy gas availa-
bility continues to posses risks for Outokumpu's
operations in Europe. In Germany, the tight-
ened global energy gas supply still poses a risk
for the continuity of operations, although the
likelihood of interruption has decreased in the
fourth quarter as the level of gas storages are
considered to be at adequate levels in Europe
for the winter. The main challenges are related
to managing the negative impacts from rising
energy costs.
High energy prices and uncertainty surrounding
energy gas supply in central Europe may also
Raw material availability risks have been mainly
related to sanctions imposed due to Russia's
invasion of Ukraine. As a result of the contin-
uous effort to reduce the dependencies on
Russian origin raw material, the exposure and
risk of supply chain disruption due to sanctions
at the end of the 2022 are considered limited.
The further change in suppliers could expose
Outokumpu to increased costs and risks related
to raw material sourcing in high-risk countries,
including environmental-social governance risks
and dependencies on certain critical suppliers,
remain high.
The continued rise in global inflation may
constrain Outokumpu's competitiveness. This
is not only due to high energy prices but also
overall cost inflation, such as in freight and
consumable prices. The weakened economic
outlook and uncertainty concerning the timing
and severity of a possible recession could
negatively impact stainless steel demand and
Outokumpu's operating environment.
The company is also exposed to risks related
to volatile metal prices, especially nickel, which
may impact Outokumpu’s result, among other
financial risks. The uncertainties related to the
spread of COVID-19 and its variants, especially
in China, and cyber security risks remain as
they could also impact Outokumpu’s business
and operations.
Outokumpu is a minority shareholder in Voimao-
sakeyhtiö SF, which is the majority shareholder
of Fennovoima. In May 2022, Fennovoima
announced that it had withdrawn the Hanhikivi
1 nuclear power plant construction license
application as a consequence of the termina-
tion of the EPC (Engineering, Procurement and
Construction) contract with RAOS Project Oy
for supplier-related reasons. Several arbitration
and other proceedings among the parties
involved have been initiated. The contractual
framework in the matter is complex and lengthy
legal proceedings among the relevant parties
are to be expected. The role of Fennovoima
has turned from a nuclear power plant project
company into an asset and litigation manage-
ment company. At year-end 2022, Outokumpu
was not a party to any of the legal proceedings.
However, on January 27, 2023, RAOS Project
Oy and Rosatom Energy International JSC filed
with the ICC International Court of Arbitration
a request to join Outokumpu Oyj and certain
other parties into the arbitration proceedings
related to the termination of the EPC contract.
As Outokumpu is not a party to any of the
underlying contracts related to the disputes
over the termination of the EPC Contract, it
sees no basis for the joinder request, and will
correspondingly strongly oppose it.
For more information on Outokumpu’s risks,
please refer to the Annual review in the Annual
report 2022 and the Notes to the 2022
Financial Statements.
Significant legal proceedings
Dispute over payment of wages in the US
On July 16, 2018, a class of plaintiffs,
consisting of 152 former and 126 current
Outokumpu Calvert mill employees, brought suit
against Outokumpu in U.S. federal circuit court.
The plaintiffs alleged that Outokumpu failed to
pay full wages for regular work and overtime
work they performed. On November 18, 2021,
the circuit court entered a default judgment
against Outokumpu with respect to liability
as a sanction for alleged misconduct during
the discovery phase of the legal proceeding.
On October 4, 2022, the circuit court further
found Outokumpu liable to the plaintiffs for
approximately USD 13 million in the aggregate,
plus attorney’s fees. Outokumpu has appealed
the circuit court’s November 18, 2021 default
judgment entry and October 4, 2022 finding
of liability. Outokumpu is of the view that the
claims asserted against it are without merit and
is defending against them.
Claim in Germany related to
expired lease agreement
On January 19, 2018, Outokumpu was served
with a claim for declaratory judgement by
the owner of a warehouse in Krefeld that
Outokumpu had leased until the end of
2016. The claim relates to a dispute over the
responsibility for the maintenance and repair
of the warehouse. The plaintiff has later in the
process specified the claim and is now seeking
payment of EUR 19 million. On May 4, 2022,
the court issued a ruling covering only the
merits of the claim. Said ruling was in favour
of the claimant and has been appealed by
Outokumpu. Outokumpu is of the view that the
claims asserted against it are without merit and
is defending against them.
Shares and share capital
On December 31, 2022, Outokumpu’s share
capital was EUR 311 million and the total
number of shares was 456,874,448. At the
end of December, Outokumpu held 12,739,837
treasury shares. The average number of shares
outstanding was 451,932,876 in 2022. The
closing share price at the end of the period, on
December 31, was EUR 4.73.
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Outokumpu Annual report 2022 Principal shareholders and share price
development is presented in the Stakeholder
engagement section in the Annual report.
Share buyback program
On November 3, 2022, Outokumpu's Board of
Directors approved a share buyback program of
up to EUR 100 million. The maximum number
of shares to be repurchased under the program
is 20 million, representing approximately 4.4%
of the company’s total number of shares. The
program commenced on November 7, 2022,
and ends no later than on March 24, 2023.
On December 31, 2022, Outokumpu had
purchased 8,575,126 shares under the
share buyback program and held 12,739,837
treasury shares.
Management shareholdings and
share based incentive programs
On December 31, 2022, the members of the
Board of Directors and Outokumpu Leadership
Team (OLT) altogether held 896,449 shares,
corresponding to 0.20% of the total number
of shares.
Outokumpu has established share-based incen-
tive programs for the OLT members, selected
managers and key employees, which include a
Performance Share Plan and a Restricted Share
Pool for key employees.
In 2022, after deductions for applicable taxes,
a total of 137,760 shares were delivered to the
participants of the incentive programs based
on the terms and conditions of the programs.
Outokumpu used its treasury shares for the
reward payments.
The Performance Share Plan and the Restricted
Share Pool Program are currently ongoing
for periods 2021–2023, 2022–2024 and
their continuation for the period 2023–2025
was approved by the Board of Directors in
December 2022. The sole performance criteria
for the Performance Share Plan 2021–2023 is
return on capital employed (ROCE).
To support Outokumpu’s continuous
improvements in sustainability an additional
sustainability-related performance criteria was
introduced in 2022 for Performance Share
Plan periods 2022–2024 and 2023–2025. The
above-mentioned programs now include earning
criteria which are linked to the CO2 emission
reduction target according to Outokumpu’s
Science Based Targets initiative (SBTi) commit-
ment. In the Performance Share Plan periods
2022–2024 and 2023–2025 return on capital
employed represents 80% of the remuneration
and CO2 emission reduction target 20%.
More details on the share-based incentive
programs can be found in the note 3.4 in the
consolidated financial statements.
The members of OLT and the Board of
Directors are introduced in the Corporate
Governance Statement included in the
Annual report and at Outokumpu website:
https://www.outokumpu.com/en/investors/
governance
presented in the Corporate Governance
Statement and remuneration in the note 3.2
in the consolidated financial statements.
Remuneration report is also included in the
Annual report.
. Their shareholding is also
Corporate governance
Outokumpu’s Corporate Governance Statement
can be found at the Outokumpu website:
https://www.outokumpu.com/en/
investors/governance
Annual General Meeting
Nomination Board
Outokumpu’s Annual General Meeting 2022
was held on March 31, 2022, at the company’s
head office in Helsinki, Finland, under special
arrangements due to the COVID-19 pandemic.
The Annual General Meeting supported all the
Board of Directors’ and the Shareholders’ Nom-
ination Board’s proposals and approved the
company’s remuneration report in an advisory
vote. The Annual General Meeting approved
the financial statements and discharged the
management of the company from liability for
the financial year 2021.
The Meeting decided that a dividend of 0.15
euros per share be paid for the financial year
2021 and authorized the Board of Directors
to repurchase the company’s own shares,
to decide on the issuance of shares as well
as special rights entitling to shares, and to
decide on donations for charitable purposes.
The Meeting also approved the proposals by
the Shareholders’ Nomination Board regarding
the members of the Board of Directors and
their remuneration.
The Annual General Meeting decided in
accordance with the proposal by the Nomina-
tion Board that the Board of Directors consists
of eight (8) members. Kari Jordan, Heinz Jörg
Fuhrmann, Kati ter Horst, Päivi Luostarinen,
Vesa-Pekka Takala, Pierre Vareille and Julia
Woodhouse were re-elected and Petter
Söderström was elected as new member, all
for the term of office ending at the end of the
next Annual General Meeting. Eeva Sipilä left
the Board of Directors with the Annual General
Meeting in 2022. Kari Jordan was re-elected as
the Chairman and Kati ter Horst elected as the
Vice Chairman of the Board of Directors.
Outokumpu’s Shareholders’ Nomination
Board consists of the representatives of the
four largest shareholders registered in the
shareholder register of the company following
Nasdaq Helsinki’s last trading day in August.
The Nomination Board has been established to
annually prepare proposals on the composition
of the Board of Directors and director remuner-
ation for the Annual General Meeting.
On August 31, 2022, the four largest share-
holders of Outokumpu were Solidium Oy, Varma
Mutual Pension Insurance Company, Ilmarinen
Mutual Pension Insurance Company and The
Social Insurance Institution of Finland. The
Shareholders' Nomination Board comprised
Reima Rytsölä, Managing Director at Solidium
Oy; Pekka Pajamo, CFO at Varma Mutual
Pension Insurance Company; Jouko Pölönen,
President and CEO at Ilmarinen Mutual Pension
Insurance Company and Outi Antila, Director
General at The Social Insurance Institution of
Finland, as well as Kari Jordan, Chairman of the
Board of Directors of Outokumpu.
The Nomination Board submitted its proposals
to Outokumpu’s Board of Directors on
December 2, 2022.
Board of Directors’ proposal
for profit distribution
According to the new dividend policy announced
on June 16, 2022, Outokumpu aims to
distribute a stable and growing dividend, to be
paid annually. According to the parent com-
pany's financial statements on December 31,
2022, distributable funds totaled EUR 2,736
million, of which retained earnings were
EUR 446 million.
The Board of Directors proposes to the Annual
General Meeting to be held on March 30,
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Outokumpu Annual report 2022 More detailed information about the financial
impacts of the transaction can be found earlier
in this report under Discontinued operations:
Divestment of majority of the Long Prod-
ucts business.
After the balance sheet date, Outokumpu has
repurchased 3,755,005 of shares under the
share buyback program, which ends no later
than on March 24, 2023. By February 8, 2023,
Outokumpu repurchased a total of 12,330,131
shares under the share buyback program and
held a total of 16,494,842 treasury shares.
On January 27, 2023, RAOS Project Oy and
Rosatom Energy International JSC have filed
with the ICC International Court of Arbitration
a request to join Outokumpu Oyj and certain
other parties into the arbitration proceedings
related to the termination of the EPC contract.
As Outokumpu is not a party to any of the
underlying contracts related to the disputes
over the termination of the EPC Contract, it
sees no basis for the joinder request, and will
correspondingly strongly oppose it.
2023, that a base dividend of EUR 0.25 per
share plus an extra dividend of EUR 0.10 per
share, totaling EUR 0.35 per share will be paid
for the year 2022, corres ponding to EUR 155
million based on the number of shares
outstanding on Dec 31, 2022.
The Board states that the base dividend
amount of EUR 0.25 is the basis for future
dividend distributions in accordance with the
policy. The extra dividend of EUR 0.10 per
share is a one-time extra dividend that is
proposed to be distributed to the shareholders
for the exceptionally good result of the
financial year.
Outlook for Q1 2023
Group stainless steel deliveries in the first
quarter are expected to increase by 10–20%
compared to the fourth quarter.
Ferrochrome production continues at 50–60%
of its full capacity as a result of the planned
optimization due to high electricity prices and
recent disruptions in one of the three furnaces.
Inflation in energy and consumable prices is
expected to continue in the first quarter.
With current raw material prices, no significant
raw material-related inventory and metal
derivative impacts are expected to be realized
in the first quarter.
Guidance for Q1 2023
Adjusted EBITDA in the first quarter of 2023 is
expected to be higher compared to the fourth
quarter.
Events after the balance sheet date
On January 3, 2023, Outokumpu announced
that is has completed the divestment of
the majority of the Long Products business.
Annual review
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Outokumpu Annual report 2022 Group key figures
2022
2021
2020 1)
2019 1)2)
2018 1)
2022
2021
2020 1)
2019 1)2)
2018 1)
Continuing operations
Scope of activity
Sales
– change in sales
– exports from and sales outside Finland,
of total sales *
Financing and financial position
Net financial expenses *
– in relation to sales
€ million
%
%
9,494
31.1
7,243
28.4
5,639
–11.9
6,403
–6.8
6,872
8.1
95.9
96.4
96.3
95.9
96.7
Interest expenses *
– in relation to sales
€ million
%
€ million
%
71
0.7
44
0.5
79
1.1
64
0.9
98
1.7
78
1.4
80
1.3
76
1.2
107
1.6
70
1.0
Capital employed on Dec 31 3) 4) *
€ million
4,751
3,828
3,543
3,904
4,086
Alternative performance measures are marked with *. For more information, please see Alternative Performance
Measures section.
1) Including discontinued operations.
2) IFRS 16 – Leases was adopted on January 1, 2019 using the modified retrospective approach.
Comparative information has not been restated.
3) In 2022, including discontinued operations’ equity. In 2021, including discontinued operations.
4) Outokumpu has redefined its capital employed and ROCE definitions in 2022. Information for 2021 has been
restated accordingly.
5) Capital expenditure definition changed from accrual-based to cash-based capital expenditure in 2020.
Comparative information has been restated accordingly.
6) In 2021, Outokumpu changed its main personnel amount measure from headcount to full-time equivalent
personnel.
7) The balance sheet component is including discontinued operations except for Sept 30 and Dec 31, 2022,
where only the equity component of discontinued operations is included.
Capital expenditure 5) *
– in relation to sales
Depreciation and amortization
Impairments
Research and development costs
– in relation to sales
Personnel on Dec 31 6)
– average for the year
Personnel on Dec 31
Profitability
Adjusted EBITDA *
– in relation to sales
EBITDA *
EBIT *
– in relation to sales
Result before taxes
– in relation to sales
€ million
%
€ million
€ million
€ million
%
FTE
FTE
headcount
€ million
%
€ million
€ million
%
€ million
%
158
1.7
245
11
15
0.2
8,357
8,683
8,591
1,256
13.2
1,248
992
10.5
933
9.8
Net result for the financial year
– in relation to sales
€ million
%
1,086
11.4
171
2.4
249
45
14
0.2
180
3.2
243
3
21
0.4
193
3.0
230
3
17
0.3
218
3.2
204
12
15
0.2
8,439
8,714
8,727
9,602
10,000
9,915
10,078
10,329
10,390
10,118
10,100
10,449
980
13.5
968
674
9.3
610
8.4
526
7.3
250
4.4
191
–55
–1.0
–151
–2.7
–116
–2.1
263
4.1
266
33
0.5
–41
–0.6
–75
–1.2
485
7.1
496
280
4.1
175
2.5
130
1.9
Return on capital employed (ROCE) 4) 7) *
%
22.6
17.6
–1.4
0.8
7.0
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Outokumpu Annual report 2022 2022
2021
2020
2019 1)
2018
2022
2021
2020
2019 1)
2018
Group key figures
Including discontinued operations
Scope of activity
Sales
€ million
10,287
7,709
5,639
6,403
6,872
Net financial expenses *
Capital employed on Dec 31 2) *
€ million
4,752
3,828
3,543
3,904
4,086
Interest expenses *
Capital expenditure 3) *
€ million
160
175
180
193
218
Net debt to adjusted EBITDA *
Financing and financial position
Net debt *
FTE
FTE
headcount
9,029
9,362
9,269
9,096
9,372
9,395
9,602
10,000
9,915
10,078
10,329
10,390
10,118
10,100
10,449
Share capital
Total equity
Personnel on Dec 31 4)
– average for the year
Personnel on Dec 31
Profitability
Adjusted EBITDA *
€ million
1,387
1,021
250
263
485
Net result for the financial year
€ million
1,140
553
–116
–75
130
Return on equity (ROE) *
Return on capital employed (ROCE) 2) *
%
%
30.6
24.5
20.1
18.4
–4.7
–1.4
–2.8
0.8
4.8
7.0
Annual review
Sustainability review
Governance
€ million
–10
408
1,028
1,155
1,241
Remuneration report
€ million
€ million
68
45
0.0
80
65
98
78
80
76
0.4
4.1
4.4
107
70
2.6
€ million
€ million
311
4,119
311
3,120
311
2,360
311
2,562
311
2,750
Financial year
Review by the Board of Directors
Financial statements
Audit
Information for shareholders
Equity-to-assets ratio *
Debt-to-equity ratio (gearing) *
%
%
59.2
–0.3
48.3
13.1
40.8
43.6
42.5
45.1
45.9
45.1
Net cash generated from operating
activities
€ million
778
597
322
371
214
Alternative performance measures are marked with *. For more information, please see Alternative Performance
Measures section.
1) IFRS 16 – Leases has been adopted on January 1, 2019 using the modified retrospective approach.
Comparative information has not been restated.
2) Outokumpu has redefined its capital employed and ROCE definitions in 2022. Information for 2021 has been
restated accordingly.
3) Capital expenditure definition changed from accrual-based to cash-based capital expenditure in 2020.
Comparative information has been restated accordingly.
4) In 2021, Outokumpu changed its main personnel amount measure from headcount to full-time equivalent
personnel.
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Outokumpu Annual report 2022 Alternative performance measures
Certain financial key figures and ratios
presented in Outokumpu’s Annual Report
are not measures of financial performance,
financial position or cash flows under IFRS
and are therefore considered as alternative
performance measures. These measures are
not defined by IFRS and therefore may not be
directly comparable with financial measures
and ratios used by other companies, including
those in the same industry. The reason for
presenting these measures is that either they
are statutory requirements applicable to the
Annual Report of the Group or the manage-
ment believes that these measures provide
meaningful supplemental information on the
underlying business performance or financial
position of the Group. These financial measures
should not be considered in isolation from,
or as a substitute for, financial information
presented in compliance with IFRS. Alternative
performance measures are marked with * in the
Group key figures table.
Key figure, continuing operations
Definition of the key figure or source in the consolidated financial statements
2022
2021
Continuing operations
Exports from and sales outside Finland
Exports from and sales outside Finland is an indicator of the international nature of the Group’s business.
Sales
Sales by destination to Finland
Exports from and sales outside FinlandSales – Sales by destination to Finland
– exports from and sales outside
Consolidated statement of income
Note 2.2
Comparison to sales
Finland, of total sales
€ million
€ million
€ million
9,494
384
9,109
7,243
258
6,985
%
95.9
96.4
Operating capital (segment reporting)
Operating capital is a measure for the amount of capital invested in Group’s operations. It is used as a measure for the business areas’
net assets.
Capital employed on Dec 31
Defined in the below section incl. discontinued operations – debt of
discontinued operations
Cash and cash equivalents
Consolidated statement of financial position
Investments in associated companies Consolidated statement of financial position
Consolidated statement of financial position
Investments in equity at fair value
through other comprehensive income
Investments at fair value through
profit or loss
Net deferred tax assets
Net assets held for sale
Note 5.5
Note 2.6
Assets held for sale – Liabilities related to assets held for sale in the
Consolidated statement of financial position
Note 3.3
Capital employed – cash and cash equivalents – investments in
associated companies – investments in equity at fair value through
other comprehensive income – investments at fair value through
profit or loss – net deferred tax asset – net asset held for sale + net
employee benefit obligations
Net employee benefit obligations
Operating capital on Dec 31
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
4,751
526
51
3,828
300
43
25
23
390
215
216
24
28
221
–
309
3,737
3,520
Annual review
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Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Audit
Information for shareholders
Capital expenditure
Capital expenditure indicates the investment in assets to generate future cash flows for the Group.
Capital expenditure
– in relation to sales
Purchases of property, plant and equipment and intangible assets,
other than emission allowances; investments in equity at fair value
through other comprehensive income and associated companies, and
acquisitions of businesses.
Comparison to sales
€ million
%
158
1.7
171
2.4
134/220
Outokumpu Annual report 2022 Key figure, continuing operations
Definition of the key figure or source in the
consolidated financial statements
2022
2021
Key figure,
including discontinued operations
Definition of the key figure or source in the
consolidated financial statements
2022
2021
Adjusted EBITDA, EBITDA, and EBIT
Adjusted EBITDA is Outokumpu’s main performance indicator in financial reporting. The adjustments to
EBITDA relate to material income and expense items of unusual nature, and their purpose is to improve
comparability of financial performance between reporting periods. EBITDA and EBIT are also measures of
financial performance of the Group.
Including discontinued operations
Capital employed
Capital employed is a measure for the amount of capital invested in Group’s operations. Outokumpu has
redefined its capital employed and ROCE definitions in 2022. Comparative information has been restated
accordingly.
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EBIT
– in relation to sales
Consolidated statement of income
Comparison to sales
€ million
%
Depreciation and amortization
Impairments
EBITDA
Adjustments to EBITDA
Adjusted EBITDA
– in relation to sales
Note 2.3
Note 2.4
EBIT before depreciation, amortization
and impairments
Note 2.1
EBITDA – Adjustments to EBITDA
Comparison to sales
€ million
€ million
€ million
€ million
€ million
%
992
10.5
245
11
1,248
–7
1,256
13.2
674
9.3
249
45
968
–12
980
13.5
Capital employed is the sum of:
Total equity
Non-current debt
Current debt
Capital employed on Dec 31
Capital expenditure
Consolidated statement of financial
position
Consolidated statement of financial
position + Note 6.1
Consolidated statement of financial
position + Note 6.1
Total equity + non-current debt +
current debt
€ million
4,119
3,120
€ million
€ million
492
141
597
112
€ million
4,752
3,828
Financial year
Review by the Board of Directors
Financial statements
Audit
Information for shareholders
Return on capital employed (ROCE)
Return on capital employed is a measure for the value the Group generates to the capital invested in its
operations. Outokumpu has redefined its capital employed and ROCE definitions in 2022. Comparative
information has been restated accordingly.
Capital employed (4-quarter average),
including discontinued operations1)
EBIT
Share of results in associated
companies
Return on capital employed (ROCE)
Defined in the below section incl.
discontinued operations – debt of
discontinued operations
Consolidated statement of income
Consolidated statement of income
(EBIT + Share of results in associated
companies) / Capital employed
(4-quarter average)
€ million
€ million
4,437
992
3,909
674
€ million
11
15
%
22.6
17.6
Net financial expenses and interest expenses
Net financial expenses and interest expenses are measures for the cost of Group’s financing.
Net financial expenses
– in relation to sales
Total financial income and
expenses in the Consolidated
statement of income
Comparison to sales
€ million
%
71
0.7
79
1.1
Interest expenses
64
– in relation to sales
0.9
1) Including discontinued operations except for capital employed on Sept 30 and Dec 31, 2022, where only the
Consolidated statement of income
Comparison to sales
€ million
%
44
0.5
equity component of discontinued operations is included.
Capital expenditure indicates the investment in assets to generate future cash flows for the Group.
Capital expenditure
– in relation to sales
Purchases of property, plant and
equipment and intangible assets, other
than emission allowances; investments
in equity at fair value through other
comprehensive income and associated
companies, and acquisitions of
businesses
Comparison to sales
€ million
%
160
1.6
175
2.3
Adjusted EBITDA, EBITDA, and EBIT
Adjusted EBITDA is Outokumpu’s main performance indicator in financial reporting. The adjustments to
EBITDA relate to material income and expense items of unusual nature, and their purpose is to improve
comparability of financial performance between reporting periods. EBITDA and EBIT are also measures of
financial performance of the Group.
EBIT
– in relation to sales
Consolidated statement of income +
Note 6.1
Comparison to sales
€ million
%
1,078
10.5
Depreciation and amortization
Impairments
EBITDA
Adjustments to EBITDA
Adjusted EBITDA
– in relation to sales
Note 2.3 + discontinued operations
Note 2.4 + discontinued operations
EBIT before depreciation, amortization
and impairments
Note 2.1 + discontinued operations
EBITDA – Adjustments to EBITDA
Comparison to sales
€ million
€ million
€ million
€ million
€ million
%
253
44
1,375
–12
1,387
13.5
705
9.1
259
45
1,009
–12
1,021
13.2
135/220
Outokumpu Annual report 2022 Key figure,
including discontinued operations
Definition of the key figure or source in
the consolidated financial statements
2022
2021
Key figure,
including discontinued operations
Definition of the key figure or source in
the consolidated financial statements
2022
2021
Annual review
Return on equity (ROE)
Return on equity is an indicator of the value the Group generates to the capital the shareholders have
invested in the Group.
Net debt
Net debt is a measure for the level of debt financing in the Group. The reduction of net debt is a key priority
for the Group.
Total equity on Dec 31 of previous
year
Total equity on March 31
Total equity on June 30
Total equity on Sept 30
Total equity on Dec 31
Total equity (4-quarter average)
Consolidated statement of financial
position
Consolidated statement of financial
position
Average of the opening and 4
quarter-end values
€ million
€ million
€ million
€ million
€ million
€ million
Net result for the financial year
Return on equity (ROE)
Consolidated statement of income € million
Net result for the financial year /
Total equity (4-quarter average)
%
3,120
3,278
3,943
4,158
4,119
3,723
1,140
30.6
2,360
2,455
2,809
3,040
3,120
2,757
553
20.1
Return on capital employed (ROCE)
Return on capital employed is a measure for the value the Group generates to the capital invested in its
operations. Outokumpu has redefined its capital employed and ROCE definitions in 2022. Comparative
information has been restated accordingly.
Defined earlier in this section
Capital employed on Dec 31 of
previous year
Capital employed on March 31
Capital employed on June 30
Capital employed on Sept 30
Defined earlier in this section
Capital employed on Dec 31
Capital employed (4-quarter average) Average of the opening and 4
EBIT
Share of results in associated
companies
Return on capital employed (ROCE)
quarter-end values
Consolidated statement of income
+ Note 6.1
Consolidated statement of income
(EBIT + Share of results in
associated companies) / Capital
employed (4-quarter average)
€ million
€ million
€ million
€ million
€ million
3,828
4,097
4,705
4,805
4,752
3,764
3,858
3,963
4,134
3,828
€ million
4,438
3,909
€ million
1,078
€ million
11
705
15
Non-current debt
Current debt
Cash and cash equivalents
Net debt
– in relation to sales
Consolidated statement of
financial position + Note 6.1
Consolidated statement of
financial position + Note 6.1
Consolidated statement of
financial position + Note 6.1
Non-current + current debt
– cash and cash equivalents
Comparison to sales
€ million
€ million
€ million
€ million
%
492
141
644
–10
–0.1
597
112
300
408
5.3
Net debt to Adjusted EBITDA
Net debt to Adjusted EBITDA is an indicator of the Group’s indebtedness.
Net debt
Adjusted EBITDA
Net debt to Adjusted EBITDA
Defined earlier in this section
Defined earlier in this section
Net debt / Adjusted EBITDA
€ million
€ million
–10
1,387
0.0
408
1,021
0.4
Equity-to-assets ratio
Equity-to-assets ratio shows the proportion the Group’s assets financed with equity. The equity-to-assets
ratio indicates the financial risk level of the Group.
Total equity
Total assets
Advances received
Equity-to-assets ratio
Consolidated statement of
financial position
Consolidated statement of
financial position
Note 4.5
Total equity / (Total assets –
advances received)
€ million
4,119
3,120
€ million
€ million
6,983
23
6,482
27
%
59.2
48.3
Debt-to-equity ratio (gearing)
Debt-to-equity ratio or gearing is an indicator of the financial risk level and the indebtedness of the Group.
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%
24.5
18.4
Net debt
Total equity
Debt-to-equity ratio (gearing)
Defined earlier in this section
Consolidated statement of
financial position
Net debt / Total equity
€ million
–10
408
€ million
%
4,119
–0.3
3,120
13.1
136/220
Outokumpu Annual report 2022 Definitions of financial key figures
Key figure
EBITDA
Definition
= EBIT before depreciation, amortization and impairments
Adjustments to EBITDA or EBIT
=
Material income and expense items which affect the comparability between periods because of their unusual
nature, size or incidence resulting for example from group-wide restructuring programs or disposals of assets or
businesses.
Adjusted EBITDA or EBIT
= EBITDA or EBIT – items classified as adjustments
Capital employed
= Total equity + non-current debt + current debt
Capital employed – cash and cash equivalents – investments in associated companies – investments in equity at
fair value through other comprehensive income – investments at fair value through profit or loss – net deferred tax
asset – net asset held for sale + net employee benefit obligations
Purchases of property, plant and equipment and intangible assets, other than emission allowances; and
investments in equity at fair value through other comprehensive income and in associated companies and
acquisitions of businesses
Operating capital (segment reporting)
Capital expenditure
Return on capital employed (ROCE)
Return on operating capital (ROOC)
(segment reporting)
Return on equity (ROE)
=
=
=
=
=
EBIT + Share of results in associated companies
Capital employed (4-quarter rolling average)
Adjusted EBIT
Operating capital (4-quarter rolling average)
Net result for the financial period
Total equity (4-quarter rolling average)
Net debt
= Non-current debt + current debt – cash and cash equivalents
Equity-to-assets ratio
Debt-to-equity ratio (gearing)
Net debt to adjusted EBITDA
Personnel, full-time equivalent
=
=
=
=
Total equity
Total assets – advances received
Net debt
Total equity
Net debt
Adjusted EBITDA
Headcount adjusted to full time equivalent number of personnel, excluding personnel on sick leave or parental
leave of more than 6 months and excluding personnel whose employment has been terminated and who are on
notice period without requirement to work
× 100
× 100
× 100
× 100
× 100
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137/220
Outokumpu Annual report 2022 Share-related key figures1)
Earnings per share 2) 3)
Earnings per share continuing operations
Diluted earnings per share 2) 3)
Diluted earnings per share continuing operations
Cash flow per share 3)
Equity per share 2) 4)
Dividend per share
Dividend payout ratio 2)
Dividend yield
Price/earnings ratio 2)
Development of share price
Average trading price
Lowest trading price
Highest trading price
Trading price at the end of the period
Change during the period
Change in the OMX Helsinki index during the period
€
€
€
€
€
€
€
%
%
€
€
€
€
%
%
Market capitalization at the end of the period 6)
€ million
Development in trading volume
Trading volume 7)
1,000 shares
In relation to adjusted weighted average number of shares 3)
%
2022
2.52
2.40
2.33
2.22
1.72
9.27
0.355)
13.6
7.4
1.88
4.69
3.51
6.48
4.73
–14.0
–13.4
2,101
2021
1.26
1.21
1.17
1.13
1.36
6.89
0.15
12.3
2.7
4.37
4.96
3.36
6.01
5.50
70.8
18.3
2020
–0.28
–
–0.28
–
0.78
5.70
–
–
–
2019
–0.18
–
–0.18
–
0.90
6.19
–
–
–
2018
0.32
–
0.32
–
0.52
6.70
0.15
47.4
4.7
neg.
neg.
