Annual report 2023
Contents
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
4
5
6
7
9
11
12
17
Risks and opportunities
19
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.
124
153
226
Sustainability review
Governance
Remuneration report
Financial year
Sustainability strategy
Climate change
and circularity
Sustainable supply chain
People and society
About reporting
31
39
58
64
87
Regulatory and structural
framework
Board of Directors
Shareholders' Nomination
Board
Executive Management
Internal control and risk
management
99
100
107
108
114
Introduction
119
Review by the Board of
Directors
Fees of the Board
of Directors
120
Financial statements
Remuneration of the CEO 121
Audit
In 2023, Outokumpu successfully exited the Long Products business as it was considered non-core. Majority of the Long
Products business was divested in the beginning of the year on January 3, 2023. The exit was completed on August 1,
2023 when the remaining Long Products units were divested. 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.
Information for shareholders 233
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Folke Bernadotte bridge in Stockholm, Sweden,
is built of Outokumpu Forta LDX 2101 duplex
stainless steel. It is an optimal choice for
bridges offering high strength, extreme corrosion
resistance and low need for maintenance making
it last a lifetime and longer. Its construction
began in 2018 as part of the commemorations
marking the Bernadotte dynasty’s 200 years on
the Swedish throne.
Outokumpu Annual report 2023 Annual
review
In 2023, our performance was solid despite
a weak market environment, and throughout
the year, we supported our customers in reducing
their supply chain emissions and made great
progress in our sustainability targets. We also took
message forward of the crucial role that stainless
steel plays in accelerating decarbonization.
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
This is Outokumpu
The rising energy demand and urbanization will increase
the need for steel everywhere. The future of green
solutions – from renewable energy to hydrogen and electric
vehicles – are all dependent on sustainable stainless steel.
The steel industry is a major contributor to climate
change – it accounts for around 7–9% of global
greenhouse gas emissions. Outokumpu has up to 75%1)
lower carbon footprint than the global industry average.
Our business relies on circular economy: more than
90% of our production of stainless steel constitutes of
recycled steel, which we turn into fully recyclable material.
In 2023, we supported customers to reduce their
emissions by 12 million tonnes with our stainless steel.
Our spearhead climate solution, Outokumpu Circle
Green®, has the lowest carbon footprint in the world, with
up to 93%2) lower carbon footprint compared to the global
industry average. If all the stainless steel in the world was
produced using the same methods, it would reduce global
carbon emissions by 364 million tonnes each year.
Outokumpu has an ambitious science-based climate
target aligned with the 1.5°C ambition. We work towards
our climate target to reduce our emission intensity by
42% by 2030 from 2016 baseline. Concrete example
of this journey is our goal for the Kemi mine becoming
carbon-neutral already by 2025 – as the first mine in the
world.
At the end of 2023, Outokumpu employed 8,4693)
professionals in close to 30 countries, with headquarters
in Helsinki, Finland and shares listed in Nasdaq Helsinki.
Sales, EUR
7.0
billion
Adjusted EBITDA, EUR
517
million
Net debt free with
a net debt of EUR
-60
million
Recycled content
95%
CO2 emissions4)
-27%
Carbon footprint
Outokumpu and
green transition
Watch a video
25%
of the industry average1)
1) Outokumpu’s carbon footprint is on average 1.52 kg/kg of crude steel against
the global average of 7 kg of CO2e per kg of stainless steel (Outokumpu’s
calculation based on data provided by CRU and worldstainless) in 2023.
2) Circle Green CO2 emissions: down to 0.5 kg CO2e per kg of stainless steel.
Global average CO2 emissions: 7 kg CO2e per kg of stainless steel. (Outokumpu’s
calculation based on data provided by CRU and worldstainless.) in 2023.
3) People as full-time equivalent.
4) Total specific CO2eq emissions, compared to the baseline of 2016.
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Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 2023 in figures
In 2023, our results reflect Outokumpu’s solid performance in the weaker
stainless steel market. We also reduced our CO2 emissions, improved our safety
performance and achieved again a record-high recycled material content.
Sales by business area, € 6,961 million
Cost structure, %
Key figures
Financial key figures
Net sales, € million
Stainless steel deliveries, 1,000 tonnes
Adjusted EBITDA, € million
Net result for the period, € million
Operating cash flow, € million1)
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 rate2)
Lost-time injuries rate3)
Personnel
Personnel, full-time equivalent
2023
2022
2021
20201)
20191)
6,961
1,906
517
-111
325
-60
-1.6
94.6
1.52
10.4
87.8
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
89.6
1.76
10.2
78.1
5,639
2,121
250
-116
322
1,028
43.6
92.5
1.55
11.0
77.1
6,403
2,196
263
-75
371
1,155
45.1
89.6
1.61
10.9
90.8
0.647
0.530
0.561
0.590
0.500
1.5
0.85
8,750
8,469
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
1) Including discontinued operations. In 2023, there was no discontinued operations impact in the balance
sheet.
2) Total recordable injury frequency includes fatalities, lost-time injuries, restricted work injuries and
Europe 68%
Americas 27%
Ferrochrome 3%
Other operations 2%
Raw materials 51%
Energy and other consumables 17%
Personnel expenses 10%
Others 22%
Adjusted EBITDA, € million
Net debt, € million*
1,500
1,200
900
600
300
0
1,500
1,200
900
600
300
0
2019* 2020* 2021
2022
2023
2019
2020
2021
2022
2023
medically treated injuries, per million working hours.
* Including discontinued operations. In 2023, there was no discontinued operations impact in the
balance sheet.
3) Lost-time injuries including fatalities and lost time injuries, per million working hours.
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Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 Our year 2023
We made great progress in 2023 and even started to prepare for
the next phase of our strategy, which is about growth and sustainability.
Forward with partnerships
We have announced several partnerships
to further decarbonize our stainless steel
production, Outokumpu took steps to
strengthen its supply chain of sustainable
raw materials for the future – concerning
recycled steel with we expanded our
partnership with CRONIMET, the global
leader in recycled stainless steel. We
also acquired shares in a Canadian
junior mining company, FPX Nickel Corp.
and in a leading European producer of
biocarbon, Envigas AB. In Finland, we are
exploring decarbonization of our steel
manufacturing with emerging nuclear
technology, small modular reactors. Any
possible investment decisions will take
place at a later date. We also launched
new partnerships during the year with
customers from different industries, from
automotive industry to cookwares, to
accelerate the green transformation.
Progress in decarbonizing
own operations
We continued to work towards our
ambitious climate targets. As part of
Outokumpu’s emission reduction targets,
our Kemi mine will become carbon neutral
by 2025. The third of this target was
reached by replacing fossil fuels with
renewable solutions.
Outokumpu continued its biocoke project
to replace fossil coke with biocoke
produced out of biomass from forest
and wood industry residues. Fossil coke
represents 50% of our direct emissions
today. In addition to partnership with
Envigas AB, we decided to invest in a
facility to pelletize externally sourced
biocarbon into biocoke in Tornio, Finland
with an annual capacity of 25,000 tonnes.