10.00
2.66
2.08
4.44
3.22
14.8
10.1
3.01
2.23
4.04
2.81
–12.2
13.4
5.39
3.18
8.26
3.20
–58.7
–8.0
2,489
1,327
1,155
1,312
720,801
159.5
880,092
200.5
1,100,628
265.9
884,254
215.0
826,636
201.1
Adjusted weighted average number of shares 3) 6)
Adjusted diluted weighted average number of shares 3) 6)
Number of shares at the end of the period 6)
451,932,876
493,535,712
444,134,611
438,871,175
479,163,509
452,571,977
413,907,618
437,336,296
412,002,212
411,198,002
446,209,235
411,774,715
411,065,622
447,181,306
410,563,719
1) Including discontinued operations if not otherwise
stated.
2) IFRS 16 – Leases has been adopted on January 1,
2019 using the modified retrospective approach.
Comparative information has not been restated.
3) Reported based on share-issue-adjusted
weighted average number of shares. Comparative
information for 2020 is presented accordingly.
Information for 2019–2018 has not been restated.
4) 2020 and 2019 calculated based on the share-
issue-adjusted number of shares. 2018 has not
been restated.
5) The Board of Directors’ proposal to the Annual
General Meeting.
6) Excluding treasury shares.
7) Includes only Nasdaq Helsinki trading.
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138/220
Outokumpu Annual report 2022 Definitions of share-related key figures
Key figure
Definition
Earnings per share
Diluted earnings per share
Cash flow per share
Equity per share
Dividend per share
Dividend payout ratio
Dividend yield
Price/earnings ratio (P/E)
Average trading price
Market capitalization at end of the period
Trading volume
=
=
=
=
=
=
=
=
=
=
=
Net result for the financial year attributable to the equity holders
Adjusted weighted average number of shares during the period
Net result for the financial year attributable to the equity holders + interest expenses on
convertible bond, net of tax
Adjusted diluted weighted average number of shares during the period
Net cash generated from operating activities
Adjusted weighted average number of shares during the period
Equity attributable to the equity holders
Adjusted number of shares at the end of the period
Dividend for the financial year
Adjusted number of shares at the end of the period
Dividend for the financial year
Net result for the financial year attributable to the equity holders
Dividend per share
Adjusted trading price at the end of the period
Adjusted trading price at the end of the period
Earnings per share
EUR amount traded during the period
Adjusted number of shares traded during the period
Number of shares at the end of the period ×
Trading price at the end of the period
Number of shares traded during the period, and in relation to
the adjusted weighted average number of shares during the period
× 100
× 100
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Financial year
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Audit
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139/220
Outokumpu Annual report 2022 Non-financial indicators
Environmental indicators
Scope 1, 2 and 3 (direct and indirect) CO2 emission intensity,
tonnes per tonne of stainless steel
Energy intensity, GJ per tonne stainless steel
Use rate of slag, including slag from ferrochrome production, %
Total landfill waste intensity, tonnes per tonne stainless steel
Recycled material content, %
Social indicators
Diversity
Employees
male, %
female, %
Managers 1)
male, %
female, %
Board of Directors
male, %
female, %
Safety
Total recordable injury frequency rate, per million working hours
1) Manager diversity data is not available for 2018.
2) Including discontinued operations.
2022
1.70
10.5
86.5
0.530
93.9
2021
2020 2)
2019 2)
2018 2)
1.76
10.2
78.1
0.561
89.6
1.55
11.0
77.1
0.590
92.5
1.61
10.9
90.8
0.500
89.6
1.72
10.1
89.9
0.472
88.6
2022
2021
20202)
20192)
20182)
83
17
83
17
62
38
84
16
84
16
50
50
84
16
84
16
50
50
85
15
84
16
57
43
85
15
n/a
n/a
67
33
1.8
2.1
2.4
3.2
4.1
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140/220
Outokumpu Annual report 2022 Taxonomy key performance indicators – Sales
Economic activties
Codes
Absolute
sales (€
million)
Proportion
of sales
(%)
Climate
Change
Mitigation
(%)
Climate
Change
Adaptation
(%)
Water
marine
resources
(%)
Circular
Economy
(%)
Pollution
(%)
Bio-
diversity
and eco-
systems
(%)
Climate
Change
Mitigation
(Y/N)
Climate
Change
Adaptation
(Y/N)
Water
marine
resources
(Y/N)
Circular
Economy
(Y/N)
Pollution
(Y/N)
Bio-
diversity
and eco-
systems
(Y/N)
Minimum
safe-
guards
(Y/N)
Taxonomy-
aligned
proportion
of sales
year N
(%)
Taxonomy-
aligned
proportion
of sales
year N-1
(%)
Category
(enabling
activity)
(E)
Category
(transitional
activity)
(T)
Substantial Contribution criteria
DNSH criteria
A. TAXONOMY-
ELIGIBLE ACTIVITIES
A.1. Environmental
sustainable activities
(Taxonomy aligned)
Manufacturing of iron
and steel
Sales of environmental
sustainable activities
(Taxonomy-aligned)
(A.1.)
A.2. Taxonomy-Eligible
but not environmental
sustainable activites
(not Taxonomy-aligned
activities)
Manufacturing of iron
and steel
Sales of Taxonomy-
eligible but not
environmental
sustainable activities
(not Taxonomy-aligned
activities) (A.2.)
Total (A.1. + A.2.)
B. TAXONOMY-NON-
ELIGIBLE ACTIVITIES
Sales of Taxonomy-non-
eligible activities (B)
Total (A+B)
3.9
8,645
91
100
0
0
0
0
0
Y
Y
N/A
Y
Y
Y
91
N/A
N/A
T
8,645
91
3.9
8,645
91
848
9,494
9
100
91
85
Taxonomy sales is presented in accordance with IFRS, in line with the sales in the Group’s consolidated financial statements. The manufacturing of iron and steel is listed as an eligible economic activity.
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141/220
Outokumpu Annual report 2022 Taxonomy key performance indicators – Capital expenditure (CapEx)
Economic activties
Codes
Absolute
CapEx (€
million)
Proportion
of CapEx
(%)
Climate
Change
Mitigation
(%)
Climate
Change
Adaptation
(%)
Water
marine
resources
(%)
Circular
Economy
(%)
Pollution
(%)
Bio-
diversity
and eco-
systems
(%)
Climate
Change
Mitigation
(Y/N)
Climate
Change
Adaptation
(Y/N)
Water
marine
resources
(Y/N)
Circular
Economy
(Y/N)
Pollution
(Y/N)
Bio-
diversity
and eco-
systems
(Y/N)
Minimum
safe-
guards
(Y/N)
Taxonomy-
aligned
proportion
of CapEx
year N
(%)
Taxonomy-
aligned
proportion
of CapEx
year N-1
(%)
Category
(enabling
activity)
(E)
Category
(transitional
activity)
(T)
Substantial Contribution criteria
DNSH criteria
A. TAXONOMY-
ELIGIBLE ACTIVITIES
A.1. Environmental
sustainable activities
(Taxonomy aligned)
Manufacturing of iron
and steel
CapEx of
environmental
sustainable activities
(Taxonomy-aligned)
(A.1.)
A.2. Taxonomy-Eligible
but not environmental
sustainable activites
(not Taxonomy-aligned
activities)
Manufacturing of iron
and steel
CapEx of Taxonomy-
eligible but not
environmental
sustainable activities
(not Taxonomy-aligned
activities) (A.2.)
Total (A.1. + A.2.)
B. TAXONOMY-NON-
ELIGIBLE ACTIVITIES
CapEx of Taxonomy-
non-eligible activities
(B)
Total (A+B)
3.9
65
42
100
0
0
0
0
0
Y
Y
N/A
Y
Y
Y
38
N/A
N/A
T
65
42
3.9
65
42
88
153
58
100
42
37
Taxonomy capital expenditure is presented and measured as cash-based, in line with the capital expenditure presented in the Group’s financial statements. Taxonomy capital expenditure consists of purchases of property, plant
and equipment and intangible assets, other than emission allowances. Leases and equity investments at fair value through other comprehensive income have been excluded from the amount. Capital expenditure associated with
taxonomy-eligible economic activities has been considered eligible while capital expenditure related to business area Ferrochrome, service centers and directly to corporate functions have been considered non-eligible.
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142/220
Outokumpu Annual report 2022
Taxonomy key performance indicators – Restricted operating expenditure (OpEx)
Economic activties
Codes
Absolute
OpEx (€
million)
Proportion
of OpEx
(%)
Climate
Change
Mitigation
(%)
Climate
Change
Adaptation
(%)
Water
marine
resources
(%)
Circular
Economy
(%)
Pollution
(%)
Bio-
diversity
and eco-
systems
(%)
Climate
Change
Mitigation
(Y/N)
Climate
Change
Adaptation
(Y/N)
Water
marine
resources
(Y/N)
Circular
Economy
(Y/N)
Pollution
(Y/N)
Bio-
diversity
and eco-
systems
(Y/N)
Minimum
safe-
guards
(Y/N)
Taxonomy-
aligned
proportion
of OpEx
year N
(%)
Taxonomy-
aligned
proportion
of OpEx
year N-1
(%)
Category
(enabling
activity)
(E)
Category
(transitional
activity)
(T)
Substantial Contribution criteria
DNSH criteria
A. TAXONOMY-
ELIGIBLE ACTIVITIES
A.1. Environmental
sustainable activities
(Taxonomy aligned)
Manufacturing of iron
and steel
OpEx of environmental
sustainable activities
(Taxonomy-aligned)
(A.1.)
A.2. Taxonomy-Eligible
but not environmental
sustainable activites
(not Taxonomy-aligned
activities)
Manufacturing of iron
and steel
OpEx of Taxonomy-
eligible but not
environmental
sustainable activities
(not Taxonomy-aligned
activities) (A.2.)
Total (A.1. + A.2.)
B. TAXONOMY-NON-
ELIGIBLE ACTIVITIES
OpEx of Taxonomy-non-
eligible activities (B)
Total (A+B)
3.9
607
82
100
0
0
0
0
0
Y
Y
N/A
Y
Y
Y
82
N/A
N/A
T
607
82
3.9
607
82
129
736
18
100
82
82
Taxonomy restricted operating expenditure consists of expenses related directly to maintenance and servicing of assets as well as research and development expenses. Of the total taxonomy restricted operating expenditure, the
portion supporting taxonomy-eligible economic activities has been considered eligible. Expenses related to business area Ferrochrome, service centers and corporate functions have been considered non-eligible. Research and
development expenses have been included in full and considered eligible except for the part related to manufacturing of ferrochrome, service centers and corporate.
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143/220
Outokumpu Annual report 2022 Financial statements
In a strong market environment combined
with strategy execution, Outokumpu
delivered its best annual results and was
net debt free at the end of the year.
Annual review
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Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
“We have successfully
de-risked the company and
our significantly strengthened
balance sheet gives us
resilience to withstand
changing conditions.”
–Pia Aaltonen-Forsell
CFO
144/220
Outokumpu Annual report 2022 Financial statements content
Consolidated financial
statements, IFRS
Consolidated statement of income _______ 146
Notes to the consolidated
financial statements
1. Basis of reporting __________________ 152
Consolidated statement of ___________________
comprehensive income __________________ 147
1.1 Corporate information _______________ 152
1.2 Basis of preparation ________________ 152
Consolidated statement of financial __________
position _______________________________ 148
Consolidated statement of cash flows _____ 149
Consolidated statement of changes __________
in equity _______________________________ 150
2. Business result ____________________ 155
2.1 Operating segments ________________ 155
2.2 Revenue ___________________________ 158
2.3 Cost of sales and selling, general and _____
administrative expenses _____________ 159
2.4 Other operating income and expenses 160
2.5 Financial income and expenses ______ 161
2.6 Income taxes ______________________ 162
2.7 Earnings per share __________________ 165
3. Employee benefits _________________ 166
3.1 Employee benefit expenses __________ 166
3.2 Employee benefits for key _______________
management _______________________ 167
3.3 Employee benefit obligations ________ 168
3.4 Share-based payments ______________ 171
4. Operating assets and liabilities _____ 173
4.1 Intangible assets and property, plant _____
and equipment _____________________ 173
4.2 Leases ____________________________ 178
4.3 Goodwill impairment test ____________ 180
4.4 Inventories _________________________ 181
4.5 Trade and other receivables and _________
payables __________________________ 182
4.6 Provisions _________________________ 184
5. Capital structure and financial risk ______
management ______________________ 185
5.1 Net debt and capital management ___ 186
5.2 Equity _____________________________ 189
Parent company financial
statements, FAS
Income statement of the parent company _ 208
Balance sheet of the parent company _____ 209
Cash flow statement of the parent ____________
company ______________________________ 210
5.3 Financial risk management and __________
insurances _________________________ 191
Statement of changes in equity of ___________
the parent company ____________________ 211
Commitments and contingent liabilities ______
of the parent company __________________ 211
5.4 Derivative instruments ______________ 194
5.5 Financial assets and liabilities _______ 196
5.6 Equity investments at fair value __________
through other comprehensive income _ 199
5.7 Commitments and contingent ____________
liabilities __________________________ 200
6. Group structure and other notes ____ 201
6.1 Discontinued operations ____________ 201
6.2 Business acquisitions and disposals __ 203
6.3 Disputes and litigations _____________ 204
6.4 Related parties _____________________ 204
6.5 Subsidiaries _______________________ 205
6.6 Associated companies ______________ 206
6.7 New IFRS standards ________________ 206
6.8 Events after the balance sheet date __ 207
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Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
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Outokumpu Annual report 2022 Consolidated financial statements
Consolidated statement of income
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2022
2021
Remuneration report
Note
2022
2021
€ million
9,494
7,243
–8,147
–6,310
Earnings per share from continuing operations attributable to the
equity holders of the parent company
Earnings per share, €
Diluted earnings per share, €
Earnings per share attributable to the equity holders of the parent
company
Earnings per share, €
Diluted earnings per share, €
Note
2.7
2.7
2.40
2.22
2.52
2.33
1.21
1.13
1.26
1.17
Net result for the financial year is fully attributable to the equity holders of the parent company. The notes are
an integral part of the financial statements.
€ million
Continuing operations
Sales
Cost of sales
Gross margin
Other operating income
Selling and marketing expenses
Administrative expenses
Research and development expenses
Other operating expenses
EBIT
Share of results in associated companies
Financial income and expenses
Interest income and other financial income
Interest expenses
Market price gains and losses
Other financial expenses
Total financial income and expenses
Result before taxes
Income taxes
2.2
2.3
2.4
2.3
2.3
2.3
2.4
6.6
2.5
2.6
1,346
18
–72
–225
–15
–60
992
11
4
–44
–12
–19
–71
933
154
933
49
–63
–176
–14
–54
674
15
7
–64
–3
–19
–79
610
–84
526
27
553
Net result for the financial year from continuing operations
1,086
Discontinued operations
Net result for the financial year from discontinued operations
Net result for the financial year
6.1
54
1,140
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Consolidated statement of income
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
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Outokumpu Annual report 2022 Consolidated statement of comprehensive income
€ million
Net result for the financial year
Note
2022
1,140
2021
553
Other comprehensive income, continuing operations
Items that may be reclassified to profit or loss:
Exchange differences on translating foreign operations
Change in exchange differences
Cash flow hedges
Fair value changes during the financial year
Reclassification to profit or loss
Income taxes
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans
Changes during the financial year
Income taxes
Equity investments at fair value through other comprehensive income
Fair value changes during the financial year
Share of other comprehensive income in associated companies
Other comprehensive income for the financial year, continuing
operations, net of tax
Other comprehensive income for the financial year, discontinued
operations, net of tax
Other comprehensive income for the financial year, net of tax
5.4
2.6
3.3
2.6
5.6
6.6
17
–43
28
–1
65
–24
–4
0
38
8
46
85
–1
27
–6
–72
26
–44
0
15
6
22
Total comprehensive income for the financial year
1,186
574
Total comprehensive income for the financial year is fully attributable to the equity holders of the parent
company. The notes are an integral part of the financial statements.
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Financial statements
Consolidated financial statements, IFRS
Consolidated statement of income
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
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Outokumpu Annual report 2022
Consolidated statement of financial position
€ million
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Investments in associated companies
Equity investments at fair value through other comprehensive income
Deferred tax assets
Trade and other receivables
Current assets
Inventories
Investments at fair value through profit or loss
Derivative financial instruments
Trade and other receivables
Cash and cash equivalents
Assets held for sale
TOTAL ASSETS
Note
2022
2021
€ million
Note
2022
2021
4.1, 4.3
4.1, 4.2
6.6
5.6
2.6
4.5
4.4
5.4
4.5
5.1
547
2,406
51
25
390
6
3,425
1,783
23
40
767
526
3,139
577
2,573
43
24
222
5
3,444
1,892
28
31
786
300
3,038
6.1
419
–
6,983
6,482
EQUITY AND LIABILITIES
Equity attributable to the equity holders of the parent company
Share capital
Premium fund and other restricted reserves
Invested unrestricted equity reserve
Treasury shares
Fair value reserves
Retained earnings
311
717
2,308
–129
–142
1,054
311
717
2,308
–30
–96
–90
Total equity
5.2
4,119
3,120
Non-current liabilities
Non-current debt
Derivative financial instruments
Deferred tax liabilities
Employee benefit obligations
Provisions
Trade and other payables
Current liabilities
Current debt
Derivative financial instruments
Provisions
Current tax liabilities
Trade and other payables
5.1
5.4
2.6
3.3
4.6
4.5
5.1
5.4
4.6
4.5
491
11
0
216
49
20
787
141
120
32
65
1,516
1,874
597
2
1
309
63
23
994
112
40
29
21
2,166
2,368
Liabilities related to assets held for sale
6.1
204
–
TOTAL EQUITY AND LIABILITIES
6,983
6,482
The notes are an integral part of the financial statements.
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Financial statements
Consolidated financial statements, IFRS
Consolidated statement of income
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
148/220
Outokumpu Annual report 2022 Note
2022
2021
€ million
Note
2022
2021
Consolidated statement of cash flows
€ million
Cash flow from operating activities
Net result for the financial year
1,140
553
Adjustments for
Depreciation, amortization and impairments
2.3, 2.4, 4.1
Net expenses on provisions and employee benefit obligations
Gains/losses on sale of non-current assets, Group
companies and businesses
Net interest income and expense
Income taxes
Other non-cash adjustments
2.4
2.5
2.6
Change in net working capital
Change in trade and other receivables
Change in inventories
Change in trade and other payables
Provisions and employee benefit obligations paid
Interest and dividends received
Interest paid
Income taxes paid
Net cash from operating activities
297
28
8
35
–119
80
331
–35
–129
–424
–587
–53
7
–39
–21
778
304
21
–19
58
87
0
450
–241
–684
660
–266
–80
10
–63
–7
597
Cash flow from investing activities
Equity investments at fair value through other comprehensive income
Purchases of property, plant and equipment
Purchases of intangible assets
Proceeds from sale of property, plant and equipment
Proceeds from disposal of shares in Group companies and
businesses, net of cash
Other investing cash flow
Net cash from investing activities
Cash flow before financing activities
Cash flow from financing activities
Directed share issue
Dividends paid
Repurchase of treasury shares
Borrowings of non-current debt
Repayments of non-current debt
Change in current debt
Repayments of lease liabilities
Net cash from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Net change in cash and cash equivalents
Foreign exchange rate effect on cash and cash equivalents
Cash and cash equivalents at the end of the financial year 1)
The notes are an integral part of the financial statements.
5.6
4.1
4.1
4.1
6.2
5.2
5.2
5.1
5.1
5.1
4.2
5.1
–5
–148
–7
2
–1
–
–159
619
–
–68
–42
–
–71
–58
–33
–272
346
300
346
–3
644
–19
–145
–11
24
–
2
–149
448
205
–
–
63
–587
–174
–32
–525
–77
376
–77
2
300
1) Year 2022 includes cash and cash equivalents of discontinued operations amounting to EUR 117 million.
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Financial statements
Consolidated financial statements, IFRS
Consolidated statement of income
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
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Outokumpu Annual report 2022 Consolidated statement of changes in equity
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€ million
Equity on Jan 1, 2021
Net result for the financial year
Other comprehensive income
Total comprehensive income for the financial year
Transactions with equity holders of the parent company
Contributions and distributions
Directed share issue
Share-based payments
Fair value transfer to inventory
Other
Equity on Dec 31, 2021
Net result for the financial year
Other comprehensive income
Total comprehensive income for the financial year
Transactions with equity holders of the parent company
Contributions and distributions
Dividends
Share-based payments
Repurchase of treasury shares1)
Fair value transfer to inventory
Equity on Dec 31, 2022
Note
Share capital
Premium fund
Other
restricted
reserves
Invested
unrestricted
equity reserve
Fair value
reserve
from equity
investments
Fair value
reserve from
derivatives
Cumulative
translation
differences
Remeasure-
ments of
defined benefit
plans
Treasury
shares
Other retained
earnings
Total equity
Governance
311
–
–
–
–
–
–
–
311
–
–
–
–
–
–
–
311
714
–
–
–
–
–
–
–
714
–
–
–
–
–
–
–
714
5.2
3.4
5.4
5.2
3.4
5.2
5.4
3
–
–
–
–
–
–
–
3
–
–
–
–
–
–
–
3
2,103
–
–
–
205
–
–
–
2,308
–
–
–
–
–
–
–
2,308
–45
–
–44
–44
–
–
–
–
–89
–
–4
–4
–
–
–
–
–93
–4
–
20
20
–
–
–23
–
–7
–
–15
–15
–
–
–
–26
–48
–113
–
92
92
–
–
–
–
–22
–
24
24
–
–
–
–
3
–124
–
–46
–46
–
–
–
1
–169
–
41
41
–
–
–
–
–128
–31
–
–
–
–
1
–
–
–30
–
–
–
–
1
–100
–
–129
–454
553
0
553
–
3
–
–1
101
1,140
0
1,140
–68
6
–
–
1,179
2,360
553
22
574
205
4
–23
–
3,120
1,140
46
1,186
–68
7
–100
–26
4,119
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Consolidated statement of income
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
The notes are an integral part of the financial statements.
Equity is fully attributable to the equity holders of the parent company. See note 5.2 for more information on equity.
1) Treasury shares are acquired as part of the share buyback program announced on November 3, 2022. Shares are repurchased using funds in the Invested unrestricted equity reserve. Because of the nature of the contract with
the third party, Outokumpu has recognized EUR 58 million financial liability related to the share buyback program and the maximum amount of EUR 100 million is impacting Group equity already in 2022.
150/220
Outokumpu Annual report 2022 Notes to the consolidated financial statements
Note
Accounting principles
Management judgements
Risk information
Outokumpu presents the notes to the consol-
idated financial statements as grouped in the
following six sections.
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial
risk management
6. Group structure and other notes
The basis of preparation, accounting principles
and management judgements applicable to the
entire consolidated financial statements are
presented in the Basis of reporting section, but
the accounting principles, management judge-
ments, and risks related to each disclosure
item are presented in the related note. The
table outlines the notes structure and indicates
which notes include accounting principle,
management judgement and risk information,
and the following icons are used to indicate
these topics within the notes.
1. Basis of reporting
1.1 Corporate information
1.2 Basis of preparation
2. Business result
2.1 Operating segments
2.2 Revenue
2.3 Cost of sales and selling, general and administrative expenses
2.4 Other operating income and expenses
2.5 Financial income and expenses
2.6 Income taxes
2.7 Earnings per share
3. Employee benefits
3.1 Employee benefit expenses
3.2 Employee benefits for key management
3.3 Employee benefit obligations
3.4 Share-based payments
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
4.2 Leases
4.3 Goodwill impairment test
4.4 Inventories
4.5 Trade and other receivables and payables
4.6 Provisions
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
6.1 Discontinued operations
6.2 Business acquisitions and disposals
6.3 Disputes and litigations
6.4 Related parties
6.5 Subsidiaries
6.6 Associated companies
6.7 New IFRS standards
6.8 Events after the balance sheet date
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Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
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Outokumpu Annual report 2022
1. Basis of reporting
This notes section covers the company information, general basis of preparation as well as
accounting principles that are applicable to the entire consolidated financial statements.
1.1 Corporate information
Outokumpu Oyj is a Finnish public limited
liability company organized under the laws of
Finland and domiciled in Helsinki, Finland. The
company has been listed on the Nasdaq Hel-
sinki since 1988. Outokumpu Oyj is the parent
company ("parent company", "Outokumpu
Oyj") of the Outokumpu Group (the "Group",
"Outokumpu", the "company").
Outokumpu is the global leader in stainless
steel. The foundation of Outokumpu’s business
is its ability to tailor stainless steel into any
form and for almost any purpose. Stainless
steel is sustainable, durable and designed to
last forever. The Group’s customers use it to
create civilization’s basic structures and its
most famous landmarks as well as products for
households and various industries. Outokumpu
employs some 8,500 (continuing operations)
professionals in more than 30 countries.
Outokumpu’s consolidated financial
statements according to ESEF regula-
tions are published in XHTML format at
www.outokumpu.com/reports
. Financial
statements presented in other reports and
formats, such as in the Annual report PDF or
print, do not constitute as reports according to
the ESEF regulations.
In its meeting on February 9, 2023, the Board
of Directors of Outokumpu Oyj approved the
publishing of these consolidated financial
statements. According to the Finnish Limited
Liability Companies Act, shareholders have the
right to approve or reject the financial state-
ments in the Annual General Meeting held after
the publication of the financial statements. The
Annual General Meeting also has the right to
decide to amend the financial statements.
1.2 Basis of preparation
These consolidated financial statements of
Outokumpu have been prepared on a going
concern basis for the financial year 2022 cov-
ering the period from January 1 to December
31, 2022.
The consolidated financial statements have
been prepared in accordance with International
Financial Reporting Standards (IFRS) as
adopted by the European Union including the
IAS and IFRS standards as well as the SIC and
IFRIC interpretations in force on December 31,
2022. The consolidated financial statements
also comply with the regulations of Finnish
accounting and company legislation comple-
menting the IFRS.
The consolidated financial statements are
presented in millions of euros and have
been prepared under the historical cost
convention, unless otherwise stated in the
accounting principles. All figures presented
have been rounded, and consequently the
sum of individual figures may deviate from the
presented aggregate figure. Key figures have
been calculated using exact figures.
held for sale and reports the businesses as
discontinued operations according to IFRS 5
Non current assets held for sale and discon-
tinued operations.
Discontinued operations -
Long product businesses
On July 12, 2022 Outokumpu announced that it
has signed an agreement to divest the majority
of the Long Products business operations to
Marcegaglia Steel Group. The transaction
includes melting, rod, and bar operations in
Sheffield, the UK, bar operations in Richburg,
the US, and wire rod mill in Fagersta, Sweden.
The transaction excludes Outokumpu Long
Products AB units in Degerfors and Storfors,
Sweden, and different options regarding the
future of the units will be evaluated. Long
products activities that remain in Outokumpu
are included in Other operations.
During 2022 Outokumpu reclassified its Long
Products businesses to be divested as assets
Net result from the discontinued operations is
reported separately from income and expenses
from continuing operations in the consolidated
statement of income and comparative period
is restated accordingly. Assets and liabilities
related to the discontinued operations are pre-
sented as separate line items in the statement
of financial position and the comparative period
is not restated. The statement of cash flows
consists of total group figures including the
discontinued operations. In the comparative
period Outokumpu didn’t have discontinued
operations. See more information in note 6.1.
Corporate information
Company name
Legal form
Country of incorporation
Domicile and principal place of business
Company address
Ultimate parent company
Outokumpu Oyj
Public limited liability company
Finland
Helsinki, Finland
P.O. Box 245, 00181 Helsinki, Finland
Outokumpu Oyj
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Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
1.1 Corporate information
1.2 Basis of preparation
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
152/220
Outokumpu Annual report 2022 Risk information
War in Ukraine
Outokumpu strongly condemns the continued
military actions Russia is taking in Ukraine. The
company has undertaken actions throughout
the year to sever connections with a country
that does not honour international laws or
human rights, while taking into account the
contractual situations. Outokumpu has no
employees, production, or service centers
in Russia.
Outokumpu's most important raw material
is recycled steel, and the company stopped
sourcing it from Russia immediately in the
first quarter of 2022. Prompt decisions were
taken to stop sales and deliveries to Russia
with a robust execution. The company also
took decisive measures to replace other raw
materials of Russian origin. At the end of 2022,
Outokumpu had replaced Russian origin nickel
suppliers and as of the beginning of 2023, the
company does not buy any nickel of Russian
origin for its operations.
The prolonged war in Ukraine has had far-
reaching consequences for Outokumpu through
the adverse development of the geopolitical
tension and global economy. In particular, the
impacts of the energy crisis in Europe resulting
from the war became severe to Outokumpu
during the second half of the year 2022.
The company has taken various measures to
mitigate the negative impacts on its business
and operations and to prevent energy costs
from rising.
Outokumpu monitors closely the prolonged
situation concerning the war along with geopo-
litical and global economic development. The
established global core team that represents
the main business support functions is steering
and facilitating the co-operation between func-
tions to ensure effective implementation of risk
mitigation actions. As part of the overall risk
mitigation process, Outokumpu has continued
to further strengthen its cyber security.
Outokumpu is committed to complying with
all applicable laws and regulations, including
applicable sanctions regulations. Due to the
Russian invasion of Ukraine, Outokumpu has
continued its actions regarding sanctions
compliance, including the conduct of enhanced
third party-screenings, as a matter of priority.
This ensures that all applicable economic
and individual sanctions related to Russia are
followed and complied with.
Outokumpu has evaluated its trade receiv-
ables against implications resulting from the
conflict. The direct trade receivables from
Russia remained very limited and based on the
assessment, no material expected credit losses
were recognized in 2022.
Outokumpu has assessed whether any
impairment indications have arisen as a
result of the war but has not identified such
indications. Outokumpu has also assessed
the carrying amounts of its other assets and
liabilities and has not identified any material
impact on the carrying amounts.
Climate matters
Outokumpu aims to reduce its CO2 emissions
by 42% by the end of 2030 compared to the
2016 level, in line with its Science-Based Target
initiative (SBTi) 1.5 degree climate target.
Outokumpu has assessed physical climate
risks and mitigation measures for all sites and
included them in the general risk assessment
system. The evaluation shows that the physical
risk does not materially impact the Group's
capital expenditure or operative expenses.
However, the financial impact of the climate
transition risk is significant and has been
estimated for the target period until 2030.
To be able to attain the 1.5 degree climate
target, the company has created and com-
mitted to a low carbon roadmap and many CO2
reduction projects have been initiated already.
According to the roadmap, Outokumpu plans
to invest to the CO2 reduction projects in total
about EUR 350 million until 2030. The avoided
direct emission from European sites in that
period corresponds to European CO2 allowances
of about EUR 1141) million. As some projects
result in lower emissions outside the company,
as avoided scope 3 emissions caused by raw
material production, they do not impact the
company's financial situation but enable the
society to save about 2.5 million tons of CO2
which corresponds to EUR 2281) million.
See more information about climate related
matters in the section Sustainability review of
the Annual report.
1) The financial impact is evaluated with Company's
shadow price of 90 Euro per ton of CO2.
Management judgments
The preparation of the financial statements in
accordance with IFRS requires management to
make judgments, estimates and assumptions
that affect the reported amounts of assets
and liabilities and the disclosure of contingent
assets and contingent liabilities at the reporting
date, as well as the reported amounts of
income and expenses during the reporting
period.
The management estimates and judgments
are continuously evaluated and they are based
on prior experience and other factors, such as
future expectations assumed to be reasonable
considering the circumstances. Although these
estimates are based on management’s best
knowledge of the circumstances at the end of
the reporting period, actual results may differ
from the estimates and the assumptions.
The table in the beginning of the notes to
the consolidated financial statements outlines
the notes that include material manage-
ment judgments.
Accounting principles
Principles of consolidation
The consolidated financial statements include
the parent company Outokumpu Oyj and all
subsidiaries controlled by Outokumpu Oyj either
directly or indirectly. The Group controls an
entity when it is exposed to, or has rights to,
variable returns from its involvement with the
entity and has the ability to affect those returns
through its power over the entity.
The financial statements of subsidiaries are
included in the consolidated financial state-
ments from the date on which control com-
mences until the date on which control ceases.
Changes in the parent company’s ownership
interest in a subsidiary are accounted for as
equity transactions if the parent company
retains control of the subsidiary.
All intra-group transactions, receivables,
liabilities and unrealized margins, as well as
distribution of profits within the Group, are
eliminated in the preparation of consolidated
financial statements.
Foreign currency transactions
Transactions of each subsidiary included in the
consolidated financial statements are meas-
ured using the currency that best reflects the
economic substance of the underlying events
and circumstances relevant to that subsidiary
(“the functional currency”). The functional cur-
rency is mainly the subsidiary’s local currency
except for subsidiaries in Argentina (disposed
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
1.1 Corporate information
1.2 Basis of preparation
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
153/220
Outokumpu Annual report 2022 at the reporting date. When a foreign operation
is sold, or is otherwise partially or completely
disposed of, the translation differences
accumulated in equity are reclassified in profit
or loss as part of the gain or loss on the sale.
Adoption of new and amended
IFRS standards
As of January 1, 2022, Outokumpu has applied
the following new and amended standards,
interpretations and decisions.
• Amendments to IAS 16 Property, Plant and
Equipment – Proceeds before intended
use: The amendment prohibits the deduction
of any proceeds from selling produced
items from the cost of a property, plant and
equipment item while preparing the asset for
its intended use. It also clarifies that testing
the functioning of an asset refers to technical
and physical performance of the asset, not
financial performance.
• Amendments to IAS 37 Provisions,
Contingent Liabilities and Contingent
Assets – Onerous Contracts: The amend-
ment clarifies that the direct costs of fulfilling
a contract include both the incremental costs
of fulfilling the contract and an allocation
of other costs directly related to fulfilling
contracts. Before recognizing a separate
provision for an onerous contract, the entity
recognizes any impairment loss occurred on
assets used in fulfilling the contract.
The amendments did not have material
impact on Outokumpu’s consolidated finan-
cial statements.
in November 2022) and Mexico who use the US
dollar as their functional currency.
The consolidated financial statements are
presented in euros which is the functional and
presentation currency of the parent company.
Group companies’ foreign currency transactions
are translated into local functional currencies
using the exchange rates prevailing at the
dates of the transactions. Receivables and
liabilities in foreign currencies are translated
into functional currencies at the exchange rates
prevailing at the end of the reporting period.
Foreign exchange differences arising from
interest -bearing assets and liabilities and
related derivatives are recognized in financial
income and expenses in the consolidated state-
ment of income. Foreign exchange differences
arising in respect of other financial instruments
are included in EBIT under sales, purchases
or other operating income and expenses. The
effective portion of accumulated exchange dif-
ferences arisen from hedges of net investments
in foreign operations are recognized in equity.
For those subsidiaries whose functional
and presentation currency is not the euro,
the items in the statements of income and
comprehensive income, and in the statement
of cash flows are translated into euro using the
average exchange rates of the reporting period.
The assets and liabilities in the statement
of financial position are translated using the
exchange rates prevailing at the reporting date.
The translation differences arising from the use
of different exchange rates explained above are
recognized in the Group’s equity through other
comprehensive income.
Any goodwill arising on acquisitions of foreign
operations and any fair value adjustments
to the carrying amounts of assets and liabil-
ities arising on acquisitions of those foreign
operations are treated as assets and liabilities
of those foreign operations. They are translated
into euro using the exchange rates prevailing
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
1.1 Corporate information
1.2 Basis of preparation
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
154/220
Outokumpu Annual report 2022
2. Business result
In 2022, Outokumpu delivered its best annual result in history in a strong market environment
and was net debt free at year-end. Stainless steel deliveries declined from the previous year
while realized prices for stainless steel increased and supported profitability. As a result,
return on capital employed and earnings per share increased to a very strong level.
2.1 Operating segments
Outokumpu’s business is divided into three
business areas which are Europe, the Americas,
and Ferrochrome. The business areas have
responsibility for commercials, supply chain
management and operations and they are
Outokumpu’s operating segments under IFRS.
In addition to the business area structure,
Group Functions cover Legal and compliance,
Health and safety, Raw material procurement,
Finance and IR, General procurement, Strategy,
Transformation office, HR, Group commu-
nications, Global business services, R&D,
Technology, Sustainability and Group IT.
Europe consists of both coil and plate opera-
tions in Europe. The high-volume and tailored
standard stainless steel grades are primarily
used for example in architecture, building
and construction, transportation, catering
and appliances, chemical, petrochemical
and energy sectors, as well as other process
industries. The production facilities are located
in Finland, Germany and Sweden. The business
area has an extensive service center and sales
network across Europe, Middle East, Africa and
APAC region.
Americas produces standard austenitic and
ferritic grades as well as tailored products. Its
largest customer segments are automotive and
transport, consumer appliances, oil and gas,
chemical and petrochemical industries, food
and beverage processing, as well as building
and construction industry. The business area
has production units in the US and Mexico.
Ferrochrome produces charge grade of ferro-
chrome. The business area has a chrome mine
in Kemi, Finland and ferrochrome smelters in
Tornio, Finland.
Other operations consist of activities outside
the three operating segments, as well as indus-
trial holdings and non-core businesses. Such
business development, Corporate Management
expenses and other extraordinary costs not part
of business area performance assessment that
are not allocated to the business areas are also
reported under Other operations. Sales of Other
operations consist of sales of electricity to the
Group’s production facilities in Finland and in
Sweden, nickel procured under the Group’s
sourcing contract, sales of non-core businesses
and internal services.
Sales EUR
9.5
billion
Adjusted EBITDA EUR
1,256
million
Net result EUR
1,086
million
Earnings per share EUR
2.40
Sales, € million
10,000
7,500
5,000
2,500
0
2018* 2019* 2020*
2021
2022
* Including discontinued operations
Adjusted EBITDA, € million
1,500
1,200
900
600
300
0
€ million
6,872
6,403
2018*
2019*
2018*
2020*
2019*
2021
5,639
2020*
7,243
2021
2022
* Including discontinued operations
2022
9,494
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
2.1 Operating segments
2.2 Revenue
2.3 Cost of sales and selling, general and
administrative expenses
2.4 Other operating income and expenses
2.5 Financial income and expenses
2.6 Income taxes
2.7 Earnings per share
3. Employee benefits
Earnings per share, €
2.5
2018*
2019*
2020*
485
263
250
38
2021
980
2022
1256
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
2
1.5
1
0.5
0
-0.5
2018*
2019*
2020*
2021
2022
* Including discontinued operations
* Including discontinued operations
155/220
24
39
2018*
2019*
2020*
2021
2022
€
0.32
-0.18
-0.28
1.21
2.40
Outokumpu Annual report 2022
2022
€ million
External sales
Inter-segment sales
Intra-Group sales to discontinued operations
Sales
Adjusted EBITDA
Adjustments to EBITDA
Loss on disposal of shares in Group
companies and businesses
Litigation provisions
EBITDA
Depreciation and amortization
Impairments
EBIT
Assets in operating capital
Other assets
Deferred tax assets
Assets held for sale
Total assets
Liabilities in operating capital
Other liabilities
Deferred tax liabilities
Liabilities related to assets held for sale
Total liabilities
Americas
Ferrochrome
Operating
segments total
Other
operations
Eliminations
Europe
6,225
42
–
6,266
680
–
–
680
–130
0
550
2,686
9
–
2,695
384
–
2
387
–67
0
320
3,203
1,274
221
412
–
633
220
–
–
220
–42
–1
177
954
9,131
462
–
9,594
1,284
–
2
1,287
–239
–1
1,046
5,431
258
462
–
720
–34
–10
–
–44
–6
–10
–60
419
–
–924
104
–820
6
–
–
6
0
–
5
–301
1,339
285
87
1,711
385
–283
Reconciliation
Group
9,389
–
104
9,494
1,256
–10
2
1,248
–245
–11
992
5,550
625
390
419
6,983
1,813
848
0
204
2,864
In 2022, Outokumpu divested its plate service
center in Aalten, Netherlands, plated services
business in Castelleone, Italy, and Outokumpu
Fortinox S.A. in Argentina. The loss on the
disposals including transaction costs amounted
to EUR 10 million. Outokumpu also decreased
the litigation provision in the US. See note 6.3
for more information on litigations and note 4.6
on provisions.
In addition to the impairment of EUR 18
million related to Group's ERP systems booked
in 2021, Outokumpu recognized additional
impairment of EUR 10 million in 2022. For
more information on impairments in 2022, see
note 2.4.
In 2021, Outokumpu recognized increases in
litigation provisions of EUR 15 million and in
environmental provisions of EUR 10 million. The
environmental provisions relate to the aftercare
of closed mines in Finland.
In 2021, Outokumpu divested properties
related to closed operations in Krefeld and
Bochum in Germany, resulting in a gain of
EUR 12 million.
Operating capital 1)
Return on operating capital (ROOC), % 2)
1,864
28.9
990
32.4
867
20.7
3,721
34
–18
3,737
Adjustments to EBITDA and EBIT
€ million
Loss on disposal of shares in Group companies and businesses
Litigation provisions
Environmental provisions
Gain on disposal of property
Adjustments to EBITDA
Impairment of Group's ERP systems
Impairments in Ferrochrome business area
Impairments in lease agreements
Adjustments to EBIT
2022
2021
–10
2
–
–
–7
–10
–
–
–17
–
–15
–10
12
–12
–18
–13
–10
–54
1) Outokumpu has redefined its operating capital
definition in 2022. Comparative information has
been restated accordingly.
2) To align with the new financial targets and internal
management reporting, Outokumpu introduced
return on operating capital (ROOC) as a key figure
for segment reporting in 2022. Return on operating
capital (ROOC) is an internal measure for the value
the business areas generate to the capital invested
in its operations.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
2.1 Operating segments
2.2 Revenue
2.3 Cost of sales and selling, general and
administrative expenses
2.4 Other operating income and expenses
2.5 Financial income and expenses
2.6 Income taxes
2.7 Earnings per share
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
156/220
Outokumpu Annual report 2022
Americas
Ferrochrome
Operating
segments total
Other
operations
Eliminations
Reconciliation
Annual review
2021
€ million
External sales
Inter-segment sales
Intra-group sales to discontinued operations
Sales
Adjusted EBITDA
Adjustments to EBITDA
Litigation provisions
Environmental provisions
Gain on disposal of property
EBITDA
Depreciation and amortization
Impairments
EBIT
Assets in operating capital
Other assets
Deferred tax assets
Total assets
Liabilities in operating capital
Other liabilities
Deferred tax liabilities
Total liabilities
Europe
4,531
69
–
4,600
485
–
–
12
498
–141
–10
346
1,896
51
–
1,947
297
–15
–
–
283
–59
–3
220
3,126
1,361
185
418
–
604
246
–
–
–
246
–44
–13
189
996
6,613
538
–
7,151
1,028
–15
–
12
1,027
–244
–27
755
5,483
540
373
–
914
–18
–
–10
–
–-28
–4
–18
–50
384
–
–911
90
–821
–30
–
–
–
–-30
–1
–
–31
–3
1,405
480
173
2,058
385
–100
Operating capital1)
Return on operating capital (ROOC), %2)
1,721
20.4
880
27.2
823
24.8
3,425
–2
97
3,520
1) Outokumpu has redefined its operating capital definition in 2022. Comparative information has been restated accordingly.
2) To align with the new financial targets and internal management reporting, Outokumpu introduced return on operating capital (ROOC) as a key figure for segment reporting
in 2022. Return on operating capital (ROOC) is an internal measure for the value the business areas generate to the capital invested in its operations.
Group
7,153
–
90
7,243
980
–15
–10
12
968
–249
–45
674
5,864
396
222
6,482
2,344
1,018
1
3,362
Accounting principles
Sustainability review
Outokumpu’s CEO, supported by the Leadership
Team, is the Group’s chief operating decision
maker. The segments are reviewed regularly
for the purpose of assessing performance and
allocating resources to segments. The review
is based on internal management reporting on
IFRS based financial information.
Adjusted EBITDA
Adjusted EBITDA is Outokumpu’s main
performance indicator in financial reporting,
and is also used to assess the segments’
performance. Adjusted EBITDA is defined as
EBIT before depreciation, amortization and
impairment charges, and excluding such
material income and expense items which
affect the comparability between periods due to
their unusual nature, size or incidence resulting
from, for example, Group-wide restructuring
programs or disposals of assets or businesses.
Adjusted EBITDA is an alternative perfor-
mance measure meaning that it is not an
IFRS-defined measure, so it is defined also in
the Alternative performance measures section
within the Review by the Board of Directors
and reconciled to the consolidated statement
of income.
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
2.1 Operating segments
2.2 Revenue
2.3 Cost of sales and selling, general and
administrative expenses
2.4 Other operating income and expenses
2.5 Financial income and expenses
2.6 Income taxes
2.7 Earnings per share
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
157/220
Outokumpu Annual report 2022
2.2 Revenue
External sales by geographical destination
€ million
2022
Operating segment
Europe
Americas
Ferrochrome
Other operations
2021
Operating segment
Europe
Americas
Ferrochrome
Other operations
Finland
Other Europe
North America
APAC region
Other countries
Group
366
–
16
2
384
244
–
14
1
258
5,014
0
163
278
5,455
3,938
0
140
555
4,632
149
2,603
40
51
2,843
79
1,829
27
42
1,977
565
2
28
1
597
227
4
31
2
264
134
80
–
–
214
49
63
1
0
112
6,229
2,686
247
331
9,494
4,535
1,896
212
600
7,243
Figures by operating segment include intra-group sales to discontinued operations in year 2022 EUR 104 million (2021: EUR 90 million).
Accounting principles
Outokumpu generates revenue mainly from
sales of stainless steel and ferrochrome.
Outokumpu ships these goods to customers
under a variety of Incoterms, and considers
the physical possession as well as risks and
rewards related to the ownership of the goods
to be transferred accordingly. This also signifies
the transfer of control of the goods to the
customer.
Outokumpu’s performance obligations related
to sale of stainless steel and ferrochrome
are satisfied and revenue from contracts with
customers recognized at a point of time. Only
revenue from the performance obligation
related to transportation of the goods is
recognized over a period of time, and the
period under which the revenue is recognized
is relatively short. Moreover, the timing of
revenue recognition does not have an impact
when assessing the uncertainty associated
with future cash flows, as the sales of goods
and transportation service are billed from the
customer on the same invoice. Outokumpu acts
as a principal with regards to transportation
of goods.
Outokumpu has bill-and-hold arrangements
with selected European customers. Under these
arrangements, based on a customer request,
Outokumpu holds the readily available material
at its own stock locations for the customer
for up to a period of three months before the
actual delivery of the material. Outokumpu has
transferred control of these materials to the
customer as Outokumpu is not able to direct
the material to another customer, and conse-
quently recognizes the revenue for the material
sales. The revenue related to Outokumpu’s
transportation service performance obligation
to deliver the material is recognized over the
time when the delivery takes place.
In the end of 2022, the amount of revenue
recognized under the bill and hold arrange-
ments for products not delivered yet was
immaterial.
Stainless steel and ferrochrome sales prices
are mainly fixed before delivery, and volume dis-
counts estimated and accrued in the revenue
recognition are the only variable component
in pricing. In individual cases, the sales price
of ferrochrome is based on the period of time
when the customer uses the purchased ferro-
chrome. The payment terms vary from advance
payment to 90 days payment term, and do not
include any significant financing component.
Outokumpu also sells nickel procured under
Group’s nickel sourcing agreement. These sales
are recognized to revenue when the title to the
material is transferred to the buyer.
Liabilities related to customer contracts are
presented in note 4.5.
Outokumpu does not have individual signifi-
cant customers as defined in IFRS 8.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
2.1 Operating segments
2.2 Revenue
2.3 Cost of sales and selling, general and
administrative expenses
2.4 Other operating income and expenses
2.5 Financial income and expenses
2.6 Income taxes
2.7 Earnings per share
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
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Information for shareholders
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Outokumpu Annual report 2022
2.3 Cost of sales and selling, general and administrative expenses
€ million
Cost of sales
Selling and marketing expenses
Administrative expenses
Research and development expenses
Total, continuing operations
2022
–8,147
–72
–225
–15
–8,460
Cost of sales and selling, general and administrative expenses by nature
€ million
Materials
Supplies
Energy
Maintenance
Freight
Employee benefits
Depreciation and amortization
Other
Total, continuing operations
Depreciation and amortization by function
€ million
Cost of sales
Selling and marketing expenses
Administrative expenses
Research and development expenses
Total, continuing operations
Auditor fees
€ million
Audit
Audit-related services
Tax advisory
Other services
Total, continuing operations
2022
–5,263
–777
–462
–197
–284
–722
–245
–510
–8,460
2022
–236
–1
–7
–1
–245
2022
–2.5
–
0.0
–0.2
–2.7
2021
–6,310
–63
–176
–14
–6,564
2021
–3,992
–518
–327
–160
–253
–662
–249
–404
–6,564
2021
–240
–1
–7
–1
–249
2021
–2.3
0.0
0.0
–0.3
–2.7
PricewaterhouseCoopers Oy has provided non-audit services to Outokumpu in total of EUR 0.2 million
during 2022 (2021: EUR 0.3 million). These services comprised of sustainability reporting, ESG
consulting and other agreed upon procedures.
Accounting principles
Cost of sales
Cost of sales includes expenses related to
materials and supplies, energy, maintenance
and freight. Employee benefit expenses,
depreciation and amortization and other
expenses are included to the extent they relate
to operational activities.
Research and development costs
As a main rule, research and development
costs are expensed as incurred. If development
is expected to generate future economic
benefits for the Group, related costs are
capitalized as intangible assets and amortized
on a systematic basis over their useful lives.
Repairs and maintenance costs
Ordinary repairs and maintenance is carried out
to maintain operating conditions of the mills
and the equipment, and the related costs are
expensed as they are incurred.
The costs of major repairs and renovations
are included in the asset’s carrying amount as
capital expenditure when these activities are
expected to generate future economic benefits
for the Group, for example in form of a longer
useful life, a wider product range, a higher
output, or an improved quality, in excess of the
originally assessed standard performance level.
Depreciation and amortization methods
and useful lives of non-current assets
Depreciation and amortization methods as well
as estimates for useful lives of different types
of intangible asset and property, plant and
equipment items are described in the note 4.1.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
2.1 Operating segments
2.2 Revenue
2.3 Cost of sales and selling, general and
administrative expenses
2.4 Other operating income and expenses
2.5 Financial income and expenses
2.6 Income taxes
2.7 Earnings per share
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
159/220
Outokumpu Annual report 2022
2.4 Other operating income and expenses
Other operating income
€ million
Exchange gains and losses from foreign exchange derivatives
Market price gains and losses from commodity derivatives
Market price gains and losses from derivative financial instruments
Sale of services and rental income
Gains on sale of non-current assets
Other income items
Total, continuing operations
Other operating expenses
€ million
Exchange gains and losses from foreign exchange derivatives
Market price gains and losses from commodity derivatives
Market price gains and losses from derivative financial instruments
Impairments in non-current assets
Loss on disposal of shares in Group companies and businesses
Loss on sale of non-current assets
Other expense items
Total, continuing operations
2022
2021
–
–
–
5
3
10
18
22
–12
10
5
19
14
49
2022
2021
–8
–21
–29
–11
–9
–2
–8
–60
–
–
–
–45
–
–
–9
–54
Comparative information for exchange as well
as market price gains and losses is reported as
other operating income.
In 2022, Outokumpu divested its plated
services business in Castelleone, Italy, plate
service center in Aalten, Netherlands, and
Outokumpu Fortinox S.A. in Argentina. The loss
on the disposals excluding transaction costs
amounted to EUR 9 million. More information
on the divestment in note 6.2.
In addition to the impairment of EUR 18 million
related to Group's ERP systems booked in
2021, Outokumpu recognized an additional
impairment of EUR 10 million in 2022.
In 2021, Outokumpu recognized impairments
in non-current assets based on reviews of
individual assets for EUR 45 million. These
impairments include EUR 18 million relating
to the Group’s ERP systems, EUR 13 million
regarding mine properties and obsolete
machinery in Ferrochrome business area,
EUR 10 million regarding lease agreements
on land and buildings in the business area
Europe’s operations in Germany, and EUR 4
million regarding obsolescence of various
assets in the Group.
Accounting principles
Other operating income and expenses include
items such as gains or losses from disposals of
non-current assets or businesses and gains or
losses from derivate financial instruments that
are not hedge accounted or do not relate to the
Group’s financing activities.
Other operating income also includes rental
and lease income, insurance compensations
and government and other grants and support.
Grants and other support are recognized as
income over the same periods as the costs they
are intended to compensate. Investment grants
related to purchases of non-current assets
are deducted from the cost of the asset and
recognized as income on a systematic basis as
a reduction in depreciation or amortization over
the useful life of the asset.
Other operating expenses include costs
related to emission allowances and impairment
losses related to non-current assets.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
2.1 Operating segments
2.2 Revenue
2.3 Cost of sales and selling, general and
administrative expenses
2.4 Other operating income and expenses
2.5 Financial income and expenses
2.6 Income taxes
2.7 Earnings per share
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
160/220
Outokumpu Annual report 2022
Exchange gains and losses include EUR 32
million of net exchange gain on derivative
financial instruments (2021: EUR 30 million
net exchange gain) of which a loss of EUR 8
million (2021: EUR 22 million gain) has been
recognized in other operating income and
expenses and a gain of EUR 40 million (2021:
EUR 8 million gain) in financial income and
expenses.
2.5 Financial income and expenses
€ million
Interest income
Other financial income
Interest income and other financial income
Interest expenses
Debt at amortized cost
Factoring
Lease liabilities
Employee benefit obligations
Other interest expenses
Interest expenses
Capitalized interests
Fees related to committed credit facilities
Other fees
Other financial expenses
Exchange gains and losses
Derivatives
Cash, loans and receivables
Other market price gains and losses
Derivatives
Other
Market price gains and losses
Total, continuing operations
Exchange gains and losses in the consolidated statement of income
€ million
In sales
In purchases
In other operating income and expenses
In financial income and expenses
Total, continuing operations
2022
2021
4
1
4
–21
–10
–10
–3
–1
–44
3
–12
–10
–19
40
–39
–10
–3
–12
–71
4
3
7
–44
–6
–11
–1
–2
–64
3
–13
–9
–19
8
–10
–5
4
–3
–79
2022
2021
10
–31
–8
1
–29
12
–32
22
–2
0
Accounting principles
Sustainability review
Annual review
Financial income includes mainly interest
income on cash and cash equivalents and
defined benefit plans.
Financial expenses include mainly interest
expenses of borrowings, lease liabilities,
factoring and defined benefit plans.
Other income and expenses include fees
related to accrued commitment credit facilities,
other financial fees and capitalized interests.
Exchange gains and losses include exchange
and other market price gains and losses on
cash, debt and receivables and derivatives
related to Group’s financing activities.
Exchange and other market price gains
and losses on operative items and related
derivative instruments are recognized in EBIT.
Exchange and other market price gains and
losses on financing items and related derivative
instruments are recognized in financial income
and expenses.
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
2.1 Operating segments
2.2 Revenue
2.3 Cost of sales and selling, general and
administrative expenses
2.4 Other operating income and expenses
2.5 Financial income and expenses
2.6 Income taxes
2.7 Earnings per share
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
161/220
Outokumpu Annual report 2022
2.6 Income taxes
Income taxes in the consolidated statement of income
€ million
Current taxes
Deferred taxes
Total, continuing operations
2022
–61
215
154
Reconciliation of income taxes in the consolidated statement of income
€ million
Result before taxes
Income taxes at Finnish tax rate of 20%
Difference between Finnish and foreign tax rates
Non-deductible expenses and tax exempt income
Current year result for which no deferred tax asset has been recognized
Changes in deferred tax recognition1)
Group company disposals
Taxes for prior years
Tax rate changes and other changes in tax laws
Associated companies
Total, continuing operations
2022
933
–187
–46
–1
84
303
–2
1
–1
2
154
2021
–23
–61
–84
2021
610
–122
–25
–2
54
4
–
–2
7
3
–84
1) Mainly relate to US deferred tax asset recognition. More information at the end of this note.
Accumulated deferred taxes recognized in equity
€ million
Deferred tax on convertible bond equity component
Net investment hedging
Remeasurements of the net defined benefit liability
Derivatives
Total, continuing operations
2022
2021
–1
–4
64
6
64
–2
–4
87
0
81
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
2.1 Operating segments
2.2 Revenue
2.3 Cost of sales and selling, general and
administrative expenses
2.4 Other operating income and expenses
2.5 Financial income and expenses
2.6 Income taxes
2.7 Earnings per share
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
162/220
Outokumpu Annual report 2022
Deferred tax assets and liabilities
€ million
Intangible assets
Property, plant and equipment
Inventories
Net derivate financial assets
Other financial assets
Employee benefit obligations
Other financial liabilities
Provisions
Tax losses and tax credits
Net deferred tax assets
Deferred tax assets
Deferred tax liabilities
Jan 1, 2022
Movements
Dec 31, 2022
Net deferred tax assets (+)
and liabilities (–)
Reclassifications
Recognized in
profit or loss
Recognized in other
comprehensive income or
directly in equity
Translation
differences
Net deferred tax assets (+)
and liabilities (–)
5
–211
6
1
39
41
38
–5
307
221
222
–1
–
–9
0
0
0
0
0
0
–8
–18
3
14
–2
–5
–8
–1
5
6
203
215
–
–
–
6
–
–24
–
–
–
–18
0
–8
0
0
0
0
0
0
–2
–10
8
–215
3
2
31
16
43
1
500
390
390
0
Reclassifications include transfers to assets classified as held for sale.
€ million
Intangible assets
Property, plant and equipment
Inventories
Net derivate financial assets
Other financial assets
Employee benefit obligations
Other financial liabilities
Provisions
Tax losses and tax credits
Net deferred tax assets
Deferred tax assets
Deferred tax liabilities
Jan 1, 2021
Movements
Dec 31, 2021
Net deferred tax assets (+)
and liabilities (–)
Reclassifications
Recognized in
profit or loss
Recognized in other
comprehensive income or
directly in equity
Translation
differences
Net deferred tax assets (+)
and liabilities (–)
6
–190
–4
–2
23
41
87
–10
306
257
264
–7
–
–
–
–
–
–
–
–
–
–
–2
–17
9
3
16
–24
–52
5
–1
–64
–
–
–
0
–
24
–
–
–
24
1
–5
0
0
0
0
3
0
3
3
5
–211
6
1
39
41
38
–5
307
221
222
–1
The figures in 2021 are including discontinued operations.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
2.1 Operating segments
2.2 Revenue
2.3 Cost of sales and selling, general and
administrative expenses
2.4 Other operating income and expenses
2.5 Financial income and expenses
2.6 Income taxes
2.7 Earnings per share
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
163/220
Outokumpu Annual report 2022
Tax losses and related deferred tax assets
Tax losses
carried forward
Recognized
deferred tax assets
Unrecognized deferred
tax assets
Management judgments
€ million
Expire in 2–5 years
Expire later than in 5 years
Never expire
Total, continuing operations
Tax losses by country
€ million
Finland
Germany
Sweden
The US
The UK
Other countries
Total, continuing operations
2022
0
1,267
924
2,190
2021
81
1,633
1,101
2,815
2022
0
302
199
500
2021
2022
16
126
165
307
–
–
7
7
2022
–
145
190
1,640
168
47
2,190
2021
–
307
108
414
2021
197
217
289
1,871
190
51
2,815
As of December 31, 2022, the tax attributes of
the Outokumpu Group for which no deferred tax
asset has been recognized amount to EUR 31
million (Dec 31, 2021: EUR 1,540 million). The
decrease is mainly due to the recognition of
deferred tax assets relating to US operations.
At the end of 2021, Outokumpu Group had
losses in the US operations where losses were
not valued to the extent they exceeded the
deferred tax liability. Year 2021 was the first
profitable year for business area Americas after
a long history of losses and the accounting
assessment for deferred tax asset did not
support the recognition of a net deferred tax
asset. Year 2022 was also profitable and
therefore, following two consecutive years of
strong performance and good expectations for
continuing good performance, the condition for
recording a deferred tax is fulfilled. A deferred
tax asset of EUR 297 million relating to US
losses was recorded in the balance sheet
in 2022.
No deferred tax liabilities were recorded on
undistributed profits of foreign subsidiaries,
as such profits are not to be distributed in the
foreseeable future.
Outokumpu operates and earns income in
numerous countries and is subject to changes
in tax laws in multiple jurisdictions. When
recognizing income tax liabilities, material
judgments and estimates need to be made on
tax uncertainties.
In deferred tax asset recognition, the
management assesses whether the realization
of future tax benefits is sufficiently probable
to support the recognition. This assessment
requires judgment regarding, for example,
realizable benefits from future taxable income,
available tax strategies, as well as other posi-
tive and negative factors. The recorded amount
of deferred tax assets could be reduced as
a result of changes in these estimates or in
tax regulations imposing restrictions on the
utilization of future tax benefits.
Accounting principles
Current and deferred income taxes are deter-
mined on entity level to the extent an entity
is subject to income taxation. The income
taxes in the consolidated statement of income
include the Group companies’ current income
taxes based on taxable profit for the period,
tax adjustments for previous periods, and the
change in deferred income taxes. In several
countries (Finland, Germany, the Netherlands,
Sweden, the UK and the US) Outokumpu com-
panies are included in income tax consolidation
groups or group taxation systems. The share
of results in associated companies is reported
in the statement of income based on the net
result and thus including the income tax effect.
Deferred income taxes are stated using the
balance sheet liability method to reflect the net
tax effects of temporary differences between
the assets and liabilities’ carrying amounts in
the financial statements and the corresponding
tax basis at the reporting date, as well as for
unused tax loss or credit carry forwards.
Deferred tax assets are recognized for all
deductible temporary differences to the extent
that it is probable that future taxable profits will
be available for utilization of these differences.
A valuation allowance is recognized if the
realization of the tax benefits is not probable.
The ability to recognize deferred tax assets is
reviewed at the end of each reporting period.
Deferred tax liabilities are usually recognized
in the statement of financial position in full.
As an exception, deferred tax liabilities are not
recognized if they arise from initial recognition
of an asset or a liability in a transaction that is
not a business combination and that does not
affect the accounting nor taxable profit at the
time of the transaction.