Towards growth and sustainability
We are preparing for the next and third
phase of our strategy. Our focus will be
to strengthen our market position further
and develop more globally diversified
operations including Americas expansion,
European competitiveness, value-
chain integration, and sustainability
leadership along with the possible biocoke
investment. We started a feasibility study
to explore options to expand our U.S.
operations to meet the increasing demand
for locally produced sustainable stainless
steel. Outokumpu is seeking to increase
existing cold rolling capacity.
Keeping global warming below 1.5°C
Outokumpu attended the United Nations
Climate Change Conference, COP28
summit, to advocate the pivotal role of
stainless steel in the green transition. We
were invited to join the Finnish Pavilion to
showcase how low-carbon stainless steel
plays a crucial role in tackling climate
change on a global scale. To keep global
warming at 1.5 degrees, we must shift
from targets to implementation – actions,
policies, and measures – to meet the
ambitious target. While governments
have the tools to set the regulations,
companies play a key role in taking
action.
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Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
CEO's review
Strength and
resilience
support us in
preparing for
the next upturn
Our results in 2023 truly reflect our
solid performance after a shift in
the market environment as well as
the hard work we did to de-risk the
company in the previous years. In
addition, we took significant steps
in our sustainability journey.
After two exceptionally favorable years, we have
moved into a period of weaker global economy. Even
in this challenging market environment, especially
in Europe, we kept our adjusted EBITDA on normal
7/235
“We believe that accelerating
the green transition through
supporting our customers
to reduce their emissions
with a low-emission stainless
steel is a competitive
advantage for us.”
Outokumpu Annual report 2023 Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
level and ourselves net debt free. I am pleased that we
took the necessary steps in the good times to reduce
debt and de-risk our company. This made us financially
stronger than ever and resilient to withstand the changing
conditions in the market environment. Our performance
in 2023 was solid and our adjusted EBITDA amounted to
EUR 517 million.
During 2023, prompt actions were taken to restore our
profitability and secure our competitiveness. Our balance
sheet continues to be the strongest in the industry and
our diversified asset portfolio gives us resilience whilst we
prepare for the next upturn.
Taking the lead in green transition
In 2023, we formed several great partnerships to
accelerate decarbonization across the stainless steel
industry. In addition, we helped our customers to reduce
their supply chain emissions by 12 million tonnes
compared to the global average carbon footprint of
stainless steel.
During the year, we announced many Outokumpu Circle
Green® partnerships with our customers, supporting them
in reducing their emissions even further. The carbon
footprint of Outokumpu Circle Green® is up to 93% lower
than the global industry average representing the lowest
carbon footprint achieved in commercial stainless steel
production. Promising customer interest towards green
steel across industries proves that we are taking our
business in the right direction.
Our aim is to remain as the global leader in sustainable
stainless steel. Even though our products already today
have the lowest carbon footprint in the industry, we took
steps to further decarbonize our operations. We have
reduced our emission intensity by 27% since 2016. We
also reached – for the second year in a row – an all-time
high recycled material content of 95% for the full year
and our safety performance was also on a record-braking
level.
We believe that accelerating the green transition through
supporting our customers to reduce their emissions with
low-emission stainless steel is a competitive advantage
for us.
As the EU is raising its climate ambition, there is a risk of
carbon leakage. Carbon Border Adjustment Mechanism
or CBAM is set to prevent that. Outokumpu, for one, is
uniquely positioned for two reasons: our own ferrochrome
production and our stainless steel’s 75% lower carbon
footprint compared to the industry average. As a result,
we have a strong position compared to imports coming
to Europe.
There are still open questions that will define how
successful CBAM will be. First, indirect emissions from
electricity are currently not planned to be included, which
can put European steel producers at a disadvantage
due to the high use of low-carbon electricity. Second,
the default emission values used to import goods to
Europe are currently being defined in the EU. In case
these values are set too low, that could potentially mean
that importers can report their products based on those
– instead of their true, higher carbon footprint. We fully
support the goal of CBAM – to combat carbon leakage
and accelerate climate work – but the mechanism needs
to be solid.
“We helped our customers
to reduce their supply chain
emissions by 12 million
tonnes compared to the
global average carbon
footprint of stainless steel.”
doing more with less and we are proud to be a part of this
story. As the global leader in sustainable stainless steel,
our product – and the spirit of innovation behind it – will
play a crucial role in the green transition towards a more
sustainable society.
Nothing can be accomplished alone. I want to express my
sincere thanks to our customers, suppliers, partners and
other stakeholders for all the collaboration in the past
year, and to our shareholders for their continued trust.
Last but not least, my heartfelt thanks go to all of our
dedicated team members who have worked hard during
the year towards a world that lasts forever.
At all times, we keep our eyes over the horizon. The world
needs to keep on fighting climate change. We need to
act today to drive the transformation to a society that
gives back more than it takes. At Outokumpu, we lead by
Heikki Malinen
President and CEO
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Outokumpu Annual report 2023 Strategy progresses in strengthening the core
We look to retain and further improve our leading position in sustainability,
so that we can meet our customers’ increasingly critical and challenging
needs. We managed to complete our first strategy phase earlier than planned,
and now the second phase is also proceeding beyond expectations.
Our strategy is three-phased, each phase building on
another. The first phase to de-risk the company was
successfully completed in 2022. The second phase is
about strengthening the core, and it will continue until the
end of 2025. At the same time, we have already started
preparations for the third phase of the strategy, which will
be about growth and sustainability and commence in 2026.
How to strengthen the core
In the second phase of the strategy, we aim to make
the most of our current asset base and have three key
priorities: sustainability, growth from productivity,
and customer-focused steering. Our financial
targets are to improve our EBITDA run-rate by
EUR 200 million and to maintain our net debt
to adjusted EBITDA ratio below 1.0 in normal
market conditions. Capital discipline will
continue throughout the second phase,
and there is also an increasing focus on
shareholder returns.
In sustainability, we look to retain and
further improve our leading position in
sustainability to meet our customers’
increasingly critical and challenging
needs. We will make targeted investments
in sustainability and productivity to
improve our margins. We also intend to
create a defendable competitive advantage
through sustainability, particularly against
Asian producers.
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
9/235
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023
To achieve growth in productivity and ensure customer-
focused steering, 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. The
Europe business area is also targeting a capacity increase
by 100 kilotonnes. In the Americas business area, the
focus is to improve capacity by 80 kilotonnes with small
investments, and in the Ferrochrome business area to
become carbon neutral by 2025.
Good progress in 2023
At the end of the year, we had completed a total of 475
projects towards the EBITDA run-rate improvement,
achieving a cumulative improvement of EUR 186 million,
and the target has almost been achieved.
In the Europe business area, the focus has been on
improving profitability and competitiveness in a challenging
market environment. For instance, we are planning to
centralize precision strip operations in Dillenburg to
consolidate underutilized capacity and to strengthen global
market leadership in advanced materials. Especially in
the commodity business, Outokumpu has been able to
improve steering and thereby benefit from being more
agile while facing challenging market conditions. We have
also improved the digital experience of our customers
and efficiency in scrap utilization. All in all, business area
Europe has contributed strongly to the EBITDA run-rate
improvement throughout 2023.
In the Americas business area, we are ahead of our
capacity expansion target. We have increased cold rolling
capacity by 55 kilotons in total both in the U.S. and in
Mexico through, for instance, yield improvements and
de-bottlenecking. Projects to turn this increased capacity
into revenue are ongoing.
In business area Ferrochrome, Outokumpu took significant
steps towards the carbon neutrality of our Kemi mine. We
achieved one third of the target by replacing fossil fuels
with renewable solutions, cutting the annual emissions of
the Kemi mine by almost 11.3 million kilos.
We have an ambitious target to improve energy efficiency
by 8% across the group by the end of 2024 compared
to the January–September 2022 level. This means
energy consumption of around 600 GWh, and in 2023
we achieved a run-rate improvement of 215 GWh. The
resulting savings were over EUR 10 million.
Up next: growth and sustainability
In 2023, Outokumpu began preparations for the final and
third phase of its strategy, which will start in 2026 and
will most likely require new investments. The focus in
the third phase will be to strengthen our market position
further and develop more globally diversified operations
including Americas expansion, European competitiveness,
value-chain integration and sustainability leadership,
including the biocoke project.
We strengthened our supply of sustainable raw materials
through strategic partnerships in our supply chain with
CRONIMET, the global leader in recycled stainless steel,
a Canadian junior mining company FPX Nickel and a
leading European biocarbon producer Envigas AB. We also
signed a letter of intent with Greenland Resources Inc.,
a Canadian mining company developing a molybdenum
project.
We also announced an investment of EUR 30 million
in a pelletizing plant for biocoke in Tornio, Finland
to accelerate the reduction of direct emissions. The
company also continues to plan for further investments
in capacity for a biocoke production in the future. Further
investment decisions are planned to be made during
2024 provided the financial feasibility is proven.
As part of these preparations Outokumpu has been
evaluating different options to strengthen its position in
North America. As the second largest producer, we want
to strengthen our position further in this attractive North-
American market and we want to capture a fair share of
the increasing demand for locally produced sustainable
stainless steel. In 2023, we evaluated different options
for our hot rolling arrangements, and while one option
was to build our own hot rolling mill, as a result of the
evaluation, continuing the existing partnership was
considered the best solution. The study to evaluate a
possible cold rolling capacity expansion continues to allow
us to grow directly in North America.
First phase targets for 2022
Achieved by end of June 2022
Second phase targets for 2023–2025
Achieved by end of 2023
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 -0.1
EUR 250 million EBITDA
run-rate improvement
EUR 260 million EBITDA
run-rate improvement
EBITDA run-rate improvement of
EUR 200 million
EUR 186 million
EBITDA run-rate
improvement
EUR 600 million of capital
expenditure for the coming three
years
EUR 328 million of
capital expenditure in
2022–2023
Stable and growing dividend
Dividend proposal of
EUR 0.26 per share
10/235
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 Our impact
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
Avoided CO2 emissions
12 million
tonnes in 2023
Sustainable development
goals we impact
Society &
Economy
384,604 tonnes alloys
398,463 tonnes slag formers
209,992 coal or coke
5,894 million euros of operating costs
> 7,400 suppliers (64% local)
6,961 million euros of sales and
7,047 million euros of revenues
145 million euros of environmental
expenditures
Economic value retained in business
184 million
euros
Environment
& Climate
2,042,426 tonnes of recycled steel
3,729 GWh of electricity used
(95% of low carbon, of which 14%
renewable)
537 GWh of our own of process gases
2,198 GWh of primary fuel used
0.9% increase in energy efficiency
122,500 tonnes of recycled and
reused waste
95% of recycled material content in
our products
83,771 tonnes of recycled metals
99% of dust captured
People
8,469 employees (full-time equivalent)
Total recordable injury frequency rate 1.50
81,294 training hours
Development discussion % of 71
Employees' engagement index at 77 in
a scale from 1 to 100
1,906,000 tonnes of stainless steel
390,000 tonnes of ferrochrome produced
59 million euros of payments to creditors
112 million euros of dividends*
84 million euros paid taxes
615,000 euros of donations
* Proposal by the Board of Directors.
1,013,282 tonnes of direct CO2 emissions
141,599 tonnes of indirect CO2 emissions
of electricity
2,309,430 tonnes of other indirect mainly
upstream CO2 emissions
249,000 tonnes of waste landfilled
50,500 tonnes of dust recycled and
700 tonnes landfilled
Some 12 million tonnes of avoided CO2
emissions by using our stainless steel
712 million euros of employee benefit
expenses
Industry,
innovation and
infrastructure
Partnership
for goals
Affordable
and clean
energy
Responsible
production
Climate
action
Decent work
and economic
growth
11/235
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 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 such as urbanization, mobility, economic
and population growth as well as 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 is
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 the circular economy. This covers an energy efficient
production by using low-carbon electricity, minimizing waste,
and the use of as much recycled resources as possible
in our production. Nearly two years ago, we introduced
Outokumpu Circle Green®, the first of its kind globally, as no
other stainless steel manufacturer has been able to produce
stainless steel with such low emission levels when taking
into account all the climate emissions from raw material
extraction through the whole production chain. In 2023,
we were able to increase the number of partnerships in
this area during 2023. Additional steps have been taken to
secure a sustainable value chain, such as partnering with
scrap supplies in our initiative, the Inner Circle.
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 2023, around 53% of our business area
Europe’s stainless steel flat products were sold directly to
end-user customers, with the share of end-users rising from
the previous year. The remaining 47% were delivered to
distributors that stock and process stainless steel to serve
end-users. In the Americas business area, distributors have
a higher share than in Europe, 72% and 38% for end-users,
respectively.
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 2023, the market for cold-rolled
flat products totaled approximately 30.8 million tonnes.
Outokumpu’s global market share was approximately 3.2%.
Outokumpu is the market leader in Europe, given our cold-
rolled market share of 33%. Our market share increased
in comparison to the previous year due to a significant
drop in imports. The import rate in 2023 amounted to 19%
compared to 35% in the previous year. In the USMCA region,
our market share stands at 23%, making Outokumpu the
clear number two in the Americas. In the U.S. market,
Outokumpu’s share amounts to approximately 21%.
(Sources: CRU Stainless Steel Flat Products Market Outlook
November 2023, EUROFER, Foreign Trade Statistics,
American Iron & Steel Institute, StatsCan, Canacero)
Especially in Asia, stainless steel producers were growing.
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 1,850 million tonnes of which approximately
3.1% was stainless steel. (Source: CRU Nickel Monitor
February 2024, Worldsteel December 2023).
12/235
In our world today, it is not sustainable to continue spending money
on bridges that have high maintenance costs. Stainless steel is
the environmentally friendly choice for modern bridges. Here is
Loppholms bridge in Sweden.