Deferred taxes are calculated at the enacted
or substantially enacted tax rates that are
expected to apply by the end of the reporting
period. Generally, deferred tax is recognized to
the statement of income. However, if the taxes
are related to items of other comprehensive
income or to transactions or other events
recognized directly in equity, the related income
taxes are also recognized either in other
comprehensive income or directly in equity,
respectively.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
2.1 Operating segments
2.2 Revenue
2.3 Cost of sales and selling, general and
administrative expenses
2.4 Other operating income and expenses
2.5 Financial income and expenses
2.6 Income taxes
2.7 Earnings per share
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
164/220
Outokumpu Annual report 2022
2.7 Earnings per share
Net result attributable to the equity holders of the parent company, € million
Interest expenses on convertible bond, net of tax, € million
Adjusted net result attributable to the equity holders of the parent company, € million
Net result attibutable to the equity holders of the parent company, continuing
operations, € million
Interest expenses on convertible bond, net of tax, continuing operations, € million
Adjusted net result attributable to the equity holders of the parent company,
continuing operations, € million
2022
1,140
8
1,148
1,086
8
1,094
2021
553
8
561
526
8
534
Adjusted weighted average number of shares, in thousands
Adjusted diluted weighted average number of shares, in thousands
451,933
493,536
438,871
479,164
2.52
2.33
2.40
2.22
1.26
1.17
1.21
1.13
Earnings per share, €
Diluted earnings per share, €
Earnings per share, continuing operations, €
Diluted earnings per share, continuing operations, €
In 2022, Outokumpu repurchased 8,575,126
treasury shares as part of a share buyback
program. More information on the program is
presented in note 5.2.
In May 2021, Outokumpu carried out an
issue of 40,500,000 new shares directed to
institutional investors. The new shares were
registered on May 12, 2021.
Accounting principles
Basic earnings per share is calculated
by dividing the net result attributable to
the equity holders of the company by the
adjusted weighted average number of shares
outstanding during the period, excluding shares
held by Outokumpu as treasury shares.
In a share issue, when shares are offered at
discount compared to market price, the pro-
portion of the issue representing the discount
is retrospectively adjusted to the weighted
average number of shares.
Diluted earnings per share is calculated
by adjusting the adjusted weighted average
number of ordinary shares outstanding with
the assumption that convertible instruments
are converted. The profit or loss used in the
calculation is adjusted for the interest expense
related to the instrument and recognized in
the period, net of tax. In addition, the shares
estimated to be delivered based on the
share-based incentive programs are taken into
account. However, potential ordinary shares are
only dilutive if the adjustments decrease the
earnings per share ratio.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
2.1 Operating segments
2.2 Revenue
2.3 Cost of sales and selling, general and
administrative expenses
2.4 Other operating income and expenses
2.5 Financial income and expenses
2.6 Income taxes
2.7 Earnings per share
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
165/220
Outokumpu Annual report 2022
3. Employee benefits
Outokumpu slightly reduced its number of personnel for continuing operations
during 2022 and at the end of December full-time equivalent number of personnel
was 8,357. Employee benefit expenses increased in 2022, reflecting the intense
utilization of our resources to produce higher volumes. In addition, expenses related
to short-term incentives increased on the back of the strong performance in 2022.
3.1 Employee benefit expenses
€ million
Wages and salaries 1)
Termination benefits
Social security costs 1)
Post-employment and other long-term employee benefits
Defined benefit plans
Defined contribution plans
Other long-term employee benefits
Share-based payments
Other employee benefit expenses
Total, continuing operations
Total employee benefit
expenses EUR
722
million
Number of personnel at
the end of period (FTE)
8,357
2022
–544
–9
–108
–5
–41
–1
–8
–7
–722
2021
–499
–3
–102
–3
–43
–1
–4
–6
–662
1) The classification between wages and salaries and social security costs has been refined in 2022. Comparison
period is presented accordingly.
Employee benefit expenses, € million
800
600
400
200
0
2018*
2019*
2020*
2021
2022
Personnel on December 31
12,000
10,000
8,000
6,000
4,000
2,000
0
2018*
2019*
2020*
2021
2022
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
3.1 Employee benefit expenses
3.2 Employee benefits for key management
3.3 Employee benefit obligations
3.4 Share-based payments
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
* Including discontinued operations
Personnel reported as full time equivalent number.
* Including discontinued operations
* Including discontinued operations
166/220
net result
€ million
10,118
10,078
9,602
8,439
8,357
2018*
2019*
2020*
2021
2022
€ million
676
774
735
662
722
2018*
2019*
2020*
2021
2022
40
37
Outokumpu Annual report 2022 3.2 Employee benefits for key management
€ thousand
Short-term employee benefits
Post-employment benefits 1)
Share-based payments
Remuneration to the Board of Directors
1) Contains only supplementary pensions.
2022
6,404
233
2,331
898
9,866
2021
6,171
421
1,048
781
8,421
Key management includes the members of the Outokumpu Leadership Team and the members of the parent
company Outokumpu Oyj’s Board of Directors. President and CEO, CFO, Presidents of the core business areas
and business lines, Chief Technology Officer and Chief Human Resources Officer are part of the Outokumpu
Leadership Team.
Employee benefits for the CEO
€ thousand
Salaries and short-term benefits
Short-term incentives
Post-employment benefits
Share-based payments
Recognized in
profit or loss
Remuneration paid
2022
900
871
241
633
2,645
2021
796
1,065
116
278
2,254
2022
900
1,065
241
–
2,206
2021
796
–
116
–
912
CEO participates in the Finnish TyEL pensions system, and the post-employment benefits have been calculated
based on the general TyEL contribution percentage of the employer.
Remuneration paid to Board of Directors
€ thousand
Chairman Kari Jordan
Vice Chairman Kati ter Horst, Vice Chairman as of March 31, 2022
Vice Chairman Eeva Sipilä, until March 31, 2022
Member Heinz Jörg Fuhrmann, as of March 31, 2021
Member Päivi Luostarinen, as of March 31, 2021
Member Karl-Petter Söderström, as of March 31, 2022
Member Vesa-Pekka Takala
Member Pierre Vareille
Member Julia Woodhouse
2022
2021
190
114
4
95
92
87
113
100
105
898
176
84
104
78
80
–
83
85
93
781
Remuneration of the CEO
The remuneration of the CEO consists of base
salary, benefits, annually determined short-term
incentives, and long-term share-based incen-
tive programs.
The CEO’s monthly gross base salary was raised
by 16% to EUR 75,397 in April 2022, totaling
EUR 900,322 including short-term benefits for
the full year 2022.
In 2022, the CEO’s short-term incentive earning
opportunity remained unchanged at 50% of
the annual gross base salary on a target level
and 100% on a maximum level. The short-term
incentive to be paid in 2023 reflects the
achievement of the pre-defined targets for 2022:
Group adjusted EBITDA (80% weight, achieved at
maximum level), safety (10% weight, achieved at
target level), and strategy implementation (10%
weight, achieved at maximum level).
The CEO participates in the Performance Share
Plans (PSP) 2020–2022, 2021–2023 and
2022–2024. Outokumpu did not reach the
target for PSP 2019–2021 and subsequently
no share rewards were paid in 2022. The target
was reached however for PSP 2020–2022, and
the CEO will receive 100% of his share grant
during spring 2023, or 130,451 gross shares.
The members of Outokumpu’s Leadership
Team, including the CEO, are expected to own
Outokumpu shares they receive in the company’s
share-based incentive programs corresponding
to the value of their annual gross base salary.
Half (50%) of the net shares received from the
share-based incentive programs must be used to
fulfil that ownership recommendation.
The CEO has the right to retire at the age of
65. He participates in the Finnish TyEL pension
system, and there is no supplementary pension
plan at place. The service contract of the CEO
is valid until further notice. He is entitled to a
severance payment of twelve (12) months, and the
notice period is six (6) months for both parties.
Remuneration of the Board of Directors
Outokumpu’s Annual General Meeting approved
the annual remuneration to the members of the
Board of Directors. 40% of the annual fee was
paid in the company’s own shares using treasury
shares, unless a Board member already owned
shares for a value exceeding the annual remunera-
tion and chose to increase their cash portion. The
annual fee is paid once a year. In addition to the
annual remuneration, a meeting fee is paid. The
Board members are not eligible for any pension
schemes nor any other share-based rewards.
Accounting principles
Employee benefits for the key management
include the benefits to each Leadership Team
or Board of Directors member for the time they
hold these positions.
Employee benefits are presented based on
expenses recognized in profit or loss during the
year on accrual basis except for the CEO whose
remuneration is presented also based on paid
during the year. The remuneration to Board of
Directors is also presented on paid basis.
Short-term incentives are recognized to profit
or loss during the period they relate to whereas
bonuses are typically paid out during the following
financial year. Expenses on share-based payments
are recognized to profit or loss at the share price
on the grant date of the benefit and over the
period when the benefit is earned. Share-based
benefits are reported as paid when delivered and
at the share price on the delivery date.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
3.1 Employee benefit expenses
3.2 Employee benefits for key management
3.3 Employee benefit obligations
3.4 Share-based payments
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
167/220
Outokumpu Annual report 2022
2022
2021
Defined benefit cost in profit or loss and other comprehensive income
€ million
In employee benefit expenses in EBIT
In financial income and expenses
Defined benefit cost in profit or loss
In other comprehensive income
Total defined benefit cost
Gross defined benefit obligations and plan assets
€ million
Present value of funded defined benefit obligations
Present value of unfunded defined benefit obligations
Fair value of plan assets
Net defined benefit liability
–5
–3
–7
65
57
2022
502
2
–301
202
Amounts recognized in the consolidated statement of financial position
€ million
Net defined benefit liability
Other long-term employee benefit liabilities
Employee benefit obligations in statement of financial position
2022
202
14
216
–3
–1
–4
–72
–76
2021
778
3
–487
294
2021
294
15
309
Gross defined benefit obligations and plan assets are presented in the statement of financial position netted per
plan either as a liability or an asset depending on nature of the netted item.
The share of discontinued operations in defined benefit cost in profit or loss and other comprehensive income in
2022 was immaterial (2021: immaterial). There was a net defined benefit liability of EUR 1 million in statement
of financial position in discontinued operations in 2022.
3.3 Employee
benefit obligations
Outokumpu has several defined benefit and
defined contribution plans in various countries.
The most significant defined benefit plans
are in Germany and the UK, representing 44%
and 53% of the Group’s total defined benefit
obligation, respectively.
Funding requirements of the defined benefit
plans are generally based on the pension fund’s
actuarial measurement framework set out in
the funding policies and local regulation.
Germany
Outokumpu has several defined benefit plans
in Germany, of which major plans include a
management plan, open pension plans for
other staff, and other pension obligations,
which are nearly all closed for new entrants.
Basis to all pension obligations in Germany
are bargaining agreements and/or individual
contracts (management obligations). The man-
agement plan and other pension obligations are
based on annuity payments, whereas plans for
other employees are based on one lump sum
payment after retirement.
In addition, all the obligations in Germany are
embedded in the BetrAVG law. The law contains
rules for vested rights, pension protection
scheme and regulations for the pension
adjustments. In Germany, no funding require-
ments exist, and the plans are funded only for a
small part with a CTA model (Contractual Trust
Arrangement) that was introduced in 2019.
The UK
The AvestaPolarit Pension Scheme (the
“Scheme”) is registered under UK legislation
and is contracted out of the State Second
Pension. The Scheme is subject to the funding
requirements outlined in UK legislation. The
Scheme’s trustee is responsible for the opera-
tion and governance of the Scheme, including
decisions regarding the Scheme’s funding and
investment strategy.
In December 2021, a GBP 390 million
buy-in contract was implemented. This buy-in
completed the Scheme’s de-risking process
which began with an initial buy-in in 2020,
when a GBP 110 million buy-in insurance
solution was implemented. The actuarial losses
in 2021 amounted to EUR 86 million, mainly
attributable to the buy-in arrangement.
A buy-in removes risks of investment, longevity,
interest rate changes and inflation for the
Scheme and is held as a Scheme asset. Until
a buy-out is secured, the Scheme ultimately
remains the responsibility of the Company.
However, as a result of the buy-in arrangement,
the risks related to the Scheme’s obligation are
now significantly reduced and mostly covered
by insurance. Outokumpu has agreed with the
trustees to hold cash in an escrow account to
provide for small mismatches in the insurance
coverage and liquidity to the scheme. At
year-end 2022, the escrow balance was GBP
13 million (2021: GBP 13 million).
Due to the buy-in solutions, no further contri-
butions are expected to be required as a result
of the triennial valuations. The latest actuarial
valuation was completed in 2021. In 2021,
Outokumpu made the final contribution of GBP
3 million.
Discontinued operations
All the figures in this note are including discon-
tinued operations as their impact is considered
immaterial.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
3.1 Employee benefit expenses
3.2 Employee benefits for key management
3.3 Employee benefit obligations
3.4 Share-based payments
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
168/220
Outokumpu Annual report 2022 Movement in net defined benefit liability
Significant actuarial assumptions
€ million
Total on Jan 1
Current service cost
Past service cost
Interest expense/(income)
Remeasurements arising from
Return on plan assets
Demographic assumptions
Financial assumptions
Experience adjustment
Exchange differences
Employer contributions
Benefits paid
Settlements
Total on Dec 31
Germany on Dec 31
The UK on Dec 31
Present
value of
obligation
Fair value of
plan assets
2022
Net defined
benefit
liability
Present
value of
obligation
Fair value of
plan assets
2021
Net defined
benefit
liability
781
4
1
10
–
4
–264
16
–16
–
–31
–1
504
221
266
–487
–
–
–8
178
–
–
–
17
–34
31
2
–301
–34
–262
294
4
1
3
178
4
–264
16
1
–34
–
0
202
187
4
783
5
–2
7
–
14
–21
5
32
–
–41
–2
781
292
470
–534
–
–
–7
72
–
–
–
–34
–28
41
2
–487
–16
–464
249
5
–2
1
72
14
–21
5
–2
–28
–
0
294
276
6
Discount rate, %
Future salary
increase, %
Inflation rate, %
Future benefit
increase, %
Medical cost trend
rate, %
Life expectancy
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Germany
3.74
0.92
–
–
–
–
2.30
1.70
–
–
The UK
4.75
1.75
–
–
3.25
3.30
3.10
3.15
–
–
RT 2018 G
mortality tables
RT 2018 G
mortality tables
96% SAPS All Pensioner
Amounts tables with CMI
Core Projection Model
–2021
96% SAPS All Pensioner
Amounts tables with CMI
Core Projection Model
–2020
Other countries
7.14
3.76
4.11
3.99
–
–
2.01
1.36
5.20
5.80–6.10
Standard
mortality tables
Standard
mortality tables
Sensitivity analysis of significant actuarial assumptions
The weighted average duration of the overall
defined benefit obligation is 12.8 years.
In Germany and in the UK, the weighted
average durations are 10.8 and 15.0 years,
respectively.
Allocation of plan assets
€ million
Cash and cash equivalents
Insurance policies
Total plan assets
2022
2
264
267
2021
5
466
471
Discount rates, rising inflation and increasing
retirement age have material impact on finan-
cial assumptions and remeasurement amounts.
The expected contributions to be paid to the
defined benefit plans in 2023 are EUR 35
million and relate mainly to the German plans.
Allocation of plan assets covers 88.5% of total
defined benefit plan assets. On December 31,
2022, 0.9% of the plan assets were invested in
quoted instruments (Dec 31, 2021: 1.0%).
2022
Discount rate
Future benefit increase
Medical cost trend rate
Future salary increase
Life expectancy
2021
Discount rate
Future benefit increase
Medical cost trend rate
Future salary increase
Life expectancy
Change in
assumption
+/– 0.5%
+/– 0.5%
+/– 0.5%
+/– 0.5%
+ 1 year
+/– 0.5%
+/– 0.5%
+/– 0.5%
+/– 0.5%
+ 1 year
Germany, %
The UK, %1) Other countries, %
–5/+6
+3/–2
–
–
+2
–6/+7
+3/–3
–
–
+3
–7/+8
+5/–5
–
–
+3
–9/+10
+7/–7
–
–
+3
–3/+4
+2/–2
+5/–4
+3/–3
+7
–4/+4
+3/–3
+1/–1
+3/–3
+7
Sensitivity is presented for reasonably possible change at the reporting date in one of the principal assumptions,
while holding all other assumptions constant.
1) The buy-in removed risks of investment, longevity, interest rate changes and inflation for the scheme.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
3.1 Employee benefit expenses
3.2 Employee benefits for key management
3.3 Employee benefit obligations
3.4 Share-based payments
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
169/220
Outokumpu Annual report 2022 which the plan can receive payments from the
insurer corresponding to the benefits due to the
participants, but ultimately the primary obliga-
tion to pay benefits has not been transferred.
For other long-term employee benefits, all
service costs and remeasurements are recog-
nized immediately in the statement of income.
Interest expenses are recognized in financial
items under interest expenses.
The significant actuarial assumptions are
presented separately for the most significant
countries, and for other countries a weighted
average of the assumptions is presented.
Other long-term employee benefits
Other long-term employee benefits mainly
relate to early retirement provisions in Germany
and long-service remunerations in Finland.
Under the German early retirement agreements,
employees work additional time prior to
retirement, which is subsequently paid for in
instalments after retirement. In Finland, the
employees are entitled to receive a one-time
indemnity every five years after 20 years of
service.
Multi-employer defined benefit plans
ITP pension plans operated by Alecta in
Sweden and plans operated by Stichting
Bedrijfspensioenfonds voor de metaalindustrie
in the Netherlands are multi-employer defined
benefit pension plans. However, it has not
been possible to get sufficient information for
the calculation of obligations and assets by
employer from the plan operators, and there-
fore these plans have been accounted for as
defined contribution plans in the consolidated
financial statements.
Risk information
Through its defined benefit plans, Outokumpu
is exposed to a number of risks, the most
significant of which are detailed below.
Asset volatility: The level of equity returns is a
key factor in the overall investment return. If
a plan holds significant proportion of equities,
which are expected to outperform corporate
bonds in the long-term, it might face higher
volatility and risk in the short-term. The
investment portfolio might also be subject to a
range of other risks typical of the assets held,
in particular credit risk on bonds and exposure
to the property market.
Change in bond yields: A decrease in
corporate bond yields will increase plan
liabilities, although this will be partially offset
by an increase in the value of the plan’s bond
holdings (if any). In a situation where the return
on plan assets is lower than the corporate bond
yields, a plan may face a shortfall which might
lead to increased contributions.
Inflation risk: Inflation rate is linked to both
future pension and salary increase, and higher
inflation will lead to higher liabilities.
Longevity: The majority of Outokumpu’s
defined benefit obligations are to provide ben-
efits for the life of the member, so increases in
life expectancy will result in an increase in the
plans’ liabilities.
The buy-in solutions implemented in the UK
in 2021 and 2020 significantly reduce the
earlier-mentioned risks for the Scheme, which
is mostly covered by insurance.
Management judgments
The present value of pension obligations is
subject to actuarial assumptions which are
used in calculating these obligations. These
assumptions include, among others, discount
rate, the annual rate of increase in future com-
pensation levels, inflation rate and employee
turnover rate. The assumptions are proposed
by external independent actuaries separately
for each defined benefit plan or each country
where Outokumpu has defined benefit plan and
approved by the management.
Accounting principles
The Group companies in different countries
have various post-employment benefit plans in
accordance with local conditions and practices.
The plans are classified as either defined
contribution plans or defined benefit plans.
The fixed contributions to defined contribu-
tion plans are recognized as expense in the
period to which they relate. The Group has no
legal or constructive obligation to pay further
contributions if the receiving party is not able to
pay the benefits in question. All such arrange-
ments that do not meet these requirements are
defined benefit plans.
Defined benefit plans are funded with
payments to the pension funds or insurance
companies. The present value of the defined
benefit obligations is determined separately
for each plan by using the projected unit credit
method. The liability recognized in the state-
ment of financial position is the defined benefit
obligation less the fair value of plan assets at
the closing date. When the fair value of plan
assets exceeds the value of the obligation, the
net amount is recognized as defined benefit
plan assets.
Current service costs, past service costs and
gains or losses on settlements are recognized
in functional costs above EBIT. Net interest
expense or income is recognized in financial
items under interest expense or interest
income. All remeasurements of the net defined
benefit liability (asset) are recognized directly in
other comprehensive income.
Buy-in contract in the UK does not result
in a settlement because Outokumpu remains
responsible for the benefit obligation. The
buy-in contract is effectively an investment by
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
3.1 Employee benefit expenses
3.2 Employee benefits for key management
3.3 Employee benefit obligations
3.4 Share-based payments
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
170/220
Outokumpu Annual report 2022 3.4 Share-based payments
Share-based programs are part of the Group’s
incentive and commitment-building system
for key employees. The objectives are to
align the interests between key employees
and shareholders, promote shareholder value
creation and the achievement of long-term
strategic targets.
Outokumpu operates two share-based
programs. The Performance Share Plan (PSP)
includes an earning criterion and is part of the
regular compensation of top executives, with
a maximum number of participants of 150.
The Restricted Share Pool (RSP) does not have
any specific earning criteria and it is used
for a limited number of employees, for key
recruitments, exceptional performance, high
potential, retention needs and other individual
specific situations.
For the financial year 2022, the share-based
payment expenses included in the employee
benefit expenses were EUR 8 million (2021:
EUR 4 million). The total estimated value of
the share-based payment plans is EUR 18
million on December 31, 2022 (2021: EUR 14
million). This value is recognized as an expense
in the statement of income during the vesting
periods.
Outstanding programs
During 2022, Outokumpu’s share based
payment programs included the Performance
Share Plan (periods 2020–2022, 2021–2023
and 2022–2024) and the Restricted Share Pool
Program (periods 2020–2022, 2021–2023 and
2022–2024).
In December 2022, the Board of Directors
approved the commencement of the 2023–
2025 plans for the Performance Share Plan
and the Restricted Share Pool Program from
the beginning of 2023.
Vested programs
In 2022, the Performance Share Plan 2019–
2021 ended, and as targets were not achieved,
no shares were delivered to the participants.
Regarding the Restricted Share Pool Program
period 2019–2021, after deductions for
applicable taxes, in total 90,740 shares were
delivered to 56 participants based on the con-
ditions of the plan. From the Restricted Share
Pool Program plan 2021–2023, after deduc-
tions for applicable taxes as first instalment of
three, in total 47,020 shares were delivered to
the 62 participants. Shares were transferred in
February 2022.
Outokumpu used its treasury shares for all
share reward payments.
Share-based payment opportunity
Maximum number of shares
Dec 31, 2022
PSP 2020–2022
RSP 2020–2022
PSP 2021–2023
RSP 2021–2023
PSP 2022–2024
RSP 2022–2024
Annual review
2023
2024
2025
Total
Sustainability review
1,969,652
148,900
2,118,552
67,500
67,500
2,803,425
67,500
2,870,925
45,433
45,433
45,433
45,433
1,352,153
231,534
1,583,687
1,969,652
148,900
2,118,552
2,803,425
135,000
2,938,425
1,352,153
322,400
1,674,553
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
Total
2,231,485
2,916,358
1,583,687
6,731,530
1. Basis of reporting
2. Business result
3. Employee benefits
3.1 Employee benefit expenses
3.2 Employee benefits for key management
3.3 Employee benefit obligations
3.4 Share-based payments
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
171/220
Outokumpu Annual report 2022 The general terms and conditions of the outstanding share-based incentive programs
Grant date
Vesting period
Performance Share Plan
March 9, 2020
Jan 1, 2020–Dec 31, 2022
Number of participants
Share price at grant date, €
88
2.80
March 15, 2021
Jan 1, 2021–Dec 31, 2023
98
4.35
March 15, 2022
Jan 1, 2022–Dec 31, 2024
105
4.50
Exercised
Vesting conditions
Non-market
In shares and cash in 2023
In shares and cash in 2024
In shares and cash in 2025
Return on operating capital
compared to a peer group
Return on capital employed
as an absolute measure
Return on capital employed (80%), CO2 emissions per ton of
crude steel produced (20%)
Other relevant conditions
Continuation of employment until the shares are delivered, a salary-based limit for the maximum benefits
Grant date
Vesting period
Restricted Share Pool Program
March 9, 2020
Jan 1, 2020–Dec 31, 2022
Number of participants
Share price at grant date, €
34
2.80
Exercised
In shares and cash in 2023
March 15, 2021
Jan 1, 2021–Dec 31, 2023
56
4.35
March 15, 2022
Jan 1, 2022–Dec 31, 2024
67
4.50
In shares and cash, in 3 installments in 2022, 2023 and
2024
In shares and cash, either in full in 2025 or in 3 installments
in 2023, 2024 and 2025
Vesting conditions
Continuation of employment until the shares are delivered, a salary-based limit for the maximum benefits
Detailed information of the share-based incentive
programs can be found in Outokumpu’s home
page www.outokumpu.com
Management judgments
Accounting principles
In valuing the share-based payment plans,
the management estimates the likelihood of
achieving the non-market performance criteria
and the number of participants remaining in the
plan when the vesting period ends.
The evaluation of the likelihood of achieving
the non-market performance criteria uses
mainly external financial forecasts but also
internal forecasts are used. The number of par-
ticipants remaining in plans at the end of the
vesting period is estimated based on historical
forfeit ratios of similar plans. Also potential
impacts from restructuring activities carried out
in the Group are considered in the estimate.
The share-based payments are settled net
of tax withholdings, and they are accounted
as fully equity-settled. The expense of the
programs recognized over vesting periods
is based on the grant date fair value and is
reported as employee benefit expenses within
the administrative expenses in profit or loss.
Applicable statistical models are used in
valuation, and the valuation is revised at the
end of each reporting period based on the
likelihood of achieving the non-market perfor-
mance criteria and the estimated retention rate
of the participants.
The salary-based maximum limits for the
pay-outs have been taken into account in the
valuation of the benefits.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
3.1 Employee benefit expenses
3.2 Employee benefits for key management
3.3 Employee benefit obligations
3.4 Share-based payments
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
172/220
Outokumpu Annual report 2022 4. Operating assets and liabilities
Outokumpu remained capital disciplined in 2022, and the annual
capital expenditure was limited to EUR 180 million. The group’s
main capital expenditure project, the Kemi mine expansion, is
estimated to be finalized in the first quarter of 2023. Outokumpu’s
net working capital increased in 2022. Inventories declined in
volumes, while higher metal prices offset the impact. Return
on capital employed increased further to an excellent level.
4.1 Intangible assets and property, plant and equipment
Intangible assets
2022
€ million
Historical cost on Jan 1, 2022
Translation differences
Additions
Disposals
Reclassifications
Historical cost on Dec 31, 2022
Accumulated amortization and impairment on Jan 1, 2022
Translation differences
Amortization
Impairments
Disposals
Reclassifications
Accumulated amortization and impairment on Dec 31, 2022
Carrying value on Dec 31, 2022
Carrying value on Jan 1, 2022
Other
intangible
assets
Goodwill
482
–2
–
–2
–8
471
–17
1
–
–
1
–
–15
456
465
367
–4
7
–2
–15
352
–255
4
–16
–10
1
15
–262
91
112
Total
849
–5
7
–4
–23
823
–272
5
–16
–10
2
15
–276
547
577
Impairments in other intangible assets relate mainly to the Group’s ERP systems. Reclassifications include
transfers to assets classified as held for sale.
Capital expenditure
EUR
158
million
Inventories
EUR
1,783
million
Return on
capital employed
22.6%
Capital expenditure, € million
Annual review
250
200
150
100
50
0
2018*
2019*
2020*
2021
2022
Capital expenditure definition changed from accrual-
based to cash-based capital expenditure in 2020. Figures
for 2019 and 2018 have been restated accordingly.
* Including discontinued operations
Inventories, € million
2,000
1,500
2018*
2019*
1,000
2020*
2021
500
2022
€ million
218
193
180
171
158
0
2018*
2019*
2020*
2021*
2022
* Including discontinued operations
Return on capital employed, %
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
4.2 Leases
4.3 Goodwill impairment test
4.4 Inventories
4.5 Trade and other receivables and payables
4.6 Provisions
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
25
20
15
2018*
2019*
10
2020*
2021*
2022
5
0
-5
41
Audit
Information for shareholders
€ million
1555
1424
1177
1892
1783
2018*
2019*
2020*
2021
2022
Outokumpu has redefined its' capital employed and
ROCE definitions in 2022. Comparative information for
2021 has been restated accordingly.
* Including discontinued operations
* Including discontinued operations
173/220
2018*
2019*
2020*
2021
2022
%
7.0
0.8
-1.4
17.6
22.6
42
43
Outokumpu Annual report 2022 2021
€ million
Historical cost on Jan 1, 2021
Translation differences
Additions
Disposals
Reclassifications
Historical cost on Dec 31, 2021
Accumulated amortization and impairment on Jan 1, 2021
Translation differences
Amortization
Impairments
Disposals
Accumulated amortization and impairment on Dec 31, 2021
Carrying value on Dec 31, 2021
Carrying value on Jan 1, 2021
Other
intangible
assets
Goodwill
485
–2
–
–1
–
482
–19
1
–
–
1
–17
465
466
377
1
10
–24
3
367
–232
0
–17
–18
12
–255
112
144
Total
862
–1
10
–24
3
849
–252
1
–17
–18
13
–272
577
610
Impairments in other intangible assets relate mainly to the Group’s ERP systems. The figures in 2021 are
including discontinued operations.
Emission allowances
Outokumpu's continuing operations had the
following active sites operating under EU’s
Emissions Trading Scheme (EU ETS) in 2022:
production plants in Tornio, Finland; Avesta,
Degerfors and Nyby in Sweden; as well as
Krefeld together with Dillenburg in Germany. All
Outokumpu sites met the compliance require-
ments on time in 2022.
The pre-verified carbon dioxide emissions under
EU ETS were approximately 0.9 million tonnes
in 2022 (2021 1.0 million tonnes). For its
2022 emission allowance delivery, Outokumpu
will use allowances received for free, but also
allowances acquired from market in prior years.
The cost of usage has been recognized as other
operating expenses.
The Group’s emission position is composed
of realized and forecasted carbon emissions
netted against confirmed and forecasted
emission allowances granted by governments.
All relevant Outokumpu sites applied for free
emission allowances for Phase IV trading period
according to the efficiency-based benchmarks
and historical activity, and the allocations
for the first half of the period have been
confirmed. These allocations combined with the
allowances held from prior period are adequate
to cover the forecasted needs of EU emission
allowances for the first half of the trading
phase (2021–2025).