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 Sales of customer segments
Stainless steel deliveries by business area, %
47%
8%
13%
3%
17%
2%
9%
1%
Appliances
Automotive
Architecture, building & construction
Metal processing & tubes
Chemical, petrochemical
Heavy industries
Other operations
Distributors
29%
71%
Europe
Americas
Business area
Europe
Americas
Market share
#1, 33% (EU30)1)
#2, 23% (USMCA)2)
Ferrochrome
3%3)
Production
Tornio, Finland
Avesta, Degerfors and
Nyby, Sweden
Dahlerbrück, Dillenburg and
Krefeld, Germany
Calvert, Alabama, the U.S.
San Luis Potosí, Mexico
Kemi and Tornio, Finland
Largest customer segments
Distributors
Automotive
Metal processing and tubes
Heavy industries
Distributors
Appliances
Automotive
Pipes and tubes
Stainless steel producers
Main competitors
Aperam, Acerinox, Acciai
Special Terni
NAS; Cleveland Cliffs (AK),
ATI
Glencore, Samancor, ERG
1) EUROFER.
2) American Iron & Steel Institute, StatsCan, Canacero.
3) ICDA.
In 2023, the global stainless steel production capacity
of slabs remained stable, increasing by approximately
1% to 72.6 million tonnes. The global utilization rate
was calculated at around 71% in 2023, the same as in
2022. In the second half of the year, estimations on
apparent consumption were revised downwards in order to
indicate slowing global stainless steel demand. (Source:
CRU Stainless Steel Flat Products Market Outlook
November 2023)
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.
Major stainless steel producers
Annual review
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Million tonnes
Tsingshan
Delong
Baosteel
TISCO*
POSCO*
Acerinox
Outokumpu
Guangxi
Jindal
Aperam
2024
2023
Remuneration report
Financial year
9.8
5.5
5.2
4.5
3.3
3.3
3.0
3.0
2.9
2.8
9.8
5,5
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 Market Outlook November 2023.
* Subsidiaries of Baowu Steel
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Outokumpu Annual report 2023 Market adjustment after an overheated
post-pandemic period
The year 2023 started with improving market confidence
as better-than-expected European economic data, China’s
re-opening after the pandemic and the seasonal cycle
indicated positive market activities. However, production
was high while demand remained below expectations and
the market entered a phase of re-adjustments. Distributors
continued to destock their inventories and preferred
ordering smaller volumes, being cautious and waiting
for clearer signs of improvements in underlying demand.
Elevated inventory levels and high energy costs exacerbated
producers’ positions. In China, economic recovery
materialized slower than anticipated.
Entering the seasonal slow summer period, the European
market remained subdued, affected by poor economic
conditions. Supply outpaced demand and producers extended
their summer breaks in order to balance the market.
Stainless steel and raw material prices in 2023
After a long destocking period, distributors started to
replenish their inventories in the third quarter. The positive
effects of this weakened soon as underlying demand from
end-users remained limited. Uncertain of future demand
and price developments, buyers preferred ordering material
hand-to-mouth.
In the first half of 2023, prices for stainless steel flat
products decreased significantly, closing the gap between
European and Asian prices. Imports became unattractive
as domestic material was available at short-hand and
prices were at similar levels. After reaching the bottom, the
second half of the year saw a rebound in prices, driven by
distributors’ restocking activities, fewer imports and tight
domestic supply as a result of extended summer shut-downs
at European producers. Prices in China developed similarly,
coming under pressure from a weak demand recovery and
an oversupplied market. Chinese producers started to cut
their output, but production remained at elevated levels.
Demand remained
below expectations,
and the market
entered a phase
of readjustments
after an overheated
2022.
Stainless steel price*, EUR/t
Nickel price, USD/t
Ferrochrome price, USD/lb
6,000
4,000
2,000
0
40,000
30,000
20,000
10,000
0
2,500
2,000
1,500
1,000
500
95
00
05
10
15
20
13 14 15 16 17 18 19 20 21 22 23
13 14 15 16 17 18 19 20 21 22 23
Source: CRU Stainless Steel Flat Products Monitor, January 2024
Source: LME settlement, monthly average prices.
Source: Quarterly contract prices agreed between South African
ferrochrome producers and European buyers.
* Stainless steel reference price for cold rolled 304 2mm sheet in
Europe.
14/235
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 The start of an anti-circumvention investigation against
Indonesian material entering the EU via Taiwan, Turkey and
Vietnam created additional downward pressure on imports.
Buyers stopped ordering Asian material to avoid possible
retroactive duties. The start of Carbon Border Adjustment
Mechanism’s or CBAM’s product registration process is a
further regulatory step that will affect non-EU material in
the future.
Economic data during 2023 indicated the start of a
recession in Europe. Inflation in the euro-zone was high, but
gradually declined over the course of the year. Energy prices
decreased, but remained at higher levels than prior to the
start of the Ukrainian war. The looming risk of an escalation
of the Middle-East crisis created additional economic
uncertainties.
Global apparent consumption of stainless steel flat
products amounted to 39.5 million tonnes in 2023, growing
+0.1% and stable compared to 39.4 million tonnes in 2022.
Demand in APAC increased by 5.4%, while in the Americas
it decreased by 11.7% and in the EMEA region by 18.3%.
(Source: CRU Stainless Steel Flat Products Market Outlook
November 2023)
Regional distribution of stainless steel apparent
consumption in 2023
Jürgen Pilarsky, CEO
of CRONIMET Holding
GmbH and Heikki
Malinen, President and
CEO of Outokumpu.
Power of partnership
As part of our long-term ambition to decarbonize the company, we have taken
strong actions to support our sustainability leadership. Our business is based on
the circular economy and scrap is our most important raw material. 95% of all our
raw material is recycled, and this is a critical factor in keeping our carbon footprint
the lowest in the industry. Also, our climate targets are ambitious and mean that
we need to reduce especially our supply chain emissions. This we can only do in
cooperation with our suppliers.
We have acquired a 10% share of a large scrap dealer CRONIMET’s Northeastern
business. By acquiring a share, we will strengthen our long-term partnership
further and ensure access to high quality scrap near our European sites.
During the year, we also signed a letter of intent with Greenland Resources Inc. to
strengthen our future supply of low-emission, high-quality molybdenum. We have
also acquired a share of FPX Nickel to ensure access to low-carbon nickel in the
future. All these actions are part of our strategic plans to strengthen cooperation
in our value chain, to ensure a sufficient future supply of critical raw materials with
a low carbon footprint.
EMEA
APAC
Americas
Source: CRU Stainless Steel Flat Products Market Outlook,
November 2023.
15/235
Annual review
This is Outokumpu
Year 2023 in figures
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Our impact
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Innovation
Risks and opportunities
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Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 2024: Recovery expected, but limited
The global economy is expected to remain at moderate
levels in 2024, although slowing down in comparison to
2023. Inflation in Europe is set to continue its downward
trend, while the U.S. economy may slow and enter
recession. GDP expectations from China may support an
increase in growth, but is missing signs of a clear demand
recovery and reluctance in the private sector to invest
remains a moderate upside risk.