The emission allowance price risk is presented
in the note 5.3 under Energy price risk.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
4.2 Leases
4.3 Goodwill impairment test
4.4 Inventories
4.5 Trade and other receivables and payables
4.6 Provisions
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
174/220
Outokumpu Annual report 2022 Property, plant and equipment
2022
€ million
Historical cost on Jan 1, 2022
Translation differences
Additions
Disposals
Reclassifications
Other
Historical cost on Dec 31, 2022
Accumulated depreciation and
impairment on Jan 1, 2022
Translation differences
Disposals
Depreciation
Impairments
Reclassifications
Other
Accumulated depreciation and
impairment on Dec 31, 2022
Own property, plant and equipment
Right-of-use assets
Carrying value on Dec 31, 2022
Carrying value on Jan 1, 2022
Land Mine properties
Buildings
Machinery and
equipment
Other
tangible assets
Advances paid
and construction
work in progress
117
1
–
–2
–4
–
112
–18
0
0
–1
–
–
–
–18
63
31
94
99
130
–
0
–
0
–
131
–70
–
–
–10
--
–
–
–81
50
–
50
59
1,259
0
2
–10
–32
–3
1,215
–782
7
4
–44
0
22
4
–789
406
20
426
477
4,575
–27
13
–28
–189
–8
4,336
–3,079
48
28
–169
–1
159
27
–2,987
1,244
104
1,348
1,496
149
–1
0
–8
–8
0
133
–91
1
8
–5
–
–2
–
–89
43
0
44
58
384
0
96
0
–36
–
444
0
0
–
0
–
–
–
Total
6,614
–27
111
–48
–269
–11
6,370
–4,041
56
40
–229
–1
179
31
–1
–3,964
443
1
443
384
2,250
156
2,406
2,573
Reclassifications include transfers to assets classified as held for sale in addition to reclassifications from advances paid and construction work in progress to other asset
classes. Change in other is mainly coming from extensions in the lease contracts.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
4.2 Leases
4.3 Goodwill impairment test
4.4 Inventories
4.5 Trade and other receivables and payables
4.6 Provisions
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
175/220
Outokumpu Annual report 2022 2021
€ million
Historical cost on Jan 1, 2021
Translation differences
Additions
Disposals
Reclassifications
Other
Historical cost on Dec 31, 2021
Accumulated depreciation and
impairment on Jan 1, 2021
Translation differences
Disposals
Depreciation
Impairments
Other
Accumulated depreciation and
impairment on Dec 31, 2021
Own property, plant and equipment
Right-of-use assets
Carrying value on Dec 31, 2021
Carrying value on Jan 1, 2021
Land Mine properties
Buildings
Machinery and
equipment
Other
tangible assets
Advances paid
and construction
work in progress
123
2
4
–7
–
–5
117
–16
0
–
–1
–4
4
–18
68
31
99
107
112
–
17
0
0
–
130
–48
–
–
–12
–10
–
–70
59
–
59
64
1,283
15
2
–37
0
–4
1,259
–766
–3
36
–47
–7
4
–782
452
25
477
517
4,668
62
36
–172
36
–58
4,575
–3,105
–20
172
–176
–7
56
–3,079
1,387
109
1,496
1,563
137
0
9
0
4
–
149
–86
0
0
–6
0
–
–91
57
0
58
51
330
2
99
–1
–44
–
384
–2
0
1
0
0
–
Total
6,654
80
167
–218
–4
–66
6,614
–4,023
–22
210
–242
–27
63
0
–4,041
384
–
384
328
2,407
166
2,573
2,631
Impairments in property, plant and equipment include mine properties and obsolete machinery in Ferrochrome business area, lease agreements on land and buildings
in the business area Europe’s operations in Germany and various obsolete machinery and equipment items in the Group. The figures in 2021 are including discontinued
operations.
Intangible assets and property, plant
and equipment by geographical region
€ million
Finland
Other Europe
North America
APAC region
Other countries
2022
1,671
574
699
9
0
2,953
2021
1,726
679
733
10
2
3,150
Capitalized interest expenses
During 2022, borrowing costs amounting to
EUR 3 million were capitalized on investment
projects under property, plant and equipment
and intangible assets (2021: EUR 3 million).
Total capitalized interests on December 31,
2022 were EUR 32 million (Dec 31, 2021:
EUR 32 million). The average capitalization rate
used in 2022 was 1.0%.
Annual review
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Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
4.2 Leases
4.3 Goodwill impairment test
4.4 Inventories
4.5 Trade and other receivables and payables
4.6 Provisions
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
176/220
Outokumpu Annual report 2022 Emission allowances
Emission allowances are reported as other
intangible assets. They are measured at
cost and initially recognized when control is
obtained. Allowances received free of charge
are recognized at nominal value, i.e. at zero
carrying amount. Emission allowances are
derecognized against the actual emissions, or
when the emission allowances are sold.
Emission allowance expense is recognized
when emission allowances received free of
charge do not cover the annual emissions for
the difference based on the cost of the pur-
chased allowances. In case the Group does not
hold sufficient allowances to cover the actual
emissions, a provision regarding the obligation
to return the emission allowances is recognized
at fair value at the end of the reporting period.
The expenses are presented as other operating
expenses. Gains from the sale of allowances
are recognized as other operating income.
Management judgments
Management estimates relating to useful lives
and recoverable amounts affect significantly
the intangible asset and property, plant
and equipment values in the consolidated
statement of financial position, and different
assumptions and assigned lives could have a
material impact on the reported amounts.
Carrying amounts of intangible asset and
property, plant and equipment items are regu-
larly reviewed for any evidence of impairment.
If any such evidence emerges, the asset’s
recoverable amount is assessed, which requires
estimation of future cash flows attributable to
the asset and related valuation parameters.
Indications for changes in useful lives are
reviewed annually, and if changes to previous
estimates are identified, the useful lives are
revised accordingly. If an impairment loss is
recognized, the estimated useful life of the
asset is also reassessed.
Accounting principles
Intangible assets other than goodwill include
capitalized development costs, patents,
licenses and software. These assets comprises
mainly acquired assets that typically have
definite useful lives. An intangible asset is
recognized if it is probable that the asset
will generate future economic benefits to the
company and the cost of the asset can be
measured reliably.
Property, plant and equipment consist mainly
of facilities, machinery and equipment used in
stainless steel and ferrochrome production.
Intangible assets and property, plant and
equipment are recognized initially at cost. Cost
comprises of the asset’s purchase price and all
costs directly attributable to bringing the asset
ready for its intended use. Government grants
received for investment purposes are deducted
from the asset’s cost. Intangible assets and
property, plant and equipment acquired in a
business combination are measured at fair
value at the acquisition date.
Borrowing costs (mainly interest costs)
directly attributable to the acquisition of an
asset are capitalized in the statement of
financial position as part of the asset’s carrying
amount, when it takes a substantial period of
time to get the asset ready for its intended use.
After initial recognition, intangible assets and
property, plant and equipment are measured at
cost less accumulated amortization, deprecia-
tion and impairment losses. Intangible assets
and property, plant and equipment, other than
land and mine properties, are amortized or
depreciated on a straight-line basis over their
expected useful lives. Assets tied to a certain
fixed period are amortized over the contract
term.
Amortization of intangible assets is based on
the following estimated useful lives:
up to 10 years
Software
Capitalized development costs up to 10 years
Intangible rights
up to 20 years
Depreciation of property, plant and equip-
ment items is based on the following estimated
useful lives:
25–40 years
Buildings
Heavy machinery
15–30 years
Light machinery and equipment 3–15 years
Land is not depreciated, except for leased
land, as the useful life of land is assumed
to be indefinite. Mine properties include
preparatory work to utilize an ore body or part
of it, such as shafts, ramps and ventilation and
are depreciated using the units-of-production
method based on the depletion of ore reserves
over their estimated useful lives. Other tangible
assets include items such as land improve-
ments, asset retirement obligations related
to landfill areas and infrastructure within the
facilities, such as roads and railroads.
Recognition of amortization or depreciation
on an asset is ceased when the item is
classified as held for sale.
If evidence regarding an impairment of an
asset is identified, the asset’s recoverable
amount is estimated as the higher of the fair
value less costs to sell or the value in use. If
the carrying amount of an asset exceeds its
recoverable amount, an impairment loss is
recognized. A previously recognized impairment
loss is reversed if there is a change in the
recoverable amount. However, the reversal
must not result in a higher carrying amount
than what it would have been if no prior
impairment loss had been recognized. Impair-
ment losses are presented as other operating
expenses in the consolidated statement
of income.
Gains or losses on disposals of property,
plant and equipment or intangible assets are
determined as the difference between the net
proceeds received and the carrying amount of
the asset. These gains or losses are presented
in other operating income or expenses.
Goodwill
Goodwill arises from business combinations
and is recognized at the acquisition date
at the amount excess of the consideration
transferred over the fair value of the identifiable
assets acquired, liabilities assumed and any
non-controlling interest and any previously held
equity interests in the acquiree. Goodwill is not
amortized but tested for impairment. Goodwill
is measured at cost less accumulated impair-
ment losses. Impairment losses on goodwill
cannot be subsequently reversed. See note 4.3
for goodwill impairment testing.
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Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
4.2 Leases
4.3 Goodwill impairment test
4.4 Inventories
4.5 Trade and other receivables and payables
4.6 Provisions
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
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Outokumpu Annual report 2022
4.2 Leases
Outokumpu leases land, buildings, and
machinery and equipment used in the Group’s
operations. Outokumpu has also entered into
service and supply contracts that contain lease
elements. Contracts include typically fixed
rental amounts, and for land and buildings,
rents are linked to an index.
Right-of-use assets
2022
€ million
Historical cost on Jan 1, 2022
Additions
Reclassifications
Other changes
Historical cost on Dec 31, 2022
The terms of new vehicle leases are typically 3
to 5 years, and lease terms for other machinery
and equipment range up to 15 years. Lease
terms for land and buildings can be significantly
longer with the remaining terms for individual
contracts on land of approximately 45–95
years.
Leases for machinery and equipment include
also contracts with variable lease payments
based on usage of the equipment. Machinery
and equipment are also hired with daily rates
for temporary use, in which case they are
reported as short-term leases.
Accumulated depreciation on Jan 1, 2022
Depreciation and impairments
Reclassifications
Other changes
Accumulated depreciation and impairment on Dec 31, 2022
Carrying value on Dec 31, 2022
Carrying value on Jan 1, 2022
Reclassifications include transfers to assets classified as held for sale.
2021
€ million
Historical cost on Jan 1, 2021
Additions
Other changes
Historical cost on Dec 31, 2021
Accumulated depreciation on Jan 1, 2021
Depreciation and impairments
Other changes
Accumulated depreciation and impairment on Dec 31, 2021
Carrying value on Dec 31, 2021
Carrying value on Jan 1, 2021
The figures in 2021 are including discontinued operations.
Land
Buildings
Machinery and
equipment
Advances paid and
other tangible assets
36
–
–
–
36
–4
–1
–
–
–5
31
31
47
1
–3
–3
41
–22
–5
1
4
–22
20
25
183
5
–3
–10
175
–75
–27
2
29
–71
104
109
0
0
0
1
2
–
0
–
0
–1
1
–
Land
Buildings
Machinery and
equipment
Advances paid
41
0
–5
36
–3
–4
4
–4
31
37
49
2
–4
47
–13
–13
4
–22
25
37
210
29
–56
183
–104
–26
57
–75
109
106
1
0
–1
0
–
–
–
–
–
1
Total
266
6
–6
–13
254
–101
–33
3
33
–97
156
166
Total
301
31
–65
266
–120
–44
66
–101
166
181
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Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
4.2 Leases
4.3 Goodwill impairment test
4.4 Inventories
4.5 Trade and other receivables and payables
4.6 Provisions
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
178/220
Outokumpu Annual report 2022 at cost less accumulated depreciation and
impairments. The proceeds of the transaction
are recognized as other loans under non-current
or current debt.
Sale and lease-back transactions carried out
prior to 2019 have been treated according to
the accounting principles prevailing at the time.
Group as a lessor
Rental income received from property, plant
and equipment leased out by the Group under
operating leases is recognized on a straight-line
basis over the lease term. Rental income is
presented as other operating income.
Lease liabilities
€ million
Non-current
Current
2022
2021
143
37
179
157
32
189
Maturity analysis of lease liabilities is presented in
note 5.1.
Lease expenses
€ million
Depreciation
Impairments
Interest expenses
Expenses on short-term and
low-value leases
Total, continuing operations
2022
2021
–32
–1
–10
–16
–60
–32
–10
–11
–9
–63
Impairments in 2021 are related to lease contracts
of land and buildings in Germany.
Lease cash flows
€ million
Repayments
Interest paid
Total, Group
2022
2021
–33
–10
–43
–32
–11
–43
Management judgments
Management judgment and estimates relate
mainly to incremental borrowing rates of
the Group companies, the probabilities of
utilizing extension options in lease contracts
and lease terms applied for contracts that
are valid until further notice, which impact
the reported amounts of lease liabilities and
right-of-use assets.
lease when available, or with the incremental
borrowing rate of the company.
Lease payments are divided into interest
expense and repayment of the lease liability.
Lease contracts may include options to extend
the contract term or purchase the leased
asset at the end of the lease term. An option
is considered in determining the lease liability
when it is highly probable that the option will
be used.
The incremental borrowing rates are
Right-of-use assets recognized to the
defined as part of the process to determine
interest rates for intra-group lending, in which
Outokumpu defines synthetic ratings for the
subsidiaries. The incremental borrowing rate
takes into account the currency, the maturity of
the lease liability, the credit risk of the lessee
based on the synthetic rating, and country risk.
The contracts with extension options are
reviewed regularly to evaluate the probability of
utilization based on information available.
Contracts that are valid until further notice
represent only a small amount of Group’s lease
contracts, as most contracts have a fixed term.
The lease terms for the contracts that are valid
until further notice are either defined based on
the Group’s mid-term planning cycle of 3 years
or treated as short-term depending of the type
of the asset.
The Group applies materiality in defining
low-value items for lease accounting purposes.
Accounting principles
Lease liabilities measured at the present value
of future lease payments are recognized to the
statement of financial position. In determining
the present value of the lease liabilities, the
fixed and index/rate-based lease payments are
discounted with the interest rate implicit to the
statement of financial position are measured
at the amount of lease liability and lease
payments made in advance, less accumulated
depreciation and impairments. Right-of-use
assets are depreciated on a straight-line basis
over the lease term, or over the expected useful
life of the asset in case the asset will transfer
to Outokumpu at the end of the lease term or
it is highly probable that a purchase option will
be used.
Lease liabilities are presented in non-current
and current debt and right-of-use assets are
presented in property, plant and equipment in
consolidated statement of financial position.
Lease liabilities or right-of-use assets relating
to short-term leases, leases of low value items,
or intangible assets are not recognized to
statement of financial position. Instead, related
payments, as well as variable lease payments,
are recognized as expense to the profit or loss.
Sale and lease-back
So-called sale and lease-back transactions by
the Group in 2019 or later (i.e. in accordance
with IFRS 16) do not typically meet the IFRS
15 criteria of a sale, as Outokumpu typically
retains the control of the asset. Consequently,
they do not meet the criteria of sale and
lease-back, either. The asset remains in
Outokumpu’s property, plant and equipment
Annual review
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Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
4.2 Leases
4.3 Goodwill impairment test
4.4 Inventories
4.5 Trade and other receivables and payables
4.6 Provisions
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
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Outokumpu Annual report 2022
4.3 Goodwill impairment test
Goodwill and operating capital by operating segment
€ million
Europe
Americas
Ferrochrome
Other operations and intra-group items
Total, continuing operations
Long Products2)
Total, Group
Goodwill
2021
342
–
114
–
456
9
465
2022
342
–
114
–
456
–
456
Operating capital1)
2022
1,864
990
867
16
3,737
-
3,737
2021
1,721
880
823
–61
3,363
157
3,520
1) Outokumpu has redefined its operating capital definition in 2022. Comparative information has been restated
accordingly.
2) Operating capital key figure excluding net assets held-for-sale as defined in Definitions of financial key figures
In 2022 Long Products businesses to be divested were classified as assets-held-for-sale under IFRS 5. Due to
the classification and ongoing disposal process as at the year-end, Long Products businesses were out-of-scope
for goodwill impairment testing and related value-in-use calculations for 2022 as the recoverable amount was
mainly expected to be recovered through the disposal transaction.
Assumptions by operating segment
2022
Weighted average cost of capital (WACC), pre-tax, %
Weighted average cost of capital (WACC), after-tax, %
Terminal growth rate, %
2021
Weighted average cost of capital (WACC), pre-tax, %
Weighted average cost of capital (WACC), after-tax, %
Terminal growth rate, %
Europe
Americas Ferrochrome
Long
Products
11.5
9.0
0.5
8.3
7.0
0.5
13.6
10.2
0.5
10.4
8.5
1.0
11.2
9.1
0.5
8.4
7.0
0.5
-
-
-
9.3
8.1
0.5
Test results and sensitivities by operating segment
2022
Headroom, € million
After-tax WACC increase leading to impairment, %-points
EBITDA decrease leading to impairment, %
Terminal growth rate of zero leading to impairment
Europe
Americas Ferro chrome
1,919
9.7
51
No
302
3.1
23
No
560
5.8
38
No
Headroom is the amount by which the recoverable amount determined based on the value-in-use analysis
exceeds the segment’s operating capital amount.
Goodwill impairment testing
In 2022 and 2021, as a result of the impair-
ment testing performed to Group’s cash-gen-
erating units, no goodwill impairment losses
were recognized. Goodwill impairment testing
is carried out on operating segment level, as
they correspond to the Group’s cash-generating
units (CGUs) and the goodwill allocation level.
The recoverable amounts of the cash-
generating units are based on value-in-use
calculations that are prepared using discounted
cash flow projections. These projections are
based on the Group’s strategy approved by the
management, and include cash flow forecasts
for 2023–2028 after which the terminal value
is calculated.
The carrying amount to which the recoverable
amount is compared, is the operating capital
of the segment, defined in the Alternative
performance measures section of the Review by
the Board of Directors.
Management judgments
Key assumptions of the value-in-use calcula-
tions include the discount rate, the terminal
value growth rate, the average global growth
in end-use consumption of stainless steel and
base price development. Assumptions also
include estimates on delivery volume and
capital expenditure development, and cost
savings related to on-going strategy-implemen-
tation related initiatives.
Cash flow forecasts are discounted using the
pre-tax weighted-average cost of capital (WACC)
as defined for Outokumpu. The components
of WACC are risk-free rate, Outokumpu credit
margin, equity market risk premium, equity
beta, and the industry's median capital
structure.
In general, management believes that
the assumptions used in the value-in-use
calculations are conservative based on the
current economic circumstances. Growth rates
assumed for stainless steel deliveries are
generally lower than independent analysts’ view
on long-term market development.
Accounting principles
Goodwill is allocated to and tested for
impairment on operating segment level, which
correspond to the Group’s cash-generating
units (CGUs), and the lowest level goodwill is
monitored. Impairment test is carried out on an
annual basis, or more frequently when there is
evidence of potential goodwill impairment.
In goodwill impairment testing, the recov-
erable amounts are based on value in use
determined by discounted future net cash flows
expected to be generated by the cash-gener-
ating unit. The discount rate used is a pre-tax
rate that reflects the current market view on
the time value of money and the CGU-specific
risks.
An impairment loss is the amount by which
the carrying amount of the segment’s assets
exceeds its recoverable amount. Impairment
losses are recognized first on goodwill and after
that on other intangible and tangible assets on
a pro-rata basis. In the consolidated statement
of income impairments are presented in other
operating expenses. Impairment losses related
to goodwill cannot be subsequently reversed.
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Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
4.2 Leases
4.3 Goodwill impairment test
4.4 Inventories
4.5 Trade and other receivables and payables
4.6 Provisions
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
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Outokumpu Annual report 2022
4.4 Inventories
€ million
Raw materials and consumables
Work in progress
Finished goods and merchandise
Advance payments
Total
2022
635
689
447
12
1,783
2021
524
875
485
8
1,892
Net realizable value write-downs of EUR 24 million were recognized in the profit or loss during 2022
(2021: write-downs of EUR 3 million).
In 2022, Outokumpu continued to apply cash flow hedge accounting for three selected nickel
hedging programs. More details on commodity price risk and hedge accounting are presented in
notes 5.3 and 5.4.
Management judgments
Accounting principles
Management judgment and estimates are
applied in net realizable value (NRV) and
inventory obsolescence analysis.
NRV calculation requires estimates on sales
prices for products to be sold in the future to
the extent the prices are not known, which can
be a significant part of the future prices. Due
to fluctuations in nickel and other alloy prices,
which are the most important commodity price
risks for Outokumpu, the realized prices can
deviate significantly from the estimates used in
NRV calculations.
The alloy surcharge clause as well as daily
fixed pricing of stainless steel reduce the
risk arising from the time difference between
raw material purchase and product delivery.
However, the risk is still significant because the
delivery cycle in production is longer than the
alloy surcharge mechanism expects and the
daily fixed pricing can also deviate from this
cycle depending on the timing of the delivery.
Inventory obsolescence for stainless steel
products is estimated based on internal
guidelines of slow-moving inventory.
Inventories are stated at the lower of cost and
net realizable value. These are defined with
different methodologies depending on the type
of inventory.
The cost of raw materials is determined
as monthly weighted average of the actual
raw material cost. The cost of self-produced
finished goods and work in progress comprises
of raw materials, direct labor, other direct
costs and related production and procurement
overheads. Cost of purchased products
includes all purchasing costs including direct
transportation, handling and other costs.
NRV is calculated as the estimated selling
price in the ordinary course of business, less
the estimated costs of completion and the
estimated costs attributable to the sale.
Obsolete stainless steel products are valued
at scrap value. Spare parts are carried as
inventory and their cost is recognized in profit
or loss as consumed.
Major spare parts are recognized in property,
plant and equipment when they are expected to
be used over more than one year.
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Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
4.2 Leases
4.3 Goodwill impairment test
4.4 Inventories
4.5 Trade and other receivables and payables
4.6 Provisions
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
181/220
Outokumpu Annual report 2022
Trade and other payables
2022
2021
€ million
4.5 Trade and other receivables and payables
Trade and other receivables
€ million
Non-current
Non-current receivables and accruals
6
5
Current
Trade receivables
VAT receivables
Income tax receivables
Escrow deposits
Prepaid insurance expenses
Other accruals
Other receivables
Total
Loss allowance on trade receivables
On Jan 1
Reclassifications
Reduction in loss allowance
On Dec 31
Reclassifications include transfers to assets classified as held for sale.
Age analysis of trade receivables
Not overdue
Past due 1–30 days
Past due 31–60 days
More than 60 days
Total
593
94
21
14
10
24
11
767
5
0
0
5
553
28
7
5
593
597
68
21
15
10
66
9
786
5
–
0
5
549
33
8
8
597
Factored trade receivables
Outokumpu uses factoring to finance its
working capital. Under these arrangements,
Outokumpu has on December 31, 2022
derecognized trade receivables totaling
EUR 423 million (2021: EUR 420 million),
which represents fair value of the assets. Net
proceeds received amounted to EUR 423
million (2021: EUR 412 million). The underlying
assets have maturity of less than one year.
The maximum amount of loss related to
derecognized assets is estimated to be EUR 16
million (2021: EUR 12 million). This estimate
is based on insurance policies and contractual
arrangements between factoring companies
and Outokumpu. The analysis does not
include impact of any operational risk related
to Outokumpu’s contractual responsibilities.
Year 2022 figures are presented for contin-
uing operations.
Non-current
Accruals
Total
Current
Trade payables
Accrued employee-related expenses
Accrued interest expenses
VAT payable
Withholding tax and social security liabilities
Advance payments received
Other accruals
Other payables
Total
Current VAT payables on December 31, 2021
included EUR 18 million of VAT payments that
were deferred for two years in Finland in 2020
as part of the state COVID-19 relief program.
The remaining deferred VAT payables were paid
during the first half of 2022.
Liabilities related to
customer contracts
On December 31, 2022, accrued volume
discounts related to customer contracts
amounted to EUR 38 million (Dec 31, 2021:
EUR 45 million). These are reported as other
current accruals.
The liabilities related to the unperformed
transportation service were not material on
December 31, 2022, and these liabilities
as well as advance payments received are
expected to be recognized as revenue over the
following three months.
2022
2021
20
20
23
23
1,210
100
6
96
23
23
51
9
1,516
1,802
109
6
119
21
27
76
7
2,166
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Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
4.2 Leases
4.3 Goodwill impairment test
4.4 Inventories
4.5 Trade and other receivables and payables
4.6 Provisions
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
182/220
Outokumpu Annual report 2022 Risk information
Accounting principles
Credit risk
Outokumpu’s sales are covered by approved
credit limits or secured payment terms. Most
of the outstanding trade receivables have
been secured by trade credit insurances,
which typically cover some 95% of the insured
amount. Part of the credit risk related to trade
receivables is managed with letters of credit,
advance payments and guarantees.
On December 31, 2022, the maximum
exposure to credit risk of trade receivables
was EUR 593 million (2021: EUR 597 million).
The portion of unsecured receivables during
2022 has been approximately 5-8% of all trade
receivables. During 2022, credit limits have
remained available from the insurer and there
is no significant change in the insurance cover.
Outokumpu has frequently monitored credit
risk and the overdue situation and continued
its close co-operation with the insurers.
Outokumpu uses factoring, which transfers
most risks and rewards to the buyer of the
receivables. At the end of the year 2022, most
of the receivables were generated by a large
number of customers and there were only few
risk concentrations.
Country risk
Exposure to country risk is monitored and
reduced by having credit insurance that
provides cover against political risk on external
trade receivables. At year-end, main country
related credit risk exposures included for
example limited exposure on Argentina.
Trade and other receivables and payables
include financial assets or liabilities measured
at amortized cost. After initial recognition, they
are measured at amortized cost by using the
effective interest rate method. Trade and other
receivables are valued net of accumulated
impairments.
Factored trade receivables
Factored trade receivables have been derecog-
nized from the statement of financial position
when the related risks and rewards of owner-
ship have materially been transferred to the
counterparty of the factoring transaction.
Expected credit losses
Outokumpu applies simplified model in
assessing and recognizing loss allowance for
expected credit losses on trade receivables.
The calculation model is based on overdue
statistics and counterparty-specific credit
ratings linked with loss probabilities for each
rating. Loss allowances are recognized in selling
and marketing expenses in the consolidated
statement of income.
Liabilities related to customer contracts
Liabilities related to customer contracts include
accrued volume discounts, advance payments
received and liabilities related to transportation
service not yet performed. Accrued volume
discounts have been recognized as reductions
in revenue during the financial year.
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Financial year
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Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
4.2 Leases
4.3 Goodwill impairment test
4.4 Inventories
4.5 Trade and other receivables and payables
4.6 Provisions
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
183/220
Outokumpu Annual report 2022 4.6 Provisions
Restructuring
provisions
Environmental
provisions
2022
€ million
Provisions on Jan 1, 2022
Translation differences
Increases in provisions
Utilized during the financial year
Unused amounts reversed
Reclassifications
Provisions on Dec 31, 2022
Reclassifications include transfers to assets classified as held for sale.
57
–1
3
–1
–
–14
45
8
0
14
–10
–2
–2
8
Other
provisions
26
1
7
–1
–4
–
28
Environmental
provisions
Restructuring
provisions
Other
provisions
48
0
20
0
–10
–
57
62
0
2
–46
–8
–3
8
5
1
21
–1
–1
1
26
2021
€ million
Provisions on Jan 1, 2021
Translation differences
Increases in provisions
Utilized during the financial year
Unused amounts reversed
Reclassifications
Provisions on Dec 31, 2021
€ million
Non-current provisions
Current provisions
Total
Total
91
0
24
–12
–6
–16
81
Total
115
1
42
–47
–19
–1
91
2022
2021
49
32
81
63
29
91
Environmental provisions
In 2022, the reclassifications include the
provisions related to landfill areas of the
discontinued operations. In 2021, Outokumpu
recognized an increase in environmental
provisions of EUR 10 million relating to the
aftercare of closed mines in Finland.
The majority of the environmental provisions for
continuing operations are for closing costs of
production facilities and landfill areas, removal
of problem waste and landscaping in facilities
in Finland, and Germany and aftercare of closed
mines in Finland. The outflow of economic
benefits related to environmental provisions is
expected to take place mainly over a period of
more than 10 years. Due to the nature of these
provisions, there are uncertainties regarding
both the amount and the timing of the outflow
of economic benefits.
Restructuring provisions
Restructuring provisions relate mainly to the
redundancies in selected countries as a result
of employee negotiations in 2020 to generate
cost savings. The cash outflows related to
these provisions took predominantly place
in 2021. In 2022 increases in restructuring
provisions are mainly due to revaluations.
Other provisions
Other provisions comprise for example provi-
sions for litigations, product and other claims
and are mainly current in nature. In both 2022
and 2021, the increases in other provisions
were mainly related to litigation provisions.
Management judgments
Provisions are based on management’s best
estimates at the end of the reporting period.
Regarding environmental provisions, the
management judgments and estimates relate
mainly to the timing and the scope of the
activities to be carried out as well as the cost
of such activities in the future. Environmental
expenditure related to dismantling an entire
production facility and restoring the area are
generally estimated when decision on a site
closure is made.
As actual outflows can differ from estimates
due to changes in law, regulations, public
expectations, technology, prices and condi-
tions, and can take place in many years in the
future, the provisions are regularly reviewed to
take such changes into account.
Regarding restructuring provisions, the
judgements and estimates mainly relate to the
amounts of termination benefits to employees.
Accounting principles
A provision is recognized when Outokumpu has
a present legal or constructive obligation as a
result of a past event, and it is probable that
an outflow of economic benefits will be required
to settle the obligation and the amount can be
reliably estimated. Provisions relate mainly to
environmental liabilities, restructuring plans,
onerous contracts and litigations. Non-current
provisions are discounted to present value at
the end of the reporting period using risk-free
discount rates.
Environmental expenditure arising from
restoring the conditions caused by past
operations are recognized as expenses when
they are incurred. Environmental provision is
recognized when the Group has an obligation to
decommission or remove a facility or equip-
ment, rehabilitate environmental damage, or
landscape and restore an area. The recognition
of environmental provisions is based on current
interpretation of the effective environmental
laws and regulations related to the Group.
When environmental expenditure will arise
from future asset retirement obligations,
an item of property, plant and equipment
corresponding to the amount of the provision
is recognized, and the cost will be depreciated
over the asset’s useful life. Subsequent
adjustments to the provision are deducted from
or added to the cost of the corresponding asset
in a symmetrical manner.
A restructuring provision is recognized when
a detailed restructuring plan has been prepared
and its implementation has been started or the
main parts of the plan have been communi-
cated to those, who are impacted by the plan.
Restructuring provision mainly comprise of
employee termination benefits.
Any potential compensation from a third
party is not included in the amount of the pro-
vision but recognized as a separate asset when
it is virtually certain that the compensation will
be received.
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Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
4.2 Leases
4.3 Goodwill impairment test
4.4 Inventories
4.5 Trade and other receivables and payables
4.6 Provisions
5. Capital structure and financial risk management
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
184/220
Outokumpu Annual report 2022
5. Capital structure and financial risk management
As a result of strong profitability and strategy execution, Outokumpu reached a
significant milestone and was net debt free at the end of 2022. In 2022, credit rating
agency Moody’s improved the outlook for Outokumpu from Ba3 stable to Ba3 positive.
Prepayment and cancellation of loan facilities, the refinancing of its main liquidity facility
as well as reductions in the interest margins further decreased finance costs.
Net debt*
EUR
-10
million
The capital structure is regularly monitored by
management through the company’s leverage
ratio. The debt-to-equity ratio and net debt to
adjusted EBITDA improved considerably during
2022 as a result of the good development in
profitability driven by the successful strategy
implementation and favorable market condi-
tions. In addition, strong cash flow allowed debt
reduction and had a positive impact on the
Group’s net debt.
The main objective of capital management is to
secure the ability to operate on a going concern
basis to enhance value to shareholders and to
optimize the cost of capital. Outokumpu seeks
to maintain access to loan and capital markets
at all times and to preserve sufficient liquidity.
The Board of Directors reviews the Group’s
capital structure on a regular basis. Capital
structure and debt capacity are taken into
account e.g. in investment, dividend and debt
decisions.
Equity is managed through dividend policy,
share buybacks and issuances of equity or
equity-linked securities. In 2022 supported by
a strong balance sheet, Outokumpu launched a
share buyback program for a maximum amount
of EUR 100 million. The buyback program will
be finalised in March, 2023.
Tools to manage debt include raising new debt
in various forms, establishing financing facili-
ties, prepaying and cancelling loans, notes and
other financing facilities in order to optimize
the maturity structure of the debt portfolio and
to minimize finance costs.
In 2022, Outokumpu refinanced its main
liquidity facility increasing the current facility
amount and extending the current maturity of
the facility. Outokumpu also prepaid and can-
celled a considerable amount of its outstanding
debt.
Net debt to
adjusted EBITDA*
0.0
Debt-to-equity ratio*
-0.3%
Capital structure
Net debt, € million*
Net debt to adjusted EBITDA*
Debt-to-equity ratio, %*
€ million
Total equity
2022
4,119
2021
3,120
Total debt, incl.
discontinued operations
633
709
Total capitalization
4,752
3,828
Net debt, incl.
discontinued operations
–10
408
1,300
1,100
900
700
500
300
100
-10
2018
2019
2020
2021
2022
5
4
3
2
1
0
50
40
30
20
10
0
-0,3
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
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Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
* Including discontinued operations
* Including discontinued operations
* Including discontinued operations
*Including discontinued operations
185/220
Same as graph #2
€ million
1,241
1,155
1,028
408
-10
2018
2019
2020
2021
2022
€ million
2.6
4.4
4.1
0.4
0.0
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
%
45.1
45.1
43.6
13.1
-0.3
44
45
46
Outokumpu Annual report 2022
5.1 Net debt and
capital management
The main focus in 2022 on debt management
was to ensure sufficient liquidity and at the
same time to reduce interest costs, together
with a target to release its comprehensive
security package. Strong cashflow enabled the
company to decrease its net debt to a level
of EUR –10 million at the year end 2022. In
addition to cancelling the SEK 1,000 million
secured revolving credit facility, the remaining
part of the secured sustainability linked term
loan was prepaid. Furthermore, the outstanding
commercial papers were paid out in full
in 2022.
In June Outokumpu refinanced its main liquidity
facility by agreeing with its core banking group
a new unsecured revolving credit facility in the
amount of EUR 700 million. The new unsecured
facility which matures in February 2026
includes a 12-month extension option. The
interest margin is linked to emission reductions
in line with the approved emission reduction
target by the Science Based Targets initiative
for 2030. The Finnvera facility of EUR 100
million is fully unutilized at year end.
During 2022 Outokumpu evaluated options
to manage its EUR 125 million convertible
bond due in 2025. In order to mitigate and
manage the dilutive impact of the company’s
outstanding convertible bonds, Outokumpu
launched a share buyback program in
November with the aim to repurchase shares
corresponding to approximately half of the
shares needed in the conversion. Outokumpu
has recognized EUR 58 million financial liability
related to the share buyback program and
the maximum amount of EUR 100 million is
impacting the equity and net debt at the end
of December 2022. See more information on
share buyback program in note 5.2.
Net debt
€ million
Non-current
Convertible bonds
Loans from financial institutions
Pension loans
Lease liabilities
Other loans
Current
Loans from financial institutions
Pension loans
Lease liabilities
Commercial papers
Other loans 1)
Cash and cash equivalents
Cash at bank and in hand
Short-term bank deposits and cash equivalents
Net debt, continuing operations
Discontinued operations 2)
Total
2022
2021
115
99
123
143
11
491
14
31
37
–
60
141
452
74
526
105
–116
–10
112
163
154
157
12
597
7
13
32
58
1
112
295
5
300
408
–
408
1) Including share buyback program related financial liability EUR 58 million.
2) Including mainly cash and cash equivalents.
Net debt development
€ million
Net cash flow from operating activities
Net cash flow from investing activities
Cash flow before financing activities
Dividends paid
Treasury share purchase
Directed share issue
Cash flow impact on net debt
Net debt on Jan 1
Cash flow impact on net debt
Share buyback financial liability
Change in net debt, non-cash
Net debt on Dec 31
2022
778
–159
619
–68
–42
–
509
408
–509
58
33
–10
2021
597
–149
448
–
–
205
653
1,028
–653
–
34
408
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
Average effective interest rate of cash and cash equivalents at the end of 2022 was 2.3% (Dec 31, 2021: 0.0%).
186/220
Outokumpu Annual report 2022
Changes in non-current and current debt
Risk information
Annual review
2022
€ million
On Jan 1
Financing cash flows
Transfer to current debt
Other non-cash movements
Reclassifications
On Dec 31
2021
€ million
On Jan 1
Financing cash flows
Transfer to current debt
Other non-cash movements
On Dec 31
Non-current debt
Current portion of
non-current debt
Non-current lease
liabilities
Current portion of
lease liabilities
Current debt 1)
440
–50
–46
4
–
348
21
–21
46
–
–
46
157
–
–38
25
–1
143
32
–33
38
1
–1
37
58
–58
–
58
–
58
Non-current debt
Current portion of
non-current debt
Non-current lease
liabilities
Current portion of
lease liabilities
Current debt
979
–523
–22
6
440
0
–1
22
–
21
174
–
–46
29
157
18
–32
46
–
32
232
–174
–
–
58
Total
709
–163
0
87
–2
632
Total
1,404
–730
–
35
709
Reclassifications include liabilities related to asset held for sale.
1) Including share buyback program related financial liability EUR 58 million.
Other non-cash movements in debt consist mainly of effective interest including accrued arrange-
ment fees. Other non-cash movements in lease liabilities consist of new lease agreements and
changes in terms of existing agreements. The reconciliation of cash effective and non-cash move-
ments in cash and cash equivalents is presented in the consolidated statement of cash flows.
Convertible bonds
€ million
2020 fixed rate bond maturing on July 9, 2025
Interest rate, %
5.000
Outstanding amount
2022
125
2021
125
The convertible bonds maturing in July 2025 can be converted into maximum of 38,191,261 ordi-
nary shares in Outokumpu representing 8.6% of the outstanding shares at year end. The conversion
period commenced on August 19, 2020 and will end on June 25, 2025. The current conversion
price is set at EUR 3.1581 per ordinary share. The conversion price is subject to adjustments for
any dividend in cash or in kind as well as customary anti-dilution adjustments, pursuant to the terms
and conditions of the bonds. On December 31, 2022, remaining part of the equity component of the
convertible bond amounted to EUR 10 million (Dec 31, 2021: EUR 12 million).
Liquidity and refinancing risk
Outokumpu raises most of its funding centrally
and in co-ordination by the Treasury function
(“Treasury”). The Group seeks to reduce its
liquidity and refinancing risk by having sufficient
amount of cash and committed long-term credit
lines available and by maintaining a balanced
debt maturity profile with diversified sources
of funding. Efficient daily cash and liquidity
management and the use of instruments such
as commercial papers and currency swaps, also
reduce the liquidity risk.
Finance and liquidity plans are prepared and
reviewed regularly with a focus on forecasted
cash flows, projected funding requirements,
planned funding transactions and financial
covenant headroom. The adequacy of liquidity
reserves, the amounts of scheduled annual
repayments of non-current debt compared
to EBITDA as well as forecasted gearing
and leverage ratios are key measures being
considered.
Outokumpu is exposed to changes in credit
margins as the development of the leverage
ratio has an impact on the interest margin
definition in some of the Group’s loan agree-
ments and as such on its interest and other
financial expenses.
Accounting principles
Bonds, loans from financial institutions,
pension and other loans are recognized at the
settlement date and measured initially at fair
value net of direct transaction costs. Subse-
quently they are carried at amortized cost using
the effective interest rate method.
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
187/220
Outokumpu Annual report 2022
Transaction costs are amortized over the
maturity of the borrowing using the effective
interest rate method. A financial liability (or
part of the liability) is derecognized when
the liability ceases to exist, that is, when the
obligation identified in a contract has been
fulfilled or cancelled or is no longer effective.
The fair value of non-current debt is deter-
mined based on quoted prices for listed instru-
ments. For loans the fair value is determined
using the discounted cash flow method based
on yields at the reporting date. The fair values
of non-current debt are presented in note 5.5.
Fees related to revolving credit facilities are
amortized over the expected facility term.
Convertible bonds
Convertible bonds are compound instruments
with components of the bonds classified
separately as financial liabilities and equity
in accordance with the substance of the
arrangement.
The liability component is recognized initially
at fair value of a similar liability. The equity
component is recognized initially at the differ-
ence between the fair values of the full bond
and the liability component. Transaction costs
are allocated to the components in proportion
to their initial carrying amounts. The fair value
includes the value of conversion rights.
Subsequently the liability component is
measured at amortized cost with the effective
interest method. At conversion or on expiry the
equity component is reclassified within equity.
Lease liabilities
Accounting principles related to lease liabilities
are presented in note 4.2.
Cash and cash equivalents
Cash and cash equivalents comprise cash in
hand, deposits held at call with banks and
Contractual cash flows
€ million
Convertible bonds
Loans from financial institutions
Pension loans
Other loans 1)
Commercial papers
Interest payments on debt and
facility charges
Lease liabilities
Interest payments on lease liabilities
Trade and other payables
2022
2021
2023
2024
2025
2026
2027
2028–
2022
2023
2024
2025
2026
2027–
–
14
31
60
–
21
37
9
1,220
1,392
–
14
29
1
–
20
17
8
–
90
125
14
23
1
–
15
16
7
–
201
–
14
19
1
–
6
15
6
–
62
–
14
15
1
–
5
14
5
–
55
–
42
38
6
–
6
81
132
–
305
–
7
13
1
58
25
32
10
1,811
1,957
–
14
31
1
–
21
18
9
–
94
–
64
29
1
–
16
16
8
–
125
14
23
1
–
10
14
7
–
–
14
19
1
–
4
14
6
–
–
56
53
7
–
8
97
137
–
134
194
59
358
Contractual cash flows related to derivative instruments are presented in note 5.4.
1) Including share buyback program related financial liability EUR 58 million.
Credit facilities
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Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
2022
2021
5.2 Equity
€ million
Committed revolving credit facility MEUR 700
Committed revolving credit facility
Committed Finnvera facility MEUR 100
Committed SEK 1,000 million revolving credit facility
Committed facilities total
Maturity
Feb 2026
May 2022
June 2022
Dec 2025
June 2022
Uncommitted Finnish commercial paper program
N/A
Total
Utilized
Available
Total
Utilized
Available
700
–
–
100
–
800
800
–
–
–
–
–
–
–
700
–
–
100
–
800
800
–
42
532
–
98
672
800
–
–
–
–
–
–
58
–
42
532
–
98
672
742
other highly liquid investments with original
maturities of three months or less. These are
readily convertible to a known amount of cash
with a low risk of any changes in the value.
Bank overdrafts are reported as current debt.
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
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Information for shareholders
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Outokumpu Annual report 2022
5.2 Equity
Shares and related movements in equity
€ million
On Jan 1, 2021
Shares delivered from the share-based payment programs
Directed share issue
Shares outstanding on Dec 31, 2021
Shares delivered from the share-based payment programs
Repurchase of treasury shares
Shares outstanding on Dec 31, 2022
Treasury shares
Total number of shares on Dec 31, 2022
Number
of shares,
1,000
412,002
70
40,500
452,572
138
–8,575
444,135
12,740
456,874
Share
capital
Premium
fund
Invested
unrestricted
equity reserve
311
–
–
311
–
–
311
714
–
–
714
–
–
714
2,103
–
205
2,308
–
–
2,308
Treasury
shares
–31
1
–
–30
1
–100
–129
Total
3,097
1
205
3,303
1
–100
3,204
Share buyback program
On November 3, 2022, Outokumpu’s Board of
Directors approved a share buyback program of
up to EUR 100 million under the authorization
of the Annual General Meeting. The maximum
number of shares to be repurchased under the
program is 20 million, representing approxi-
mately 4.4% of the company’s total number
of shares. The program started on November
7, 2022 and ends no later than on March 24,
2023. By the end of December, Outokumpu has
purchased 8,575,126 shares which represents
1.9% of the total number of shares and EUR 42
million. The program continues.
Through the share buyback program,
Outokumpu seeks to mitigate and manage the
dilutive impact of the company’s outstanding
convertible bonds. The repurchased shares
will be initially held by Outokumpu as treasury
shares and may be used to meet its obligations
under the convertible bonds. Alternatively,
Outokumpu may decide to cancel any or all of
the repurchased shares and reduce its capital
accordingly. The share repurchases are funded
by using funds from the invested unrestricted
equity reserve.
To execute the share buyback program,
Outokumpu has appointed a third-party broker.
Based on irrevocable instructions, the broker
will decide on the repurchase of shares in full
independence, also in relation to the timing
of the transactions, and in compliance with
applicable price and volume limits as well as
applicable terms. The share buyback program is
expected to be carried out in full and to have a
maximum EUR 100 million impact on net debt
during the duration of the program. However,
the company has the option to terminate the
program during the buyback period and will,
in such case, issue a stock exchange release
to this effect. Because of the nature of the
contract with the third party, Outokumpu has
recognized a EUR 58 million financial liability
related to the share buyback program and
the maximum amount of EUR 100 million is
impacting the equity and net debt already
in 2022.
The Annual General Meeting, held on March 31,
2022, authorized Board of Directors to resolve
to repurchase a maximum of 45,000,000
of Outokumpu’s own shares, representing
approximately 9.85% of Outokumpu’s total
number of shares.
Directed share issue
Based on the authorization granted by the
Annual General Meeting 2021, Outokumpu
issued 40,500,000 new shares directed to
institutional investors on May 10, 2021, in
deviation from the pre-emptive subscription
right of the shareholders. The main purpose of
the share issue was to accelerate Outokumpu’s
de-leveraging by using the proceeds to reduce
gross debt.
The subscription price of the new shares
was EUR 5.15 per share, corresponding to a
discount of approximately 5.7% to the closing
price of the Company’s share on May 10,
2021. The gross proceeds of EUR 209 million
were recorded in their entirety to the invested
unrestricted equity reserve of Outokumpu
Oyj. In the consolidated financial statements,
the net proceeds are presented net of trans-
action costs, the net proceeds amounting to
EUR 205 million.
Dividend policy and distributable funds
According to the new dividend policy announced
in 2022, Outokumpu aims to distribute a stable
and growing dividend, to be paid annually.
On December 31, 2022, the distributable funds
of the parent company totaled EUR 2,736
million of which retained earnings were
EUR 446 million.
The Board of Directors proposes to the Annual
General Meeting in 2023 that a base dividend
of EUR 0.25 per share plus an extra dividend
of EUR 0.10 per share, totaling EUR 0.35
per share will be paid for the year 2022,
corres ponding to EUR 155 million based on
the number of shares outstanding on Dec 31,
2022.
The Board states that the base dividend
amount of EUR 0.25 is the basis for future
dividend distributions in accordance with the
policy. The extra dividend of EUR 0.10 per
share is a one-time extra dividend that is
proposed to be distributed to the shareholders
for the exceptionally good result of the
financial year.
In 2022, Outokumpu paid a dividend of
EUR 0.15 per share for the financial year 2021,
a total of EUR 68 million.
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Financial year
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Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
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Information for shareholders
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Outokumpu Annual report 2022
Accounting principles
Fair value reserves
Shares and share capital
According to the Articles of Association,
Outokumpu has one single class of shares
and all shares have equal voting rights at
General meetings. The shares do not have a
nominal value.
Premium fund
Premium fund includes proceeds from share
subscription and other contribution based on
the old Finnish Limited Liability Companies
Act for the part the contributions exceeded
the account equivalent value allocated to
share capital.
Other restricted reserves
Other restricted reserves include amounts
transferred from the distributable equity under
the Articles of Association or by a decision of
the General Meeting of Shareholders, and other
items based on the local regulations of the
Group companies.
Invested unrestricted equity reserve
Invested unrestricted equity reserve includes
the net proceeds from the rights issues in
2012 and 2014 and the directed share issue
in 2021.
Fair value reserves include movements in
the fair values of equity securities and hedge
accounted derivative instruments.
Retained earnings
Retained earnings include remeasurements of
defined benefit plans, cumulative translation
differences and other retained earnings and
losses.
Treasury shares
When the parent company or its subsidiaries
purchase the parent company’s own shares, the
consideration paid, including any attributable
transaction costs, net of taxes, is deducted
from the parent company’s equity as treasury
shares until the shares are cancelled. When
such shares are subsequently sold or reissued,
any consideration received is recognized
directly in equity.
Dividends
The dividend proposed by the Board of Direc-
tors is not deducted from distributable equity
until approved by the Annual General Meeting
of Shareholders. For the time period between
the approval and the payment, the dividend
to be paid is presented in current trade and
other payables.
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Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
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Outokumpu Annual report 2022
5.3 Financial risk management
and insurances
The main objectives of financial risk manage-
ment are to reduce earnings volatility and to
secure sufficient liquidity to avoid financial
distress. Other objectives include the reduction
of cash flow volatility and the maintenance of
the debt-to-equity and leverage ratios within
set targets. The main objectives of insurance
management are to provide mitigation against
catastrophe risks and to reduce earn-
ings variation.
The Board of Directors has approved the
risk management policy, which defines
responsibilities, the process and other main
principles of risk management. The Board
of Directors oversees risk management on a
regular basis and the Chief Financial Officer
(CFO) is responsible for the implementation
and development of financial risk management.
The CFO leads relevant steering groups, such
as the Risk Management Steering Group for
enterprise risk management, the Financial Risk
Steering Group for financial risk management
and the Energy Risk Steering Group for energy
risk management.
Financial risks consist of market, country,
credit, liquidity and refinancing risks.
Outokumpu subsidiaries hedge their currency
and commodity price risk with Outokumpu
Oyj, which does most of the Group’s foreign
exchange and commodity derivative contracts
with banks and other financial institutions. The
Treasury function (“Treasury”) is responsible
for managing foreign exchange, metal, interest
rate, liquidity and refinancing as well as
emission allowance price risk. Credit controlling
has been mainly centralized to Global Business
Services, and Treasury coordinates credit risk
management. Customer credit risk is presented
in note 4.5. The CFO office together with the
relevant business areas are responsible for
managing the electricity and fuel price risks.
In 2022 Treasury revised and implemented new
policy framework for treasury and risk manage-
ment. The policy framework has three levels:
Risk Management Policy, Treasury Policy and
Instructions. In the policy levels the risk profile
of the company’s financial risk management
was kept unchanged. The documentation is
currently more aligned with organizational
changes in Treasury, increasing clarity and
transparency in day-to-day work as well as
improving steering work.
Treasury sources all global insurances. The
most important insurance lines are property
damage and business interruption (PDBI),
liability, marine cargo and credit risk. The
captive insurance company Visenta Försäkrings-
aktiebolag is contributing global insurances by
mainly participating in property damage and
business interruption (PDBI) insurance line.
Exposure to financial risks is identified in
connection with the Group’s risk management
process. This approach aims to ensure that
any emerging risks are identified early and
that significant risks are described, quantified,
managed and communicated appropriately.
Risk information
Market risk
Outokumpu’s main market risks are foreign
exchange risk, interest rate risk, security price
risk as well as commodity price risk, namely in
metals, energy and emission allowances. The
price changes in the before mentioned risks
may have a significant impact on the Group’s
earnings (net result), cash flow and capital
structure. Due to the cyclical stainless steel
business, Outokumpu’s exposure to market
Sensitivity of financial instruments to market risks
€ million
+/–10% change in EUR/USD exchange rate
+/–10% change in EUR/SEK exchange rate
+/–10% change in nickel price in USD
+/–1% parallel shift in interest rates
In profit or loss
+1/–2
–5/+7
+2/–2
–2/+2
Dec 31, 2022
In other
comprehensive income
–
–
–18/+18
–
In profit or loss
+6/–7
–5/+6
–1/+1
–3/+4
Dec 31, 2021
In other
comprehensive income
–
–
–10/+10
–
The sensitivity analyses apply to financial assets and liabilities only. Other assets and liabilities, including defined benefit pension plan assets and liabilities, as well as off-
balance sheet items such as sales and purchase orders, are not in the scope of these analyses. The calculations are net of tax. During the year the volatility for nickel price
has been in the range of 28–113%. With +/–50% change in dollar denominated price, the effect in profit or loss is about EUR +12/-12 million and in other comprehensive
income EUR –89/+89 million for nickel derivatives. The sensitivity analysis is presented for continuing operations.
risks may change significantly from one period
to another. Consequently, its derivatives’
positions to mitigate its market risks change
due to the cyclical business environment.
Note 5.4 details the fair values and nominal
amounts of derivative instruments while the
sensitivity of financial instruments to market
risks is described in the below table.
The strategy for market risk management is
based on identifying, evaluating and mitigating
relevant risks in committed business trans-
actions and balance sheet items for each of
the market risk categories. Forecasted items
are included in the underlying risk position
in interest rate, energy price and emission
allowance price risk. The use of derivatives
to mitigate market risks may cause timing
differences between derivative gains or losses
and the earnings impact of the underlying
exposure. In order to reduce such timing
differences in earnings, hedge accounting can
be applied selectively as part of the metal and
foreign exchange hedging activities. Most of
the derivatives are short-term, however interest
rate hedges typically have a maturity in excess
of one year.
Foreign exchange rate risk
Outokumpu is exposed to foreign exchange risk
as its business and operations are global. The
risk arises from changes in exchange rates and
may have effects on earnings, cash flow and
balance sheet. The exposure consists mainly
of raw material procurement, sales of stainless
steel and ferrochrome production in foreign
currencies. Also the location of Outokumpu’s
global operations expose the Group to foreign
exchange rate risk. Outokumpu group compa-
nies are exposed to foreign exchange rate risk
arising from net cash flows in other than the
functional currency.
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Financial year
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Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
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Outokumpu Annual report 2022
Foreign exchange positions of EUR based companies
€ million
Trade receivables and payables
Loans and bank accounts 1)
Derivatives
Net position
SEK
USD
5
243
–229
19
–267
–305
566
–6
Dec 31, 2022
Dec 31, 2021
GBP
11
58
–79
–10
Other
SEK
USD
GBP
Other
17
15
–39
–7
38
269
–302
6
–458
–167
553
–72
14
52
–106
–40
18
13
–82
–51
Foreign exchange positions of SEK based companies
€ million
Trade receivables and payables
Loans and bank accounts 1)
Derivatives
Net position
Dec 31, 2022
Dec 31, 2021
EUR
32
27
–83
–24
USD
13
9
–30
–8
GBP
3
5
–18
–11
Other
6
2
–28
–20
EUR
15
13
–120
–92
USD
20
7
–47
–21
GBP
0
1
–21
–20
Other
-4
7
–12
–9
1) Includes cash and cash equivalents, loan receivables and debt.
Currency distribution and re-pricing of outstanding net debt
€ million
Currency
EUR
SEK
USD
Others
€ million
Currency
EUR
SEK
USD
Others
Net debt 1)
Derivatives 2)
Average rate, % 1)
Duration, year 3)
Rate sensitivity 4)
Dec 31, 2022
315
–31
–165
–130
–10
17
250
–321
63
9
7.9
2.2
3.8
1.6
5.7
0.1
0.0
–0.1
0.6
2.2
–4.9
–0.7
–2.7
Dec 31, 2021
Net debt 1)
Derivatives 2)
Average rate, % 1)
Duration, year 3)
Rate sensitivity 4)
582
–23
–85
–66
408
–120
262
–191
47
–2
5.4
–0.1
0.0
0.6
5.2
0.1
0.0
–0.3
1.5
2.4
–2.8
–0.2
1.0
1) Includes cash and cash equivalents, debt and financial liability related to share buyback program. The interest
rate of share buyback program financial liability is zero.
2) Net derivative liabilities include nominal value of interest rate and currency forwards earmarked to net debt.
Currency forwards are not included in average rate calculation.
3) Duration calculation includes both net debt and derivatives.
4) The effect of one percentage point increase in interest rates to financial expenses over the following year.
The foreign exchange exposure consists of
risks associated with foreign currency cash
flows (transaction risk), translation risk and
economic risk, such as the change in com-
petitiveness resulting from changes in foreign
exchange rates. The transaction risk arises
from committed and forecasted transactions
and payments in currencies other than the
functional currency of the entity and from
changes in fair value of foreign currency denom-
inated items recognized on the balance sheet.
The fair value risk consists of foreign currency
denominated accounts receivables, accounts
payables, debt, cash, loan receivables and the
currency position from commodity derivatives.
Foreign exchange transaction risk relates to
firm commitments, e.g. price fixed sales and
purchase orders. The fair value risks are hedged
in principle in full in major currencies. However,
continuing an exception to the hedging policy
approved in 2019, the main operating entity
in Sweden hedged its fixed price sales orders
to a limited extent, and did not hedge its fixed
price purchase orders. Forecasted and probable
cash flows are not typically hedged but can
be hedged selectively. In 2022 there were no
hedge accounting applied in foreign exchange
hedging activities.
Outokumpu’s largest foreign exchange
transaction risk exposures are in US dollars,
Swedish krona and British pound. However, the
British pound foreign exchange transaction risk
exposures arising from the UK companies are
expected to decrease substantially after the
divestment of UK operations of Long Products
business. A major part of the Group’s sales
is in euros and US dollars and thus the local
currency denominated production costs in
Sweden and the UK cause foreign exchange
risk. The main US dollar cash flow risk origins
from sales in the ferrochrome operations as
chromium is priced in US dollars. Another
significant US dollar cash flow risk is included
in sales margins due to the dollar-linked
stainless scrap purchase discounts. Internal
Swedish krona denominated financing causes
significant fair value foreign exchange rate risk,
which is hedged with forward contracts and, if
possible, with matching of external debt. The
Group’s fair value foreign exchange position is
presented in a more detailed level in the table
on the left side.
Translation risk consists of current net
investment in foreign entities and future foreign
currency denominated profits and losses which
eventually will have an impact on Group’s net
result and balance sheet through consolidation.
Outokumpu’s net result and net investment
translation risk is mainly in US dollars, Swedish
kronas and British pounds. The equity trans-
lation risk is not typically hedged, although
according to the Treasury policy this risk can
be hedged selectively. In 2022, there were no
hedges of net result or net investment expo-
sures. However, the effective portion of gains
(EUR 17 million, net of tax) on earlier financial
years’ net investment hedges is recognized
in equity.
Interest rate risk
Changes in interest rates expose Outokumpu
to interest rate risk with effects on Group’s
net interest expense (i.e. cash flow risk) and
value of assets and liabilities (i.e. fair value
risk) arising from changes in interest rates.
The objective of the Group’s interest rate risk
management is to have a significant share of
net debt effectively with a short-term interest
rate as a reference rate. This approach is
applied to mitigate the risk of adverse business
conditions against net interest expenses as
low interest rates are typically associated with
such business conditions. Also this approach
may help to reduce the average interest rate
of debt. Approximately 38% (2021: 39%) of
the Group’s debt has an interest period of less
Annual review
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Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
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Outokumpu Annual report 2022
than one year and the average interest rate of
non-current debt on December 31, 2022 was
5.4% (Dec 31, 2021: 4.7%).
The interest rate risk exposure is composed
of the Group’s net debt including all interest-
bearing assets and liabilities as well as deriv-
atives that hedge these items. Interest rate
derivatives, such as interest rate swaps, are
used to adjust the share of net debt effectively
repricing in different maturity buckets to limits
defined in the Treasury policy. This cash flow
risk exposure excludes lease liabilities.
Euro, Swedish krona and US dollar have a
substantial contribution to the Group’s interest
rate risk exposure. The interest rate risk expo-
sure in Swedish krona and US dollar primarily
originates from cash balances and foreign
exchange derivatives. The interest rate position
for the Group is presented in more detail in the
table on the previous page.
Metal price risk
Commodity risk refers to the risk on Outokumpu
earnings, cash flow and balance sheet arising
from commodity prices, such as metals, energy
and emission allowances.
The Group’s most significant exposures in
metals price risk arise from chromium and
nickel, while other alloy metals with metal price
risk include for example iron and molybdenum.
Outokumpu is exposed to metal price risk for
example through purchase of raw materials
as well as sale of stainless steel end products
where the price of alloy metals is based on
market prices. The timing difference in such
commercial purchase and sale transactions as
well as inventory position expose the Group to
metal price risk alongside the Group’s capa-
bility to pass on price changes in raw materials
to end-product prices. Market prices are based
on prices determined in regulated markets,
such as the London Metal Exchange (LME).
Also, derivatives contracts to mitigate metal
price risk are based on for example LME prices.
Chromium does not have an established finan-
cial derivatives market and consequently is not
included in the scope of the Treasury policy.
In addition to hedging with financial deriv-
atives, the metal price risk is also mitigated
through other measures such as pricing
decisions. A significant part of the Group’s
stainless steel sales contracts include an alloy
surcharge clause, with the aim of reducing the
risk arising from the timing difference between
alloy metal purchase and stainless steel
pricing and delivery. The share of Group sales
contracts including an alloy surcharge clause
increased in 2022 compared to the previous
year. Outokumpu’s underlying metal position (in
following alloy metals: nickel, iron and molyb-
denum) consists of price fixed purchase orders,
inventories of alloy metal containing materials
and price fixed sales orders. According to the
Tresury policy, the nickel price risk, excluding
the risk related to the base stock, must be
hedged in full. Price risk positions in iron
and molybdenum can be hedged selectively.
Financial derivatives mainly in nickel are used
to manage impacts of metal price changes
on earnings, whereas efficient working capital
management helps to reduce cash flow varia-
tions caused by metal price. Outokumpu has
continued to apply cash flow hedge accounting
programs on nickel hedging in order to reduce
the timing differences between derivative
gains or losses and the earnings impact of the
underlying exposure. The hedge accounting
covers a material part of the Group’s nickel
derivatives hedges.
in the first quarter of 2022, after nickel
market trading disruption on the LME, the
exchange implemented up and down price
limits for daily market price fluctuations. No
market interruptions occurred on the LME since
March 2022 but trading volumes in LME nickel
contracts were still lower throughout the year
since the market disruption compared to period
preceding the market disruption. Raw material
purchases and stainless-steel sales as well as
nickel derivatives continue to have references
to LME pricing. As a consequence of the trading
disruption in the first quarter, the LME started
an independent review of the nickel market
in addition to reviews announced by the UK
Financial Conduct Authority (FCA) and the Bank
of England. The final independent report was
published in January 2023.
Energy and emission allowance price risk
Outokumpu manages energy price risk centrally
and mitigates the risks by guidance from the
Energy Procurement policy. Energy price risk
is hedged with long-term agreements, fixed
price supply contracts and partial ownerships in
power utilities. The Energy Risk Steering Group
monitors and decides upon proposed hedging
levels for each business entity.
In 2022, the energy market saw an energy
crisis in Europe, especially after the Russia's
attack on Ukraine in late February. Europe
faced unprecedent heavy inflation of electricity
and gas prices. The war in Ukraine also led
to ceased electricity imports from Russia
to Finland and domestic production could
not catch up with that gap which further
increased area prices in Finland. All in all,
Outokumpu’s energy spend took an estimated
30-40% increase compared to previous year.
For 2023, Outokumpu’s energy portfolio has
been hedged with roughly two thirds of the
estimated consumption.