World GDP is expected to have grown 2.5% in 2023. For
2024, growth is expected at 2.0%. (Source: CRU Global
Economic Outlook December 2023)
Growing regionalization, as opposed to globalization, as
well as newly introduced trade barriers may support a
shift by EU buyers to ordering domestic material. As a
consequence, sentiment and production in Europe may
recover, still at a slow pace, though, as an improvement
in demand is only likely to materialize in the second half
of 2024. Demand in the U.S. is likely to be subdued with
large projects being delayed due to high interest rates. A
likely decrease in interest rates may bring some positive
stimulus to both economies in Europe and the U.S.
The Chinese stainless steel market is expected to
experience a destocking phase due to elevated stock
levels and overcapacities before a demand recovery
may boost the market and imply stronger growth rates
in 2024. (Source: CRU Stainless Steel Market Outlook
November 2023)
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Bright prospects for low-
emission stainless steel
Our latest innovation, the world’s first towards-zero Circle Green product line
has now been on the market for nearly two years and it has raised interest
across customer segments. Since the early successes with Fiskars and
Klöckner & Co, we can already say that this year has shown the product’s
potential. The publication of recent renowned customer cases has instilled
confidence in the bright prospects that lie ahead.
Circle Green will be used in the home appliance industry by Fissler and
ZWILLING, in wind turbine medium-voltage switchgear by Siemens, in heat
exchangers by Alfa Laval, in automotive industry by thyssenkrupp Materials
Processing Europe together with Purem by Eberspaecher as well as Boysen
Group, and in the transport industry by Stalatube. In addition, Nordic Steel,
Sverdrup Steel and Stalatube offer Circle Green in their service centers for
their customers in Norway and Finland.
Circle Green’s emission intensity is the smallest in the world: up to 93%
lower carbon footprint compared to the global industry average.
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Outokumpu Annual report 2023 Innovating to accelerate the green transition
Our built environment presents boundless opportunities for accelerating the green transition in our industry and society.
Embracing smarter decisions each day requires curiosity, courage, and a willingness to disrupt the status quo in pursuit of more
sustainable solutions. Innovation, research and development enable Outokumpu to be the leader in sustainable stainless steel.
As pioneers in the circular economy and a global leader
in sustainable stainless steel, we are leading the
green transition in our industry. Our commitment to
innovation will drive the creation of new business models,
investments in cutting-edge technologies, and the
invention of revolutionary products.
Looking at cutting-edge technologies
By 2030, Outokumpu aims to reduce its total emission
intensity by 42% from 2016, requiring the development of
new technologies and more efficient production.
In 2023, Outokumpu founded an EvoEnergy unit to study
and explore low-carbon investments, related to our
own energy production, carbon capture and hydrogen
economy. We also started to evaluate the feasibility of a
low-carbon electricity increase through emerging nuclear
technology, small modular reactors, to decarbonize
Outokumpu’s steel manufacturing operations. In the first
phase, the goal is to identify potential business models
and technical solutions for further development. One
possible option for the location would be close to our site
in Tornio, Finland. Any potential investment decisions will
be made later.
Since we embarked on the research program Towards
Carbon Neutral Metals (TOCANEM) financed by Business
Finland a few years ago, we have previously announced
that we are planning an investment in a biocoke plant
at our stainless steel production site in Tornio, Finland.
The move towards using new types of biomass-based raw
materials is a concrete step forward to significantly reduce
our direct emissions, which account for approximately
25% of Outokumpu’s total emissions. While our study
regarding our own biocoke plant continues, in 2023 we
acquired a share of Swedish Envigas AB to reduce direct
emissions with biomass-based raw material. With the
investment, Outokumpu secures a right to 50% of Envigas’
production. We also decided to invest in a pelletizing plant
to produce biocoke in Tornio, Finland. The investment is
approximately EUR 30 million.
The circular economy is another key area of Outokumpu’s
research and development. Examples include the use of
waste heat with the help of new technologies or the reuse
of refractories in the company’s melt shops.
Invention of revolutionary products
Megatrends drive stainless steel demand growth and
motivate Outokumpu to develop new steel grades and
improve existing grades for new applications.
We have introduced a groundbreaking metal powder
portfolio. By using stainless steel scrap generated from
our own processes as a pre-material for powder metal
production, we offer a highly sustainable solution. The
demand for metal powder is on the rise, thanks to
significant growth in powder metallurgy technologies,
particularly in 3D printing (additive manufacturing). With
metal powders, manufacturers can produce parts with
higher complexity, reduce the weight of parts, decrease
lead times, and avoid disruptions in the supply chain.
17/235
Outokumpu Circle Green®, the world’s first towards-zero stainless
steel with the lowest carbon footprint in the industry, was first
produced at our mill in Tornio, Finland.
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 In the past year, one of the key areas has been Outokumpu
Circle Green® product family. Since we launched the first
towards-zero Circle Green grade Core in 2022, we have
worked on other grades and also introduced Moda and
Supra, for mildly and highly corrosive environment, as well
as Dura.
To strengthen Outokumpu’s portfolio a new ferritic grade,
Therma 4622Nb™, was launched. This grade has an
enhanced high temperature creep resistance above 1,000°C.
That makes it ideal for a wide range of applications such as
automotive exhaust systems, furnace equipment, annealing
boxes, air heaters, and burner nozzles.
Research and development in 2023
Outokumpu’s research and development (R&D) provides
leading technical expertise covering the whole range from
the production process to the fabrication of the company’s
products for our customers. Outokumpu has three R&D
centers located in Avesta, Sweden, in Krefeld, Germany,
and in Tornio, Finland. R&D activities are focused on two
key themes: sustainable production process technologies
and future products and customer applications. In 2023,
Outokumpu’s total R&D expenditure amounted to EUR 14
million, representing 0.2% of the annual net sales (2022:
EUR 15 million and 0.2%).
As a leader in sustainable stainless steel, Outokumpu
has recognized for a long time its responsibility to provide
customers with all the technical information they need
to select the best grade for their requirements. In 2023,
Outokumpu published its 12th edition of Outokumpu’s
Corrosion handbook, fully revised and updated. It covers
the latest additions to the company’s expanding portfolio of
corrosion-resistant materials, which now include nickel alloys.
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.
How was Circle Green born?
We wanted to find out what was the minimum amount of emissions that could be
associated with stainless steel production. But why bother, some asked, when the
stainless steel we produce is already the industry’s most low-emission stainless
steel?
“What we were actually attempted – was to find out what is the minimum CO2
emission that can be achieved with our current production technology, including
scopes 1, 2 and 3. In other words, a sustainable method of stainless steel production
combining numerous cutting-edge technologies into one process. This was definitely a
groundbreaking thought, and any setbacks only made us hungrier to see how to make
it a reality,” says Niklas Wass, our President, Stainless Europe business line.
Depending on the choices you make throughout the process, you will have different
carbon emissions. This is an area where Outokumpu has already pioneered solutions,
and our product’s carbon footprint today is up to 75% lower than the industry average.
The idea behind Circle Green was to take that as far as it could possibly go. The
production process we were able to create accelerates the usage of recycled raw
materials, renewables and low-carbon energy, and a thoroughly reimagined value
chain. In total, these changes have allowed us (so far) to eliminate 95% of scope 1
and 2 CO2 emissions, resulting in a production process that has as little as 7% of the
carbon footprint of conventionally produced stainless steel.
18/235
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 Risks and opportunities
Effective risk management is critical to the delivery of our strategic targets.
Risks and opportunities delivering
on Outokumpu’s strategy
Outokumpu’s strategy is built on our strong foundation,
starting with the megatrends driving stainless steel
demand growth, our people and ways of working,
leadership in sustainability, high customer satisfaction
and our stable operations and continuous improvement
culture.
Risk areas relevant to us and
our strategy implementation
Our strategy and risk appetite shape our risk
management approach. The risk management approach
is mapped to risk areas relevant for Outokumpu. The
areas are regularly reviewed and discussed in order
to form an appropriate approach for identifying and
managing relevant risks.
The first phase of the strategy focused on de-risking the
company and as the phase was completed successfully
in 2022, we are now more resilient to withstand the
changing conditions in the market environment. The
second phase of our strategy is about strengthening the
core of the company, focusing on three key priorities:
sustainability, growth from productivity and customer-
focused steering.
Effective risk management has a vital role in supporting
the strategy execution. In order to manage risks and
opportunities associated with the strategy execution
and delivery of the strategic objectives, an effective risk
management will facilitate:
• Determining the appropriate level of risk tolerance
and appetite
• Identifying and assessing the risks and opportunities,
and their impact on Outokumpu
• Ensuring that appropriate processes, risk mitigations
and controls are embedded across the organization to
manage the risk under each risk area
The identified material risks and opportunities outlined in
relation to the risk areas are events that could materially
affect (negatively or positively) our ability to meet our
strategic objectives. While risks and uncertainties
could hinder us, opportunities can further leverage our
capabilities in reaching targets. Unlocking opportunities
is the key to success in our strategy implementation.
The risk management approach with the eight risk
areas with identified material risks is set out in the
table on the next page. Financial risks are described
in further detail in note 5 to our audited consolidated
financial statements. Risks associated with internal
controls over financial reporting are described in
Corporate Governance Statement.
19/235
Outokumpu is committed to managing risks in a proactive and
effective manner to contribute in success in strategy execution.
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 Risk management approach is mapped into risk areas
Macroeconomics
and steel markets
Legal and compliance
Raw material
and energy prices
Operational/supply chain
Steel demand is affected by business
environment, global economy, market
megatrends, demand for sustainable
materials and long-term prospects for
stainless steel across regions. The risk of
overcapacity in stainless steel, geopolitical
tensions, global trade and industrial
actions and trade defense measures could
also impact the supply-demand balance.
Climate change and the green transition
to low-carbon economy may affect
demand and growth development though
changes in operating environment.
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
as well as various contractual requirements and
obligations require constant attention to which
Outokumpu is committed. Outokumpu may be
exposed to legal disputes in the jurisdictions in
which it operates. Breaches of applicable laws and
regulations, other unethical behavior, 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.
Material risks in the area:
• Legal disputes
Price changes of alloy metals such as
nickel and chrome as well as volatility
in energy prices may have significant
impacts on net result, cash flow and
balance sheet. Price volatility may
also adversely impact stainless steel
demand, the level of inventories
and consequently also capacity
utilization ratios.
Outokumpu’s production processes are
dependent on the continuous operation of critical
production equipment and the supply of needed
materials in production. Fire or machinery
breakdown, equipment failures, supplier
dependencies, natural disasters, epidemics,
or other factors could affect operations or the
supply for critical raw materials and energy
required in the manufacturing process.
Material risks in the area:
• Metal price risk
• Energy costs
Material risks in the area:
• Dependency on critical machinery
and suppliers
• Sustainable nickel availability
• Energy availability
Financial
Reporting
Corporate security
ESG
Outokumpu is committed to protecting
people, assets, information and
reputation by ensuring there is an
effective and robust approach to
the management of security risks.
Unplanned interruptions or failures
in the applications and underlying
infrastructure could result in business
interruptions. Furthermore, a possible
security breach could cause damage
to our operations, assets, people or
leaks of sensitive information related to
Outokumpu, its personnel or partners
such as customers and suppliers.
Material risks in the area:
• Cyber security
Sustainability at Outokumpu consist of three
pillars – environmental, social and governance
– and we are committed to the UN’ Sustainable
Development Goals. Outokumpu is committed
to ambitious climate targets aligned with the
SBTi’s 1.5°C target and to decrease carbon
emissions by 42% per tonne of stainless
steel by 2030. Outokumpu's sustainability
targets also include an increased recycling
rate and energy efficiency, improved safety
and organizational health, diversity, equity and
inclusion, supply chain sustainability and zero
environmental incidents.
Material risks in the area:
• Climate risk
• People and safety
• Sustainable sourcing
Financial risks arise from changes
in metal prices, foreign currencies,
interest rates and fair values of equity
instruments, credit risk, liquidity risk,
country and counterparty risk. Financial
risks are described in further details
in note 5 to our audited consolidated
financial statements.
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.
Risks associated with internal controls
over financial reporting are described in in
Corporate Governance Statement.
Opportunities can further leverage our capabilities
in strategy implementation
• Global megatrends such as urbanization as well as climate change all require
sustainable and circular solutions. Stainless steel has an important role in
accelerating green transition.
• Outokumpu enables its customers to reduce their value chain emissions and thus
assists in decarbonizing various industries.
• By partnering with suppliers, we look to ensure a sufficient, high-quality and low-
carbon supply of critical raw materials in the future.
Read more about the opportunities in connection with risk areas on the following pages.
20/235
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023
Risk management
Our three lines governance model
Outokumpu's risk management policy outlines the roles
and responsibilities of the relevant governance bodies
in implementing risk management, including continuous
reporting within the Outokumpu Group.
The Board of Directors carries ultimate responsibility for
risk management within Outokumpu. The CEO and CFO
form the governing body with the main responsibility
for ensuring risk management implementation. The
governance, risk and compliance (GRC) functions
(consisting of risk management, legal, cyber and
corporate security, ethics and compliance and internal
control) are responsible for coordination and supporting
of risk management procedures and monitoring. Risk
ownership is in the first line of defense, including risk
identification, evaluation, mitigation and control. Internal
audit periodically reviews risk management, internal
control, compliance, and governance processes.
Board of Directors
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, cyber and
corporate security, compliance,
and internal control
Group Internal Audit
Accountability: Independent
assurance and value
adding recommendations
Descriptions of our three lines model can be found in
the table on the right.
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
E
x
t
e
r
n
a
l
a
u
d
i
t
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Delegation, direction,
resources, oversight
Accountability,
reporting
Alignment, communication,
coordination, collaboration
21/235
Outokumpu Annual report 2023
Risk management and control procedures
Our risk management procedure and related assigned
responsibilities ensure structured and efficient risk
management across the organization.
We operate in accordance with the risk management
policy approved by the Board of Directors. The
risk management policy sets out our common
risk management procedures with clear roles and
responsibilities. Within Outokumpu, identified risks are
monitored and controlled at different organizational
levels and supported by the digital platform. By
leveraging our digital 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. 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 process also
includes control testing.