Outokumpu has initiated and executed
multiple actions to prevent further risks from
realizing and to cope with the escalated energy
prices. Outokumpu bought 6-months' worth of
reserve fuel, propane, for Tornio, signed another
10-year wind power deal and started hourly and
daily optimization activities to avoid peak prices
in electricity. Additionally, Outokumpu renewed
energy efficiency targets for 2023 and 2024
and created a long-term energy strategy for
coming years.
Outokumpu is exposed to changes in
emission allowance prices as the Group’s main
production sites in Europe are participating in
the EU Emissions Trading Scheme (EU ETS)
while the production site in the United Kingdom
is participating in the UK Emissions Trading
Scheme (UK ETS). The EU ETS and the UK ETS
markets are separate and emission allowances
are not transferable nor convertible. However,
the risk exposure in relation to UK ETS arising
from the UK operations is expected to disap-
pear after the divestment of the Long Products
businesses in the UK. All Outokumpu sites
met the compliance requirements on time in
2022 regarding returning of emissions to local
authorities. The Group’s emission allowances
positions are composed of realized and
forecasted emissions netted against confirmed
and forecasted emission allowances granted
by the authorities. The prices of fuels and
power as well as decisions on the EU and UK
ETS have a significant impact on the price of
emission allowances. The current trading phase
of the EU ETS refers to the period 2021–2030.
Outokumpu forecasts to have adequate amount
of EU emission allowances until the end of this
decade. However, e.g. future decisions on EU
ETS including the Carbon Border Adjustment
Mechanism (CBAM), may have a significant
impact on this forecast.
Security price risk
Outokumpu has equity investments and fixed
income securities. On December 31, 2022, the
largest investments were in OSTP Holding Oy
(investment in associated company of EUR 33
million) and Voimaosakeyhtiö SF. For more
information on the investment in Voimaosake-
yhtiö SF refer to note 5.6.
Annual review
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Financial year
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Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
193/220
Outokumpu Annual report 2022
The captive insurance company Visenta
Försäkringsaktiebolag has investments totaling
EUR 23 million in highly rated and liquid fixed
income securities as well as in fixed income
and equity funds in order to optimize return for
assets and to manage the risk prudently.
Country and counterparty credit risk
Treasury monitors credit risk related to financial
institutions. Outokumpu seeks to reduce these
risks by limiting the counterparties to banks
and other financial institutions with good
credit standing. For derivative transactions,
Outokumpu prefers to have the ISDA framework
agreements in place.
Exposure to country risk is monitored and
mitigated by having a credit insurance that
provides cover against political risk on external
account receivables. However, there is some
exposure on certain countries where insur-
ance was unavailable, like limited exposure
in Argentina.
Insurances
As part of risk mitigation activities, Outokumpu
aims to secure it’s assets and business globally
by arranging insurances against financial losses
arisen from risk events. Risks related to prop-
erty, business interruption, liabilities and credit
risk are covered by insurances. There were no
events leading to a significant insurance claims
during the reporting period. Losses related to
the Outokumpu’s site in Dahlerbrück due to
flooding of the river Volme in 2021 remained
limited and lower than first expected. In Kemi
mine, Finland, the incident related to Deep
Mine expansion project further delayed the
commissioning of the hoisting system work.
The project will be finalized in the first quarter
of 2023.
Outokumpu has captive insurance company,
Visenta Försäkringsaktiebolag (Visenta), for
optimizing insurance arrangements as part
of Group’s risk management. The captive is
registered in Sweden and can operate as a
direct insurer and reinsurer. Visenta has to
comply with capital adequacy requirements set
by the financial supervisory authority in Sweden
and European Insurance and Occupational
Pensions Authority (EIOPA). During the reporting
period Visenta was profitable and well capital-
ized to meet externally imposed requirements,
which are based on e.g. the Solvency II
framework. There were no significant changes
in the company’s assets during the year. On
December 31, 2022 the assets amounted to
EUR 38 million.
Visenta continued its participation in
Outokumpu’s property and business interrup-
tion insurance and also continued to provide
surety to cover certain potential environmental
liabilities in connection with the operations
in Kemi and Tornio. The business interruption
and property damage incident in Dahlerbrück,
Germany was reported to Visenta and it did not
led into claim compensation.
Outokumpu continued its systematic fire
safety and loss prevention surveys, focusing
on execution of the mitigating and preventive
actions. In addition, marine cargo audits
were conducted on sites with major logistic
operations.
5.4 Derivative instruments
€ million
Currency and interest rate
derivatives
Currency forwards
Interest rate swaps
Metal derivatives
Forward nickel contracts, hedge
accounted
Forward nickel contracts
Forward scrap contracts
Total derivatives
Less long-term derivatives
Interest rate swaps
Short-term derivatives
Contractual cash flows
2022
€ million
Currency derivatives
Outflows
Inflows
Interest derivatives
2021
€ million
Currency derivatives
Outflows
Inflows
Interest derivatives
2022
2021
2022
2021
Positive
fair value
Negative
fair value
Net
fair value
Net
fair value
Nominal
amounts
Nominal
amounts
10
–
12
19
–
40
–
40
–24
–11
–15
–11
1
–2
1,982
125
2,510
125
Tonnes
Tonnes
21,612
13,289
–
27,636
21,343
20,000
–65
–31
–
–131
–11
–120
–53
–12
–
–91
–11
–80
–8
–2
0
–11
–2
–9
2023
2024
2025
2026
1,975
–1,990
–2
–17
–
–
–4
–4
–
–
–4
–4
–
–
–
–
2022
2023
2024
2025
2,511
–2,510
0
1
–
–
0
0
–
–
0
0
–
–
0
0
Annual review
Sustainability review
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Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
194/220
Outokumpu Annual report 2022
one another. Hedge accounting is discontinued
if the requirements of hedge accounting are no
longer met.
Fair value changes of derivatives designated
to hedge forecasted cash flows are recognized
in other comprehensive income and presented
within the fair value reserve in equity to the
extent that the hedge is effective. Such fair
value changes accumulated in equity are
reclassified in profit or loss, and presented
in sales or cost of sales in the period when
the hedge accounted cash flows affect the
profit or loss. In the certain hedge accounted
transaction, the realized gains or losses of the
nickel derivatives are first reclassified from fair
value reserves in equity to the inventory for a
certain period and finally recognized in profit
or loss. The fair value changes related to the
ineffective portion of the hedging instrument
are recognized immediately in profit or loss.
Hedge accounted cash flow hedges (nickel derivatives)
Accounting principles
Fair value of nickel derivatives, € million
Nominal amount of nickel derivatives, tonnes
Hedge ratio
Fair value reserve in other comprehensive income, € million
Reclassified to sales in profit or loss, € million
Reclassified to cost of sales in profit or loss, € million
Recognized in inventory, € million
2022
–53
21,612
1:1
–54
–28
32
–5
2021
–8
27,636
1:1
–7
–27
29
–4
The nickel hedge accounting programs imple-
mented for the business area Americas and the
business area Europe cover a material part of
the Group’s sales and purchase contracts. For-
wards, which correspond to the pricing model of
underlying, are used as derivative instrument.
Only the spot component of nickel derivatives
is under hedge accounting, forward element is
recognized in profit or loss. The ineffectiveness
is tested regularly. Management estimates that
possible ineffectiveness can arise related to
credit risk or timing of transactions, but these
are estimated to be immaterial.
Master netting agreements and similar arrangements
€ million
Derivative assets
Gross amounts of recognized financial assets in the statement of financial position
Related financial instruments that are not offset
Derivative liabilities
Gross amounts of recognized financial liabilities in the statement of financial
position
Related financial instruments that are not offset
2022
2021
40
40
0
131
40
91
31
28
3
42
28
14
Outokumpu enters into derivative transactions
with most counterparties under ISDA agree-
ments. In general, the amounts owed by each
counterparty on a single day in respect of all
transactions outstanding in the same currency
are aggregated into a single net amount that
is payable by one party to the other. In certain
circumstances, e.g. when a credit event such
as a default occurs, all outstanding trans-
actions under the agreement are terminated.
The termination value is assessed and only a
single amount is payable in settlement of all
transactions. ISDA agreements do not meet
the criteria for offsetting the balances in the
statement of financial position, but the right
to offset is enforceable only on the occurrence
of future credit events. The following table
sets out the carrying amounts of recognized
financial instruments that are subject to the
agreements described above.
Derivatives are initially recognized at fair value
on the trade date, when the Group enters into
a derivative contract, and are subsequently
measured at fair value.
The presentation of the gains or losses
arising from the fair value measurement
depends on the purpose of the derivative. The
gains or losses arising from fair value changes
of effective hedge-accounted derivative con-
tracts are presented in profit or loss congruent
with the hedged item. Changes in fair value of
derivative contracts, where hedge accounting
is not applied, are recognized in EBIT in other
operating income and expenses. Changes in
fair value of derivatives designated for financing
activities are presented within financial income
and expenses.
The fair value measurement is based on
quoted market prices and rates as well as
on discounted cash flows at the end of the
reporting period. Fair values of derivatives can
in certain cases be based on valuations of
external counterparties.
Hedge accounting
Outokumpu applies cash flow hedge accounting
on certain nickel derivatives. For each hedging
arrangement the relationship between the
hedging instrument and the hedged item, the
objectives of risk management and the strategy
of the hedging arrangement are documented.
The effectiveness of the hedge relationship
is documented and assessed when hedging
is started and at least in the end of each
reporting period. Hedge effectiveness is calcu-
lated and assessed between the changes in
the fair value or cash flows of the hedged item
attributable to the hedged risk and the changes
in the fair value or cash flows of the hedging
instrument to ensure that these impacts offset
Annual review
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Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
195/220
Outokumpu Annual report 2022
5.5 Financial assets and liabilities
Carrying values and fair values of financial assets and liabilities by measurement category
2022
€ million
Non-current financial assets
Equity investments
Trade and other receivables
Current financial assets
Other investments
Trade and other receivables
Hedge accounted derivatives
Derivatives held for trading
Cash and cash equivalents
Non-current financial liabilities
Non-current debt
Derivatives held for trading
Current financial liabilities
Current debt
Trade and other payables
Hedge accounted derivatives
Derivatives held for trading
Amortized cost
Fair value through
other comprehensive
income
Fair value through
profit or loss
Carrying
amount
Fair value
Fair value
hierarchy level
Measured at
–
6
–
593
–
–
526
1,126
491
–
141
1,220
–
–
1,852
25
–
–
–
–
–
–
25
–
–
–
–
–
–
–
–
–
23
–
12
28
–
63
–
11
–
–
65
55
131
25
6
23
593
12
28
526
1,213
491
11
141
1,220
65
55
1,983
25
23
12
28
571
11
141
65
55
3
1
2
2
2
2
2
2
2
There were no transfers between levels 1, 2 and 3 during the years. A major part of equity investments at fair value through other comprehensive income at hierarchy level
3 relates to investments in unlisted energy producing companies. The movement in the carrying amounts of these investments presented in note 5.6 represents also the
reconciliation of level 3 changes. Current debt includes EUR 58 million of share buyback program related financial liability.
Annual review
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Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
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Outokumpu Annual report 2022
2021
€ million
Non-current financial assets
Equity investments
Trade and other receivables
Current financial assets
Other investments
Trade and other receivables
Hedge accounted derivatives
Derivatives held for trading
Cash and cash equivalents
Non-current financial liabilities
Non-current debt
Derivatives held for trading
Current financial liabilities
Current debt
Trade and other payables
Hedge accounted derivatives
Derivatives held for trading
Amortized cost
Fair value through
other comprehensive
income
Fair value through
profit or loss
Carrying
amount
Fair value
Fair value
hierarchy level
Measured at
–
4
–
597
–
–
300
902
597
–
112
1,811
–
–
2,520
24
–
–
–
–
–
–
24
–
–
–
–
–
–
–
–
–
28
–
9
22
–
60
–
2
–
–
17
23
42
24
4
28
597
9
22
300
985
597
2
112
1,811
17
23
2,562
24
28
9
22
730
2
112
17
23
3
1
2
2
2
2
2
2
2
Annual review
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Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
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Outokumpu Annual report 2022
Accounting principles
The Group’s financial assets and liabilities are
classified as items at fair value through profit or
loss, items at fair value through other compre-
hensive income and items at amortized cost.
The classification is based on Group’s business
model for financial assets and liabilities, and
their contractual cash flow characteristics.
If a financial asset is not measured at fair
value through profit or loss, significant trans-
action costs are included in the initial carrying
amount of the asset. Financial assets are
derecognized when the Group loses the rights
to receive the contractual cash flows on the
financial asset or it transfers substantially all
the risks and rewards of ownership outside the
Group. Accounting principles related to transac-
tion costs and de-recognition of borrowings are
presented in note 5.1.
Financial assets and liabilities
measured at amortized cost
Financial assets measured at amortized
cost include trade and other receivables and
cash and cash equivalents. These assets are
measured initially at fair value. After initial
recognition, they are measured at amortized
cost by using the effective interest rate method
less accumulated impairments. The accounting
principles related to factored receivables and
expected credit losses are presented in note
4.5.
Financial liabilities measured at amortized
cost include the borrowing and trade and other
payables. See note 5.1 for further accounting
and fair valuation principles for borrowings and
note 4.5 for accounting principles for trade and
other payables.
Financial assets at fair value through
other comprehensive income
Financial assets at fair value through other
comprehensive income include equity
investments in listed and unlisted companies.
Accounting principles are presented in note
5.6.
Financial assets and liabilities at
fair value through profit or loss
Financial assets and liabilities at fair value
through profit or loss include derivative
instruments. Financial assets at fair value
through profit or loss include also investments
in debt instrument or money market funds held
for trading purposes and intended to be sold
within a short period of time. In some cases,
also equity investments can be classified in
this category.
These financial assets and liabilities are
recognized at the trade date at fair value
and subsequently remeasured at fair value
at the end of each reporting period. The fair
value measurement is based on quoted rates
and market prices as well as on appropriate
valuation methodologies and models.
Realized and unrealized gains and losses
arising from changes in fair values of non-
derivative financial assets are recognized in
market price gains and losses under financial
income and expenses in the reporting period in
which they are incurred. Accounting principles
related to derivatives are described in more
detail in note 5.4.
Measurement of fair values
Number of accounting policies and disclosures
require the measurement of fair values.
Financial assets and liabilities measured at
fair value are classified to fair value hierarchy
levels based on the source information and
inputs used in the fair valuation. In level one,
fair values are based on public quotations for
identical instruments. In level two, fair values
are based on market rates and prices and
discounted future cash flows. For assets and
liabilities in level three, there is no reliable
market source available and thus the fair value
measurement is not based on observable
market data. Therefore, the measurement
methods are chosen taking into account the
information available for the measurement and
the characteristics of the measured item.
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Sustainability review
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Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
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Outokumpu Annual report 2022
5.6 Equity investments at
fair value through other
comprehensive income
€ million
Carrying value on Jan 1
Additions
Fair value changes
Carrying value on Dec 31
2022
2021
24
5
–4
25
Fair value reserve in equity
€ million
Fair value on Dec 31
Fair value at acquisition
Fair value reserve
2022
25
118
–93
48
19
–44
24
2021
24
113
–89
Equity investments at fair value through
other comprehensive income include unlisted
strategic holdings mainly in energy companies
in which Outokumpu does not have control,
joint control or significant influence.
These energy companies produce energy
to their shareholders on a cost-price basis
(Mankala principle) which is a widely used
business model among the Finnish energy
companies. Under the Mankala principle,
shareholders are entitled to receive energy in
proportion to the ownership, and each share-
holder is severally responsible for its respective
share of the costs of the energy company as
set out in the articles of association.
Outokumpu is an owner in nuclear utility
through Pohjolan Voima Oy (PVO) which is a
shareholder in Teollisuuuden Voima Oy (TVO).
TVO, where Outokumpu does not have a direct
ownership, operates Olkiluoto 3 (OL3) nuclear
power plant in Eurajoki, Finland. Outokumpu
has indirect ownership in Tornion Voima Oy,
combined heat and power plant in Tornio,
Northern Finland. This indirect ownership
The investments and divestments are
recognized at the trade date. They are included
in non-current assets unless there is intention
to dispose of the investment within 12 months
from the reporting date.
The investments are measured at fair value,
and fair value changes are recognized through
other comprehensive income and presented
net of tax in fair value reserve in equity. The
valuation is based on quoted rates and market
prices at the end of the reporting period, as
well as on appropriate valuation techniques,
such as cash flow discounting. Observable
market data is used in the valuation when
available but also entity-specific management
estimates are applied.
Dividends are recognized in profit or loss.
When equity investment is disposed, the
accumulated fair value changes are reclassified
from fair value reserve to retained earnings.
is through EPV Energia Oy. In addition,
Outokumpu has a direct ownership in Rajakiiri
Oy, which is a wind power mill in Tornio. The
total estimated fair value of the aforemen-
tioned three utility assets was EUR 24 million
at the year end.
Fennovoima
Investments include a 22% holding in Voima-
osakeyhtiö SF at fair value of EUR 0 million
(Dec 31, 2021: EUR 0 million). Voima-
osakeyhtiö SF is the majority shareholder of
Fennovoima. Voimaosakeyhtiö SF’s ownership
increased from 66% to 97% as a result of share
issue which was resolved by an Extraordinary
General Meeting (EGM) of Fennovoima on
September 21, 2022. RAOS Voima Oy has
challenged the said EGM resolution in Helsinki
district court.
During the year 2022, Outokumpu invested
EUR 5 million into Voimaosakeyhtiö SF, and by
the end of 2022, Outokumpu had invested in
total EUR 117 million (Dec 31, 2021: EUR 112
million) in Voimaosakeyhtiö SF.
In May 2022, Fennovoima announced that it
had withdrawn the Hanhikivi-1 nuclear power
plant construction license application as a
consequence of the termination of the EPC
(Engineering, Procurement and Construction)
contract with RAOS Project Oy due to supplier
related reasons. Several arbitration and other
proceedings among the parties involved have
been initiated. The contractual framework of
the matter is complex and lengthy legal pro-
ceedings among the relevant parties are to be
expected. The role of Fennovoima has turned
from a nuclear power plant project company
into an asset and litigation management
company. At year-end 2022 Outokumpu was
not a party to any of the legal proceedings.
Management judgments
Fennovoima
Due to Fennovoima’s withdrawal of the nuclear
power plant construction license application
and the termination of the EPC contract,
Outokumpu updated its discounted cash flow
based valuation model to reflect the latest
situation and developments in the project.
The updated valuation model is no longer
based on the earlier used main parameters i.e.
market and forecasted long- term electricity
prices, estimated amount of electricity to be
received or estimated production costs due to
the cancellation of the project. The valuation
model is now mainly based on estimates of
potential cash inflows or outflows related to
Voimaosakeyhtiö SF.
Other unlisted strategic energy companies
The valuation model of the other unlisted
strategic energy companies include among
others discount rate derived from risk free rate
(Germany 10 year bond yield), growth factor
depending the nature of the power plant or
wearing out of the mill and contractual factors
which may have an impact on the valuation.
Discounted cash flow models include also
adjustments based on the latest information
regarding the power plants and potential energy
production.
Accounting principles
Equity investments at fair value through other
comprehensive income consists of investments
which are not held for trading, and which
the Group has irrevocably elected at initial
recognition to recognize in this category.
These are mainly strategic investments, so this
classification is considered relevant.
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Financial year
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Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
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Outokumpu Annual report 2022
5.7 Commitments and contingent liabilities
€ million
Mortgages and pledges on Dec 31
Mortgages
Other pledges
Guarantees on Dec 31
On behalf of subsidiaries for commercial and other commitments
On behalf of associated companies for financing
On behalf of discontinued operations for other commitments
Other commitments for financing on Dec 31
2022
2021
546
13
3,208
13
51
1
5
4
27
–
–
9
Outstanding mortgages relate mainly to Group’s
financing and include both mortgage over the
real property and the business mortgage note
to secure a loan for the Kemi mine expansion
project. In June 2022, Outokumpu signed a
new unsecured revolving credit facility replacing
the existing secured revolving credit facility and
resulting in a release of mortgages provided for
security.
Outokumpu is liable for its associated company
Manga LNG Oy’s certain liabilities amounting
to EUR 16 million at the end of 2022 (2021:
EUR 21 million). In the above table, this liability
is reported as other pledges (Outokumpu’s
shares in Manga LNG Oy), as guarantees on
behalf of associated companies, and the part
exceeding the share pledge and guarantee as
other commitments for financing.
Outokumpu Oyj is, in relation to its share-
holding in EPV Energia Oy, liable for the
costs, commitments and liabilities relating to
electricity provided by Tornion Voima Oy. These
liabilities are reported under other commit-
ments for financing.
Outokumpu has a long-term energy supply
contract that includes a minimum purchase
quantity. There is uncertainty whether the
company will be able to utilize this minimum
purchase quantity in full by the end of 2028
or whether there will be additional cost to the
company from this contract.
Investment commitments
Outokumpu is a minority shareholder in
Voima osakeyhtiö SF, which is the majority
shareholder of Fennovoima. Fennovoima
announced in May 2022 that it has withdrawn
the Hanhikivi-1 nuclear power plant construc-
tion license application as a consequence of
the termination of the EPC contract with RAOS
Project Oy due to supplier related causes. In
June 2022, Fennovoima completed change
negotiations concerning its entire personnel
which led to significant staff and operation
reductions.
Originally, Outokumpu’s commitment to the
Fennovoima investment amounted to approx-
imately EUR 250 million, of which EUR 117
million has been paid by the end of the
reporting period. The payments related to the
original commitment, if any, are not expected
to occur in the previously planned schedule.
See more information in note 5.6.
The Group’s other off-balance sheet invest-
ment commitments totaled EUR 27 million
on December 31, 2022 (Dec 31, 2021:
EUR 32 million).
Accounting principles
Unrecognized commitments are disclosed when
the Group has an obligation or a pledge to
assume a financial liability at a future date.
A contingent liability is a possible obligation
that arises from past events and the existence
of which will be confirmed by uncertain future
events that are not wholly within the control of
the entity. Obligations that are not considered
probable or where the amounts cannot be
reliably measured are also considered as
contingent liabilities. Contingent liabilities
are not recognized in the statement of
financial position but disclosed as off-balance
sheet commitments.
Annual review
Sustainability review
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Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other
comprehensive income
5.7 Commitments and contingent liabilities
6. Group structure and other notes
Parent company financial statements, FAS
Audit
Information for shareholders
200/220
Outokumpu Annual report 2022
6. Group structure and other notes
This notes section covers the notes related to the Group
structure, as well as other notes that do not directly
fall under any of the previous notes sections.
6.1 Discontinued operations
On July 12, 2022 Outokumpu announced that it
has signed an agreement to divest the majority
of the Long Products business operations to
Marcegaglia Steel Group. The transaction
includes melting, rod, and bar operations in
Sheffield, the UK, bar operations in Richburg,
the US, and wire rod mill in Fagersta, Sweden.
The transaction excludes Outokumpu Long
Products AB units in Degerfors and Storfors,
Sweden, and different options regarding the
future of the units will be evaluated. Long
products activities that remain in Outokumpu
are included in Other operations.
During 2022 Outokumpu reclassified its Long
Products businesses to be divested assets
held for sale and discontinued operations.
Outokumpu booked an impairment loss EUR 33
million. The impairment was allocated to
goodwill, other intangible assets and property,
plant and equipment. Transaction costs are
estimated to be approximately EUR 8 million.
The divestment was completed on January
3, 2023 and the transaction was carried out
as a share sale. The accumulated translation
differences, currently estimated at EUR 8
million, will be reclassified into net result from
the discontinued operations at the time of
the disposal.
Accounting principles
Condensed statement of income, discontinued operations
€ million
Sales
Cost of sales
Gross margin
Other operating income
Sales, general and administrative costs
Other operating expenses
EBIT
Total financial income and expenses
Result before taxes
Income taxes
Net result for the financial year from discontinued operations
Other comprehensive income for the financial year from discontinued
operations, net of tax
Total comprehensive income for the financial year from discontinued
operations
2022
794
–656
138
1
–17
–36
86
2
88
–35
54
8
62
2021
466
–422
44
0
–12
–2
30
–1
29
–2
27
6
33
Other operating expenses is including impairment loss of EUR 33 million and due to the disposal of the Long
Products businesses in the UK a relating deferred tax asset was reduced, increasing the tax expense with EUR
13 million.
Non-current assets or a disposal group are
classified as held for sale if their carrying amount
will be recovered principally through the disposal
of the assets and the sale is highly probable. If
their carrying amount will be recovered principally
through their disposal rather than through their
continuing use, they are measured at the lower of
carrying amount and fair value less cost to sell.
Property, plant and equipment and intangible
assets are not depreciated or amortized once
classified as held for sale.
Result from the discontinued operations is
reported separately from income and expenses
from continuing operations in the consolidated
statement of income and prior periods are
restated accordingly. Assets and liabilities
related to the discontinued operations are pre-
sented as separate line items in the statement of
the financial position and the comparative period
is not restated. The statement of cash flows
consists of total group figures including the dis-
continued operations. In the comparative periods
Outokumpu didn’t have discontinued operations.
Intra-group revenues and expenses between
continuing and discontinued operations are
eliminated in continuing operations only when
the revenues and expenses are not considered
to continue after the disposal of the discon-
tinued operations.
Annual review
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Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
6.1 Discontinued operations
6.2 Business acquisitions and disposals
6.3 Disputes and litigations
6.4 Related parties
6.5 Subsidiaries
6.6 Associated companies
6.7 New IFRS standards
6.8 Events after the reporting period
Parent company financial statements, FAS
Audit
Information for shareholders
201/220
Outokumpu Annual report 2022 Condensed statement of financial position, discontinued operations
Statement of cash flows, discontinued operations
€ million
Assets held for sale
Non-current assets
Property, plant and equipment
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total Assets held for sale
€ million
Liabilities related to assets held for sale
Non-current liabilities
Non-current debt
Deferred tax liabilities
Employee benefit obligations
Provisions
Total non-current liabilities
Current liabilities
Current debt
Trade and other payables
Total current liabilities
Total liabilities related to assets held for sale
€ million
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
Net change in cash and cash equivalents
2022
60
60
193
49
117
359
419
2022
1
2
1
14
18
1
186
186
204
2022
2021
91
–2
–2
87
28
–4
–6
18
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
6.1 Discontinued operations
6.2 Business acquisitions and disposals
6.3 Disputes and litigations
6.4 Related parties
6.5 Subsidiaries
6.6 Associated companies
6.7 New IFRS standards
6.8 Events after the reporting period
Parent company financial statements, FAS
Audit
Information for shareholders
202/220
Outokumpu Annual report 2022 Accounting principles
Provisional loss on sale
The disposed companies are included in the
consolidated financial statements up to
the date when the control is lost. The gain or
loss on disposal together with cumulative
translation adjustments related to disposed
companies are recognised in the consolidated
statement of income at the date control is lost.
€ million
Total net assets sold
Provisional sale consideration
Provisional loss on sale
Cash flow
Provisional cash consideration, net of cash acquired
Receivable related to sale consideration
Consideration received
6.2 Business acquisitions
and disposals
During year 2022, Outokumpu divested its
plated services business in Castellone, Italy,
plate service center in Aalten, the Netherlands
and Outokumpu Fortinox S.A. subsidiary
in Argentina.
Total book value of sold net assets including a
cumulative translation adjustment release was
EUR 22 million, the provisional loss on sale was
EUR 9 million and the net cash received was
EUR –1 million. Receivable of EUR 2 million
related to the sale consideration of the sub-
sidiary Fortinox S.A. is recognized in the trade
and other receivables. The provisional sale
consideration is subject to completion of the
closing accounts in accordance with the terms
of the sale agreements. Related transaction
costs amounted to EUR 1 million.
These transactions did not have a significant
impact on the Group.
2022
–22
13
–9
1
–2
–1
Annual review
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Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
6.1 Discontinued operations
6.2 Business acquisitions and disposals
6.3 Disputes and litigations
6.4 Related parties
6.5 Subsidiaries
6.6 Associated companies
6.7 New IFRS standards
6.8 Events after the reporting period
Parent company financial statements, FAS
Audit
Information for shareholders
203/220
Outokumpu Annual report 2022
favour of the claimant and has been appealed
by Outokumpu. Outokumpu is of the view that
the claims asserted against it are without merit
and is defending against them. Appropriate
provisions are in place.
6.4 Related parties
Outokumpu’s related parties include the key
management of the company and their close
family members, subsidiaries, associated
companies and Solidium Oy. Key management
includes Leadership Team members and
members of the Board of Directors, and their
remuneration is presented in note 3.2. The
principal subsidiaries and associated compa-
nies are listed later in this notes section.
Solidium Oy, a limited company fully owned
by the State of Finland, owned 15.5% of
Outokumpu on December 31, 2022. Solidium’s
mission is to strengthen and stabilize Finnish
ownership in nationally important companies
and increase the value of its holdings in the
long run.
Transactions with related partied are carried out
at arms-length principles.
6.3 Disputes and litigations
Dispute over payment of
wages in the US
On July 16, 2018, a class of plaintiffs,
consisting of 152 former and 126 current
Outokumpu Calvert mill employees, brought suit
against Outokumpu in U.S. federal circuit court.
The plaintiffs alleged that Outokumpu failed to
pay full wages for regular work and overtime
work they performed. On November 18, 2021,
the circuit court entered a default judgment
against Outokumpu with respect to liability
as a sanction for alleged misconduct during
the discovery phase of the legal proceeding.
On October 4, 2022, the circuit court further
found Outokumpu liable to the plaintiffs for
approximately USD 13 million in the aggregate,
plus attorney’s fees. Outokumpu has appealed
the circuit court’s November 18, 2021 default
judgment entry and October 4, 2022 finding
of liability. Outokumpu is of the view that the
claims asserted against it are without merit
and is defending against them. Appropriate
provisions are in place.
Claim in Germany related to
expired lease agreement
On January 19, 2018, Outokumpu was served
with a claim for declaratory judgement by
the owner of a warehouse in Krefeld that
Outokumpu had leased until the end of
2016. The claim relates to a dispute over the
responsibility for the maintenance and repair
of the warehouse. The plaintiff has later in
the process specified the claim and is now
seeking payment of EUR 19 million. On May
4, 2022, the court issued a ruling covering
only the merits of the claim. Said ruling was in
Transactions and balances
with related companies
Annual review
€ million
Sales and other operating
income
Purchases
Dividend income
Trade and other receivables
Trade and other payables
2022
2021
Sustainability review
115
–66
11
26
7
97
–51
7
36
4
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
6.1 Discontinued operations
6.2 Business acquisitions and disposals
6.3 Disputes and litigations
6.4 Related parties
6.5 Subsidiaries
6.6 Associated companies
6.7 New IFRS standards
6.8 Events after the reporting period
Parent company financial statements, FAS
Audit
Information for shareholders
204/220
Outokumpu Annual report 2022 1)
1)
6.5 Subsidiaries
December 31, 2022
Europe
Outokumpu AS
Outokumpu Distribution France S.A.S.
Outokumpu Distribution Hungary Kft.
Outokumpu Distribution Polska Sp. z o.o.
Outokumpu Europe Oy
Outokumpu India Private Limited
Outokumpu Management (Shanghai) Co., Ltd
Outokumpu Middle East FZCO
Outokumpu Nirosta GmbH
Outokumpu N.V.