Furthermore, regular and active co-operation between
GRC and assurance functions further enhances
situational awareness and alignment of efforts.
The illustration on the right summarizes our risk and
control procedures.
Outokumpu's vision
Outokumpu’s pursuit of its strategic
objectives affects the risks to
which the company is exposed
Risk management policy
The policy defines the objectives,
procedures and areas of responsibility
in Group’s risk management activities
Who
Board of
Directors
CEO & CFO
Risk and control management
Approves Risk Management Policy including
risk tolerances. Oversees the system of internal
controls and monitors material risks.
Develop and implement risk management
approach in line with policy. Responsible for
ensuring an effective internal control system.
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 and internal
control activities related to business.
Internal audit
Determines whether governance and compliance
processes, the internal control system, and the risk and
control management process are effective and efficient.
How
• Supported by the digital
platform for risk and
control management,
where risks are
identified, evaluated,
mitigated, controlled,
monitored and reported
on a timely basis
• Adherence to Group
level Statements,
Policies and
Instructions that define
common way we operate
in the Group
• Embedded in
business, strategy
and performance
management processes
Risk management process
Analyze
Manage
1. Identify
2. Evaluate
3. Mitigate
4. Control
5. Report
Identify risks,
including causes
and effects
of the risks.
Evaluate the
risks, determine
gross and net
impacts and
likelihood of risk
Develop and implement
risk mitigation actions,
seek to reduce the
likelihood and impact or
realization of the risk
Conduct control
activities, improve
the level of assurance
on the underlying
processes
Monitor and communicate
the risks on an on-going
basis and regular
update to maintain
continuous improvement
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Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 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
strategy execution, 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 sustainability strategy and reputational tolerance. The
evaluation of the material risks, and the effectiveness of
our associated mitigation actions and internal controls,
reflect the 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 12 material risks in relation
to the risk areas. They are presented in the table on the
right. Outokumpu continuously monitors and reassesses
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 on the
following pages to provide an overview of the possible
threats, opportunities and our actions to mitigate
these risks.
Risk areas and material risks
Macroeconomics
and steel markets
Stagnation/economic downturn
Macroeconomics
and steel markets
Trade and geopolitics
Raw material
and energy prices
Metal price risk
Raw material
and energy prices
Energy costs
Operational/
supply chain
Operational/
supply chain
Operational/
supply chain
Dependency on critical
machinery and suppliers
Sustainable nickel availabiliy
Energy availability
Corporate security
Cyber security
ESG
ESG
ESG
Climate risk
People and safety
Sustainable sourcing
Legal and compliance
Legal disputes
We are
continuously
monitoring
and mitigating
identified risks.
23/235
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 Stagnation and economic downturn
Trade and geopolitics
Description
Outokumpu operates in global stainless steel market. The development
in the global economy including economic growth globally and in China,
inflation, geopolitical conflicts that could disrupt global supply chains, and
energy markets could all affect Outokumpu's operating environment and
stainless steel demand. Climate change with extreme weather conditions
could also impact economies and communities. Outokumpu believes that
the long-term outlook for stainless steel consumption remains positive
as there is an increasing need for long-lasting and sustainable solutions
including low-carbon stainless steel.
Risk area
Macro-
economics
and steel
markets
Opportunities
• Global megatrends such as population growth and urbanization require
more steel. This calls for sustainable and circular solutions such as
stainless steel.
• Create a defendable competitive advantage through sustainability,
particularly against Asian producers.
Threats
• Weakening global economy and falling into recession could have a
negative impact on our business and demand for our products.
• High inflation could increase the cost of production and negatively
impact demand and profitability.
Outokumpu’s response
• Successful completion of the first phase of the strategy to de-risking the
company to be financially stronger against economic headwind.
• Continue capital discipline with targeted investments in sustainability
and productivity to improve our margins.
• Strengthen our market position further and develop more globally
diversified operations including Americas expansion, European
competitiveness, value-chain integration and sustainability leadership,
including the biocoke project.
Read more about stainless steel market.
Description
Outokumpu is exposed to the developments of global trade policies and
geopolitics. Potential geopolitical conflicts and unfavorable trade policy
decisions for Outokumpu can result in the 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 in its markets.
• More assertive trade and climate policies for the imports imposed by
governmental authorities in our home markets 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 quota measures, tariffs and antidumping/antisubsidy duties) are not
renewed or not made effective enough to mitigate unfair imports.
• Geopolitical conflicts, trade sanctions or the trade policies imposed by
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 level to promote relevant
measures and cooperate with organizations such as the European Steel
Association (EUROFER) and AISI (American Iron and Steel Institute) to
initiate new investigations when possible to ensure a level playing field
and fair competition.
• Closely review the status of 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 and proactively mitigate and increase resilience towards
potential adverse impacts to business and supply chain disruptions
Read more about stainless steel market.
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
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Outokumpu Annual report 2023
Metal price risks
Energy costs
Description
Outokumpu is exposed to price changes in alloy metals (such as chrome,
nickel, molybdenum and iron) through, for example, purchase of raw
materials as well as the 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’s 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
ferrochrome market prices.
Outokumpu’s response
• Steer metal price risk mitigation through the Financial Risk Steering
group and other steering groups.
• Manage the 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 note 5.3 in the financial statements.
Risk area
Raw material
and energy
prices
Description
Outokumpu’s operations are energy intensive. 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 hence Outokumpu is continuously striving to make its production
operations more energy and material efficient.
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.
• Improving energy efficiency accelerates the execution of our
decarbonization strategy.
Threats
• Adverse geopolitical development such as escalated geopolitical
tensions, the continuing war in Ukraine, the Hamas-Israeli conflict, and
political interventions could cause an imbalance in the energy market or
even disruptions in the energy supply.
Outokumpu’s response
• Improve our energy efficiency by 8% by the end of 2024 with energy
efficiency targets translated into site-specific targets.
• Innovate and implement energy efficiency investment initiatives and
measures throughout the organization.
• Optimize production and maintenance periods to avoid an increase in
costs and to ensure profitability by daily activities.
• Hedge the energy price risk with long-term agreements, fixed price
supply contracts, and partial ownership in power utilities.
• Manage energy price risk centrally, complying with Energy Procurement
Policy, and energy steering cadence.
Read more about low-carbon energy and energy efficiency.
25/235
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 Dependency on critical machinery and suppliers
Sustainable nickel availability
Description
Outokumpu’s stainless steel and ferrochrome production are dependent
on the continuous operation of critical production equipment. Production
downtime and disrupted operations may occur as a result of fire, natural
catastrophes, mechanical failures in production equipment, disruptions in
supply chain or supplier relationships. Critical supplier dependencies are
for example within electricity network partnerships, the supply of liquid
natural gas to our Tornio site in Finland, and hot rolling services to our
Calvert site in the U.S. A long-term extension to the hot rolling services
partnership was agreed in the fourth quarter in 2023.
Opportunities
• Focus on global manufacturing excellence initiatives and operational risk
management improve safety and increases efficiency in production.
• Stringent supplier qualification requirements and efficient supplier
relationship management improve supply chain resilience.