Outokumpu Prefab AB
Outokumpu Press Plate AB
Outokumpu PSC Finland Oy
Outokumpu (Pty) Ltd
Outokumpu S.A.
Outokumpu (S.E.A.) Pte. Ltd
Outokumpu Shipping Oy
Outokumpu S.r.l.
Outokumpu Stainless AB
Outokumpu Stainless B.V.
Outokumpu Stainless Ltd
Outokumpu Stainless Oy
Outokumpu Stainless Pty. Ltd
Outokumpu Stainless Steel (China) Co., Ltd
Outokumpu Tornio Infrastructure Oy
Country
Group
holding, %
December 31, 2022
Norway
France
Hungary
Poland
Finland
India
China
United Arab Emirates
Germany
Belgium
Sweden
Sweden
Finland
South Africa
Spain
Singapore
Finland
Italy
Sweden
The Netherlands
The UK
Finland
Australia
China
Finland
Americas
Outokumpu Brasil Comércio de Metais Ltda
Outokumpu Mexinox Distribution S.A. de C.V.
Outokumpu Mexinox S.A. de C.V.
Outokumpu Stainless USA, LLC
ThyssenKrupp Mexinox CreateIT, S.A. de C.V.
Ferrochrome
Outokumpu Chrome Oy
Other operations
Outokumpu Americas, Inc.
Outokumpu Distribution Benelux B.V.
Outokumpu Holding Germany GmbH
Outokumpu Holding Nederland B.V.
Outokumpu Long Products AB
Outokumpu Mining Oy
Outokumpu Stainless Holding GmbH
Outokumpu Stainless UAB
Québec Inc.
Viscaria AB
Visenta Försäkrings AB
Discontinued operations
Fagersta Stainless AB
Outokumpu Long Products Ltd.
Outokumpu Stainless Bar, LLC
1)
1)
1)
2)
1)
2)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Country
Brazil
Mexico
Mexico
The US
Mexico
Finland
The US
The Netherlands
Germany
The Netherlands
Sweden
Finland
Germany
Lithuania
Canada
Sweden
Sweden
Sweden
The UK
The US
This list does not include all holding companies or all dormant companies. In addition, Outokumpu has branch
offices in South Korea, Taiwan, Thailand, The UK and Vietnam.
1) Shares and stock held by the parent company
2) Established in 2022
Group
holding, %
Annual review
Sustainability review
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
6.1 Discontinued operations
6.2 Business acquisitions and disposals
6.3 Disputes and litigations
6.4 Related parties
6.5 Subsidiaries
6.6 Associated companies
6.7 New IFRS standards
6.8 Events after the reporting period
Parent company financial statements, FAS
Audit
Information for shareholders
205/220
Outokumpu Annual report 2022 6.6 Associated companies
Industry
Domicile
Ownership, %
Manga LNG Oy
OSTP Holding Oy
Rapid Power Oy
Energy
Metals processing
Energy
Finland
Finland
Finland
Summarized financial information on associated companies
€ million
Carrying value of investments in associated companies
Group’s share of total comprehensive income
2022
51
11
The impact of investments in associated companies on the Group's consolidated financial statement is
considered immaterial.
45
49
33
2021
43
15
Accounting principles
Companies where Outokumpu generally holds
voting rights of 20–50% or in which Outokumpu
otherwise has significant influence, but not
control, are included in the consolidated
financial statements as associated companies,
and they are accounted for using the equity
method from the date significant influence was
obtained until it ceases.
The Group’s share of the associated
company’s net result for the period is sepa-
rately disclosed below EBIT in the consolidated
statement of income. Outokumpu’s share of
changes recognized in the associated compa-
ny’s other comprehensive income is recognized
in the Group’s other comprehensive income.
If Outokumpu’s share of the associated
company’s losses exceeds the carrying amount
of the investment, the investment is recognized
at zero value in the statement of financial
position and recognition of further losses is
discontinued, except to the extent that the
Group has incurred obligations in respect of
the associated company. The interest in an
associated company comprises the carrying
amount of the investment under the equity
method together with any long-term interest
that, in substance, forms a part of the net
investment in the associated company.
introduce additional disclosure requirements
on loans which contain covenants.
• Amendments to IAS 1 Presentation of
financial statements, IFRS Practice
Statement 2 and IAS 8 Accounting Policies,
Changes in Accounting Estimates and
Errors – Disclosure of Accounting Policies
and Definition of Accounting Estimates*
(effective for financial years beginning on or
after January 1, 2023): The amendments
distinguish changes in accounting estimates
from changes in accounting policies and aim
to improve accounting policy disclosures.
• Amendments to IAS 12 Income taxes
– Deferred Tax related to Assets and
Liabilities arising from single transaction*
(effective for financial years beginning on
or after January 1, 2023): The amendment
clarifies the application of the recognition
exemption of deferred taxes on a single
transaction.
• Amendments to IFRS16 Leases: Lease
liability in a Sale and Leaseback* (effective
for financial years beginning on or after
January 1, 2024): Narrow-scope amendments
to requirements for sale and leaseback
transactions in IFRS 16 explaining how an
entity accounts for a sale and leaseback
after the date of the transaction.
*Not yet endorsed by the EU.
6.7 New IFRS standards
Adoption of new and amended
IFRS standards
Outokumpu has not yet applied the following
new and amended standards and interpreta-
tions, but adopts them as of the effective date
or, if the date is other than the first day of the
financial year, from the beginning of the subse-
quent financial year. These new and amended
standards or other not yet effective amend-
ments and interpretations are not expected
to have a material impact on Outokumpu’s
consolidated financial statements.
• IFRS 17 Insurance contracts and amend-
ments to IFRS 17 insurance contracts:
Initial Application of IFRS 17 and IFRS
9 - Comparative information (effective for
financial years beginning on or after January
1, 2023): The standard requires a current
measurement model for insurance liability
with re-measured estimates at each reporting
date. The standard can impact the financial
reporting of Outokumpu’s captive insurance
company Visenta Försäkrings AB. However,
the company is not material to Outokumpu
as a whole, and the impacts are not expected
to be material for the Group.
• Amendments to IAS 1 Presentation of
financial statements – Classification of
Liabilities as Current or Non-current*
(effective for financial years beginning on or
after January 1, 2023): The amendments
clarify that liabilities are classified as either
current or non-current, depending on the
rights that exist at the end of the reporting
period, and that classification is unaffected
by the expectations of the entity or events
after the reporting date. The amendments
also clarify what IAS 1 means when it refers
to the settlement of a liability. Amendments
Annual review
Sustainability review
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Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
6.1 Discontinued operations
6.2 Business acquisitions and disposals
6.3 Disputes and litigations
6.4 Related parties
6.5 Subsidiaries
6.6 Associated companies
6.7 New IFRS standards
6.8 Events after the reporting period
Parent company financial statements, FAS
Audit
Information for shareholders
206/220
Outokumpu Annual report 2022
6.8 Events after the
balance sheet date
On January 3, 2023, Outokumpu announced
that is has completed the divestment of
majority of the Long Products business. More
detailed information about the financial
impacts of the transaction can be found in note
6.1.
After the balance sheet date, Outokumpu
has repurchased 3,755,005 shares under
the share buyback program, which ends no
later than on March 24, 2023. By February 8,
2023, Outokumpu had repurchased a total of
12,330,131 shares under the share buyback
program and held a total of 16,494,842
treasury shares.
On January 27, 2023, RAOS Project Oy and
Rosatom Energy International JSC have filed
with the ICC International Court of Arbitration
a request to join Outokumpu Oyj and certain
other parties into the arbitration proceedings
related to the termination of the EPC contract.
As Outokumpu is not a party to any of the
underlying contracts related to the disputes
over the termination of the EPC Contract, it
sees no basis for the joinder request, and will
correspondingly strongly oppose it.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Group structure and other notes
6.1 Discontinued operations
6.2 Business acquisitions and disposals
6.3 Disputes and litigations
6.4 Related parties
6.5 Subsidiaries
6.6 Associated companies
6.7 New IFRS standards
6.8 Events after the reporting period
Parent company financial statements, FAS
Audit
Information for shareholders
207/220
Outokumpu Annual report 2022 Parent company financial statements, FAS
Income statement of the parent company
€ million
Sales
Cost of sales
Gross margin
Other operating income
Selling and marketing expenses
Administrative expenses
Other operating expenses
EBIT
Financial income and expenses
Result before appropriations and taxes
Appropriations
Group contribution
Income taxes
Result for the financial year
2022
2021
496
–409
87
232
–3
–131
–10
175
–6
169
117
0
286
783
–716
67
27
–2
–103
–13
–24
–100
–124
164
0
40
According to the Finnish accounting standards (FAS), the parent company financial statements are
presented in addition to the Group financial statements. The parent company’s financial state-
ments have been prepared in accordance with Finnish accounting standards. The parent company
Outokumpu Oyj’s income statement and balance sheet items are mainly internal and are eliminated
on the group level except for the external financing and treasury items which are mainly centralized
to the parent company.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
Parent company financial statements, FAS
Income statement of the parent company
Balance sheet of the parent company
Cash flow statement of the parent company
Statement of changes in equity
of the parent company
Commitments and contingent liabilities
of the parent company
Audit
Information for shareholders
208/220
Outokumpu Annual report 2022 Balance sheet of the parent company
€ million
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Financial assets
Shares in Group companies
Loan receivables from Group companies
Shares in associated companies
Other shares and holdings
Other financial assets
Total non-current assets
Current assets
Current receivables
Loans receivable
Trade receivables
Prepaid expenses and accrued income
Other receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
2022
2021
€ million
2022
2021
EQUITY AND LIABILITIES
Shareholders’ equity
Share capital
Premium fund
Invested unrestricted equity reserve
Retained earnings
Result for the financial year
Untaxed reserves
Accumulated depreciation difference
Liabilities
Non-current liabilities
Convertible bonds
Loans from financial institutions
Pension loans
Other non-current loans
Current liabilities
Group bank account liabilities
Other current loans
Pension loans
Trade payables
Accrued expenses and prepaid income
Other current liabilities
85
2
3,877
127
13
1
3
4,021
103
2
3,685
658
13
1
3
4,360
4,108
4,465
294
94
22
242
652
257
909
694
75
22
275
1,066
500
1,566
5,674
5,374
Total liabilities
TOTAL EQUITY AND LIABILITIES
311
720
2,290
160
286
3,768
311
720
2,332
188
40
3,592
1
1
125
–
123
11
260
1,263
27
31
139
13
173
1,646
125
50
154
2
330
898
212
13
236
16
76
1,451
1,906
1,781
5,674
5,374
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
Parent company financial statements, FAS
Income statement of the parent company
Balance sheet of the parent company
Cash flow statement of the parent company
Statement of changes in equity
of the parent company
Commitments and contingent liabilities
of the parent company
Audit
Information for shareholders
209/220
Outokumpu Annual report 2022 Cash flow statement of the parent company
€ million
2022
2021
€ million
Cash flow from operating activities
Result for the financial year
Adjustments for
Depreciation and amortization
Impairments
Reversal of impairments
Gain/loss on sale of intangible assets, and property, plant and equipment
Interest income
Dividend income
Interest expense
Change in provisions
Exchange gains and losses
Group contributions
Other non-cash adjustments
Change in working capital
Change in trade and other receivables
Change in trade and other payables
Dividends received
Interest received
Interest paid
Net cash from operating activities
Cash flow from investing activities
Investments in subsidiaries and other shares and holdings
Purchases of intangible assets
Proceeds from disposal of subsidiaries
Proceeds from disposal of other shares and holdings
Proceeds from sale of property, plant and equipment
Proceeds from sale of intangible assets
Change in other long-term receivables
Net cash from investing activities
Cash flow before financing activities
Cash flow from financing activities
Directed share issue
Dividends paid
Treasury shares purchase
Borrowings of non-current debt
Repayments of non-current debt
Change in current debt
Cash flow from group contribution
Other financing cash flow
Net cash from financing activities
Net change in cash and cash equivalents
Net change in cash and cash equivalents in the balance sheet
286
15
15
–220
0
–43
–
27
0
3
–117
–12
–332
21
–28
–7
–
41
–27
13
–41
40
14
91
–
–18
–37
–2
34
–1
6
–164
–8
–84
–30
66
36
2
37
–37
2
–6
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2021
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Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
Parent company financial statements, FAS
Income statement of the parent company
Balance sheet of the parent company
Cash flow statement of the parent company
Statement of changes in equity
of the parent company
Commitments and contingent liabilities
of the parent company
Audit
Information for shareholders
–5
–6
28
–
–1
0
–
16
–24
–
–68
–42
–
–63
171
164
106
268
244
244
–19
–14
28
2
0
30
105
132
126
209
–
–
24
–530
50
111
–64
–201
–75
–75
210/220
Outokumpu Annual report 2022 Statement of changes in equity of the parent
company
Commitments and contingent liabilities of the
parent company
Share capital
Premium fund
Invested
unrestricted
equity reserve
Retained
earnings
Total equity
€ million
Other pledges on Dec 31
€ million
Equity on Jan 1, 2021
Result for the financial year
Directed share issue
Equity on Dec 31, 2021
Result for the financial year
Dividends paid
Treasury share purchase
Equity on Dec 31, 2022
Distributable funds on Dec 31
€ million
Retained earnings
Result for the financial year
Invested unrestricted equity reserve
Distributable funds on Dec 31
311
–
–
311
–
–
–
311
720
–
–
720
–
–
–
720
2,123
–
209
2,332
–
–
–42
2,290
188
40
–
228
286
–68
–
446
2022
160
286
2,290
2,736
3,343
40
209
3,592
286
–68
–42
3,768
2021
188
40
2,332
2,560
Guarantees on Dec 31
On behalf of subsidiaries
For financing
For commercial guarantees
For other commitments
On behalf of associated companies
For financing
Other commitments
for financing on Dec 31
2022
13
2021
13
307
1
55
1
4
427
0
27
–
9
Outokumpu is liable for its associated company
Manga LNG Oy’s certain liabilities amounting
to EUR 16 million at the end of 2022 (2021:
EUR 21 million). In the above table, this liability
is reported as other pledges (Outokumpu’s
shares in Manga LNG Oy), as guarantees on
behalf of associated companies, and the part
exceeding the share pledge and guarantee as
other commitments for financing.
Fennovoima announced in May 2022 that it
has withdrawn the Hanhikivi-1 nuclear power
plant construction license application as a
consequence of the termination of the EPC
contract with RAOS Project Oy due to supplier
related causes. In June 2022, Fennovoima
completed change negotiations concerning its
entire personnel which led to significant staff
and operation reductions.
Outokumpu Oyj is, in relation to its share-
holding in EPV Energia Oy, liable for the
costs, commitments and liabilities relating to
electricity provided by Tornion Voima Oy. These
liabilities are reported under other commit-
ments for financing.
Outokumpu is a minority shareholder in Voimao-
sakeyhtiö SF, which is the majority shareholder
of Fennovoima.
Originally, Outokumpu’s commitment to the
Fennovoima investment amounted to approx-
imately EUR 250 million, of which EUR 117
million has been paid by the end of the
reporting period. The payments related to the
original commitment, if any, are not expected
to occur in previously planned schedule. See
more information in note 5.6 of the consoli-
dated financial statements.
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Parent company financial statements, FAS
Income statement of the parent company
Balance sheet of the parent company
Cash flow statement of the parent company
Statement of changes in equity
of the parent company
Commitments and contingent liabilities
of the parent company
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Outokumpu Annual report 2022 Audit
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Materiality
Audit Scope
Key Audit
Matters
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Outokumpu Annual report 2022 Auditor’s Report
(Translation of the Finnish Original)
Report on the Audit of the Financial Statements
To the Annual General Meeting of Outokumpu Oyj
Independence
Opinion
In our opinion
• the consolidated financial statements give a true and fair view of the group’s financial position
and financial performance and cash flows in accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU
• the financial statements give a true and fair view of the parent company’s financial performance
and financial position in accordance with the laws and regulations governing the preparation of the
financial statements in Finland and comply with statutory requirements.
We are independent of the parent company and of the group companies in accordance with the
ethical requirements that are applicable in Finland and are relevant to our audit, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, the non-audit services that we have provided to the parent
company and to the group companies are in accordance with the applicable law and regulations
in Finland and we have not provided non-audit services that are prohibited under Article 5(1) of
Regulation (EU) No 537/2014. The non-audit services that we have provided are disclosed in note
2.3 to the Financial Statements.
Our opinion is consistent with the additional report to the Audit Committee.
Our Audit Approach
Overview
What we have audited
We have audited the financial statements of Outokumpu Oyj (business identity code 0215254-2) for
the year ended 31 December 2022. The financial statements comprise:
• the consolidated statement of income, consolidated statement of comprehensive income,
consolidated statement of financial position, consolidated statement of cash flows, consolidated
statement of changes in equity and notes to the consolidated financial statements, including
accounting principles for the consolidated financial statements
• the parent company’s income statement, balance sheet, cash flow statement and notes to the
parent company financial statements.
Basis for Opinion
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities
under good auditing practice are further described in the Auditor’s Responsibilities for the Audit of
the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the financial statements. In particular, we considered where management made
subjective judgements; for example, in respect of significant accounting estimates that involved
making assumptions and considering future events that are inherently uncertain.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to
obtain reasonable assurance whether the financial statements are free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall group materiality for the consolidated financial statements as set out in the
table below. These, together with qualitative considerations, helped us to determine the scope of
our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements on the financial statements as a whole.
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Outokumpu Annual report 2022 Overall group materiality
€ 35 million (2021: € 35 million)
How we determined it
0.4% of sales 2021
Rationale for the materiality
benchmark applied
We chose sales as the benchmark because, in our view, it is a
stable and an important benchmark in the group’s current situation,
against which the performance of the group is measured by users of
the financial statements. As the group’s profitability has not been
stable, sales is also a generally accepted benchmark. We chose
0.4% which is within the range of acceptable quantitative materiality
thresholds in auditing standards.
How we tailored our group audit scope
We tailored the scope of our audit, taking into account the structure of the Outokumpu group, the
accounting processes and controls, and the industry in which the group operates. The group audit
scope was focused on the manufacturing companies in Finland, Sweden, Germany, USA, Mexico, the
UK and Italy. We obtained, through our audit procedures at the aforementioned companies, com-
bined with additional procedures at the group level, sufficient and appropriate evidence regarding the
financial information of the group as a whole to provide a basis for our opinion on the consolidated
financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
As in all of our audits, we also addressed the risk of management override of internal controls,
including among other matters consideration of whether there was evidence of bias that represented
a risk of material misstatement due to fraud.
Key audit matter in the audit of the group
How our audit addressed the key audit matter
Valuation of goodwill
Refer to notes 4.1 and 4.3 in the
consolidated financial statements.
As at 31 December 2022 the group’s goodwill
balance amounted to € 456 million.
Goodwill is tested at least annually, irrespective
of whether there is any indication of impairment.
In goodwill impairment testing, the recoverable
amounts are based on value in use determined
by discounted future net cash flows expected to
be generated by the cash-generating unit.
Key assumptions of the value-in-use calculations
include the discount rate, the terminal value
growth rate, the average global growth in
end-use consumption of stainless steel and base
price development.
Our audit of goodwill valuation focused on man-
agement’s judgement and estimates used. We
assessed the appropriateness of these through
the following procedures:
• We tested the methodology applied in the
value in use calculation by comparing it to the
requirements of IAS 36, Impairment of Assets,
and we tested the mathematical accuracy of
the calculations.
• We evaluated the process by which the future
cash flow forecasts were drawn up, including
comparing them to medium term strategic
plans and forecasts approved by the Board and
testing the key underlying assumptions.
• We considered whether the sensitivity analysis
performed by management around key drivers
of the cash flow forecast was appropriate by
considering the likelihood of the movements of
these key assumptions.
Valuation of goodwill is a key audit matter due
to the size of the goodwill balance and the high
level of management judgement involved in the
estimation process.
• We compared the current year actual results to
those included as estimates in the prior year
impairment model to corroborate the reliability
of management’s estimates.
• The discount rates applied within the model
were assessed by PwC business valuation
specialists, including comparison to economic
and industry forecasts as appropriate.
We also considered the appropriateness of the
related disclosures provided in notes 4.1 and 4.3
in the group financial statements.
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Outokumpu Annual report 2022
Key audit matter in the audit of the group
How our audit addressed the key audit matter
Key audit matter in the audit of the group
How our audit addressed the key audit matter
Our audit work on the valuation of deferred tax
assets, with the involvement of our tax specialists,
included:
• Validating the completeness and accuracy of
tax attributes.
• Confirming the appropriate application of tax
rules for utilizing deferred tax assets, including
expiry of those attributes.
• Evaluating the Company’s ability to generate
sufficient taxable income to utilize deferred tax
assets. This evaluation takes into account the
Company’s historical profitability and circum-
stances as well as future projections.
We also considered the appropriateness of the
related disclosures provided in note 2.6 in the
group financial statements.
Valuation of Property, Plant and Equipment
Refer to note 4.1 in the consolidated
financial statements.
As at 31 December 2022 the group’s Property,
Plant and Equipment (PPE) amounted to €
2,406 million, which is 34% of the total assets
and 58% of the total equity.
The group’s business is very capital intensive
and there is a risk that the carrying value of the
Property, Plant and Equipment is overstated. The
carrying value of Property, Plant and Equipment
is tested as part of the group impairment testing
based on the discounted cash flow model.
Valuation of Property, Plant and Equipment is a
key audit matter due to the size of the balance
and the high level of management judgement
involved in the estimation process.
We assessed the appropriateness of the group’s
method and management’s judgement and esti-
mates in the impairment calculations for Property,
Plant and Equipment.
Our audit work also included testing the operating
effectiveness of controls in place to ensure the
existence and appropriate valuation of Property,
Plant and Equipment. Such controls include e.g.
the authorization of additions, disposals and
scrapings, and the reconciliation of fixed assets
registers to the accounting records.
In addition, we performed substantive audit
procedures including testing of assets acquired
in the year and depreciation of the fixed assets
mainly through analytical audit procedures.
Valuation of Deferred Tax Assets in the US
Refer to note 2.6 in the consolidated
financial statements.
As at 31 December 2022 the group’s deferred
tax assets amounted to € 390 million, of which
€ 297 million related to the US.
Valuation of deferred tax assets in the US is a key
audit matter as the amounts are material, the
assessment process is judgemental and is based
on assumptions that are impacted by expected
future market conditions and performance in
the US.
In deferred tax recognition, the management
assesses whether the realization of future tax
benefits is sufficiently probable to support the
recognition. Deferred tax assets are recognized
for all deductible temporary differences to the
extent that it is probable that future taxable
profits will be available for utilization of these
differences.
We obtained an understanding of the process for
accounting for deferred tax assets.
We performed substantive audit procedures to
validate the deferred tax balances, which are
recorded with a consideration of enacted tax laws
in each jurisdiction.
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Outokumpu Annual report 2022 Key audit matter in the audit of the group
How our audit addressed the key audit matter
Key audit matter in the audit of the group
How our audit addressed the key audit matter
System environment and internal controls
The group has a fragmented system environment
with a strong focus on continuously developing
its system environment, e.g. platform trans-
formation in 2022. However, the fragmented
system environment introduces risks related to
system access and change management, and
we have accordingly designated this as a key
audit matter.
Our response to the risks related to the
fragmented system environment included both
testing of IT controls and tests of details.
We tested the group’s controls around access
and change management related to the key
IT systems.
We noted certain weaknesses related to access
controls to certain key systems. We reported
those control weaknesses to the management and
performed tests of details to reduce the related
risks of material misstatement to an acceptably
low level.
We tested the group’s controls related to the
platform transformation regarding database
migration to a new environment. We also tested
the completeness and accuracy of data migrations
relevant for financial reporting.
Valuation of Inventories
Refer to note 4.4 in the consolidated
financial statements.
Our audit work included testing controls in place
to ensure proper valuation and existence of
inventories.
In addition, our audit procedures included, among
other things, the following:
• We performed tests over the prices of raw
materials and verified items in the product
costing of work in progress.
• We performed tests over the NRV calculations
and the assumptions used.
• We assessed the adequacy of the obsolescence
provision and the management judgement used.
• We participated in the physical inventory
counting and performed independent test
counts to validate the existence of assets and
accuracy of the counting performed.
As at 31 December 2022 the group’s inventories
amounted to € 1,783 million.
Inventories are stated at the lower of cost and
net realizable value (NRV). Net realizable value
is the estimated selling price in the ordinary
course of business, less the estimated costs of
completion and the estimated costs attributable
to the sale.
The most important commodity price risk for
Outokumpu is caused by fluctuation in nickel
and other alloy prices. The alloy surcharge
clause as well as daily fixed pricing of stainless
steel reduce the risk arising from the time
difference between raw material purchase
and product delivery. However, the risk is still
relevant because the delivery cycle in production
is longer than the alloy surcharge mechanism
expects and the daily fixed pricing can also
deviate from this cycle depending on the timing
of the delivery. As the prices for all products to
be sold in the future are not known, a signif-
icant part of the future prices are estimated
according to management’s best knowledge in
net realizable value (NRV) calculations. Due to
fluctuations in nickel and other alloy prices, the
realized prices can deviate significantly from the
estimates used in NRV calculations.
Due to the high level of management judgement
and the significant carrying amounts and risks
relating to valuation, this is one of the key
audit matters.
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Outokumpu Annual report 2022 Key audit matter in the audit of the parent company
How our audit addressed the key audit matter
Valuation of subsidiary shares in the
parent company’s financial statements
As at 31 December 2022 the value of
Outokumpu Oyj’s subsidiary shares amounted
to € 3,877 million in the parent company’s
financial statements prepared in accordance
with Finnish GAAP.
The valuation of subsidiary shares is tested as
part of the group impairment testing based on
the discounted cash flow model.
The valuation of subsidiary shares is a key audit
matter due to the significant carrying amounts
involved and the high level of management
judgement involved.
We assessed the appropriateness of the method
and management’s judgement and estimates in
the calculations through the following procedures:
• We evaluated the process by which the future
cash flow forecasts were drawn up, including
comparing them to medium term strategic
plans and forecasts approved by the Board and
testing the key underlying assumptions.
• We considered whether the sensitivity analysis
performed by management around key drivers
of the cash flow forecast was appropriate by
considering the likelihood of the movements of
these key assumptions.
• We compared the current year actual results
included in the prior year impairment model
to corroborate the reliability of manage-
ment’s estimates.
• The discount rates applied within the model
were assessed by PwC business valuation
specialists, including comparison to economic
and industry forecasts as appropriate.
There are no significant risks of material misstatement referred to in Article 10(2c) of Regulation
(EU) No 537/2014 with respect to the consolidated financial statements or the parent company
financial statements.
Responsibilities of the Board of Directors and the
Managing Director for the Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation of consoli-
dated financial statements that give a true and fair view in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU, and of financial statements that give a true and
fair view in accordance with the laws and regulations governing the preparation of financial state-
ments in Finland and comply with statutory requirements. The Board of Directors and the Managing
Director are also responsible for such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the Board of Directors and the Managing Director are respon-
sible for assessing the parent company’s and the group’s ability to continue as a going concern,
disclosing, as applicable, matters relating to going concern and using the going concern basis of
accounting. The financial statements are prepared using the going concern basis of accounting
unless there is an intention to liquidate the parent company or the group or to cease operations, or
there is no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with good auditing practice will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are consid-
ered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with good auditing practice, we exercise professional judgement
and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit proce-
dures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the parent company’s or the group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the
going concern basis of accounting and based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the parent
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Outokumpu Annual report 2022 company’s or the group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclo-
sures in the financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the parent company or the group to cease to
continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions and
events so that the financial statements give a true and fair view.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the group to express an opinion on the consolidated financial state-
ments. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all relation-
ships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Other Reporting Requirements
Appointment
We were first appointed as auditors by the annual general meeting on 21 March 2017. Our appoint-
ment represents a total period of uninterrupted engagement of 6 years.
Other Information
The Board of Directors and the Managing Director are responsible for the other information. The
other information comprises the report of the Board of Directors and the information included in the
Annual Report, but does not include the financial statements and our auditor’s report thereon. We
have obtained the report of the Board of Directors prior to the date of this auditor’s report and the
Annual Report is expected to be made available to us after that date.
Our opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. With respect to the report of the Board of Directors, our respon-
sibility also includes considering whether the report of the Board of Directors has been prepared in
accordance with the applicable laws and regulations.
In our opinion
• the information in the report of the Board of Directors is consistent with the information in the
financial statements
• the report of the Board of Directors has been prepared in accordance with the applicable laws
and regulations.
If, based on the work we have performed on the other information that we obtained prior to the date
of this auditor’s report, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Other statements based on the decision by the Annual General Meeting
The proposal by the Board of Directors regarding the treatment of distributable funds is in compliance
with the Limited Liability Companies Act. We support that the Board of Directors of the parent company
and the President and CEO be discharged from liability for the financial period audited by us.
Helsinki 9 February 2023
PricewaterhouseCoopers Oy
Authorised Public Accountants
Janne Rajalahti
Authorised Public Accountant (KHT)
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Outokumpu Annual report 2022 Information for shareholders
Annual General Meeting 2023
Outokumpu’s Annual General Meeting will be
held on Thursday, March 30, 2023 at 1.00 pm
EEST at Dipoli congress center in Otaniemi, at
Otakaari 24, 02150 Espoo, Finland entrance
through the Gala entrance (Juhlaovi). The recep-
tion of persons who have registered for the
meeting and the distribution of voting tickets
will commence at 11.00 am EEST. Share-
holders of the Company can exercise their right
to vote also by voting in advance. Shareholders,
who have registered for the meeting have the
possibility to follow the Annual General Meeting
via a webcast.
The meeting language of the Annual General
Meeting will be Finnish. There will be simulta-
neous interpretation in English at the meeting.
at the event are thus not questions referred
to in Chapter 5, Section 25 of the Finnish
Companies Act.
Important dates
February 9, 2023: Notice to the Annual General
Meeting published.
February 9, 2023: Registration for the Annual
General Meeting started at 12.00 noon.
March 3, 2023: Advance voting starts at
12.00 noon.
March 20, 2023: Record date of the AGM.
March 23, 2023: Registration and advance
voting end at 4.00 pm EET.
Notice of the meeting and more information at
www.outokumpu.com/en/agm 2023.
March 30, 2023: Annual General Meeting at
1.00 pm EEST.
CEO and CFO available before the meeting
April 3, 2023: Proposed dividend record date.
April 12, 2023: Proposed dividend payment
date.
Before the Annual General Meeting, at
11.30-12.30 am EEST, the CEO and CFO of
the Company will be available in Dipoli, and
the CEO will discuss Company’s result and
development of operations. The event is not
part of the Annual General Meeting, and it will
be held only in Finnish. In connection with the
event, participants can present questions to
the CEO and CFO, but the event will not be a
decision-making forum. Questions presented
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Outokumpu Annual report 2022 Working towards a world
that lasts forever
We believe in a world that is efficient,
sustainable, and designed to last
forever. The world deserves innovations
that can stand the test of time and are
ready to be born again at the end of
their life cycle. Stainless steel is vital
in enabling a sustainable world with
economic prosperity.
Outokumpu Oyj
Salmisaarenranta 11
FI-00180 Helsinki, Finland
Tel. +358 9 4211
corporate.comms@outokumpu.com
www.outokumpu.com
@Outokumpu
Outokumpu Group
Outokumpu