• Continuous evaluation of dependencies and review of alternative plans
increase our ability to identify opportunities to further improve the
efficiency and resilience 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 or contractors 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
• Drive global manufacturing excellence across operation to continuously
improve our asset and equipment reliability and maintenance.
• Focus on loss prevention through a global loss prevention program with
regular site visits and close cooperation with our insurers.
• Place appropriate insurances to secure the company against large
financial losses arising from insurable loss events.
• Manage our supply chain by maintaining good visibility into the supply
chain and relationships with suppliers.
• Review and implement alternative plans including partnering and
integration into value chain for securing the availability of critical
services and goods with contingency plans being developed and
updated.
Risk area
Operational/
supply chain
Description
Nickel is one of the essential metal alloys in stainless steel production.
The majority of the needed nickel units in Outokumpu’s production is
derived from stainless steel scrap. In addition, a limited amount of primary
nickel is also utilized in production. Depending on the primary nickel ore
type and the origin of the raw material, the carbon footprint varies. As with
all raw materials, Outokumpu aims to ensure that its nickel supply chain
complies with its stringent sustainable and responsible sourcing values,
including human rights and carbon emission reduction.
Risk area
Operational/
supply chain
Opportunities
• Maximization of using steel scrap as a raw material rather than primary
nickel, and the utilization of sustainable nickel ensures minimized
carbon footprint.
• The emerging recycling industry, such as battery recycling, provides new
recycled raw material streams to increase scrap availability and diversify
scrap sources.
• Partnerships around the value chain fosters joint innovations and
benefits across the supply chain by improving abilities to further reduce
CO2 emissions, lower costs through better predictability and drive waste
reduction.
Threats
• Significant growth in demand of nickel in industries such as the electric
vehicle battery industry could cause undersupply of sustainable
nickel sources.
• Supply chain disruptions and limited alternatives could push towards the
use of high carbon footprint options which would negatively impact on
CO2 emissions, costs and supply chain sustainability.
Outokumpu’s response
• Launch the Inner Circle initiative to connect customers to scrap
suppliers which promotes the recycling of steel scrap and
enhance circularity.
• Manage long-term partnerships with strategic suppliers and expand
collaboration through value chain integration to secure sourcing and
retain the supply of high-quality scrap and sustainable nickel.
• Drive to retain the high scrap utilization level to limit the need for
primary raw materials.
Read more about fostering sustainable supply chain.
26/235
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 Energy availability
Cyber security
Description
The availability of energy is critical for the continuity of Outokumpu’s
stainless steel and ferrochrome production. In addition to electricity, the
primary energy sources are natural gas, propane or other fuels such as
diesel. As part of its decarbonization strategy, Outokumpu is increasing
the share of low-carbon electricity, planning to switch to low-carbon fuels
in production and implementing energy efficiency initiatives to ensure
energy availability while remaining committed to the decarbonization
target.
Opportunities
• Focus on securing energy availability with low-carbon options can
contribute in decarbonization targets by reducing scope 1-3 emissions
• Strengthening the independence of Outokumpu from fossil energy.
improve business and operational resilience towards the lack of energy.
• The 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 to production limitations or
even temporary shutdowns.
• Trade sanctions could disrupt the 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
• Continue to strive to make production operations more energy and
material efficient, prioritize investments related to energy efficiency.
• Ensure diversified energy sources and suppliers by, for example,
increasing low-carbon energy like wind power.
• Evaluate the feasibility of low-carbon electricity increase through
emerging nuclear technology, small modular reactors in Tornio.
• Founded an EvoEnergy unit to study and explore low-carbon
investments, related to our own energy production, carbon capture, and
hydrogen economy.
• 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.
Read more about low-carbon energy and energy efficiency.
Risk area
Operational/
supply chain
Description
Outokumpu relies on various applications, technologies and third party
solutions that are used globally and locally. A possible cyber security
breach could cause damage to our operations, assets, people or leaks of
sensitive information related to Outokumpu, its personnel or partners such
as customers and suppliers.
Risk area
Corporate
security
Opportunities
• Cyber security visibility, analysis and improvement investments increase
transparency on the underlying synergies and efficiencies in all of
Outokumpu’s global and local environments in all assets.
• Cyber awareness campaigns targeted at better cyber security
engagement, awareness and knowledge among Outokumpu’s
employees, employee families, suppliers and customers will also
improve the overall cyber security culture.
Threats
• Outokumpu production facilities could face a sudden disruption, which
could cause delays in deliveries and, in severe cases, large business
losses as well as damage to our customer and supplier relationships.
• Employee identities used in fraud cases, personal or confidential
information leaked outside the company could cause financial losses,
imposition of penalties, but also reputational harm.
• A cyber attack could cause injuries to personnel or to our supply chain in
Outokumpu.
Outokumpu’s response
• Continuous improvement of Outokumpu cyber security resilience to
ensure better business continuity through cyber threat intelligence
and cyber threat detection to notice any attacks to conduct proactive
prevention.
• Enhance security operations capability for resilience and faster incident
response.
• Ensure cyber practices implementation among Outokumpu suppliers.
• Raise awareness of cyber threats by cyber security engagement
campaigns.
• Continue improving cyber security global governance with cross-
functional co-operation for cyber security strategy implementation.
27/235
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023 Climate change
People and safety
Description
Outokumpu has ambitious climate targets and is committed to limiting
global warming to 1.5°C. The transition towards decarbonization presents
Outokumpu with both risk (physical and transition risks) and opportunities.
The main opportunities relate to the demand for green steel and the
exposures relate to transition risks and regulatory environment.
Risk area
ESG
Description
Outokumpu aims to be the industry leader in safety with the vision of zero
accidents and continuously reduces the accident record year on year to
achieve this. 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
• Need for steel is expected to grow due to global megatrends.
• Sustainable and circular solutions are critical in accelerating the
green transition.
• Enabling customers to reduce their carbon footprint and reach
their climate targets with our low-carbon products, and providing a
transparent product carbon footprint.
• Being well positioned in the industry towards Carbon Border Adjustment
Mechanism (CBAM) and the EU’s taxonomy alignment could create
competitive advantage.
Threats
• Decarbonization technologies and investments would not be viable and
effective enough to meet emission reduction targets.
• Increase in production costs due to new regulation after 2025 such
as in Emission Trading System (ETS) and Carbon Border Adjustment
Mechanism (CBAM).
• Physical climate change risks such as extreme weather conditions could
impact Outokumpu through the supply chain or directly to its operations.
Outokumpu’s response
• Committed to ambitious climate targets set in line with the Science
Based Targets initiative’s 1.5°C ambition of limiting global warming.
• Continue to implement the sustainability strategy further by increasing
the use of recycled materials, low carbon electricity, energy efficiency,
improvements in operations, and replacing fossil fuels with renewable
alternatives in logistics.
• Invest in the pelletizing plant for biocoke in Tornio, Finland, to accelerate
the reduction of direct emissions.
• Support customers in their emission-reduction targets with new low-
carbon solutions, such as Circle Green, and transparent product-
specific carbon footprint data.
• Embed emission reduction targets by the Science Based Targets initiative
for 2030 in our main loan facility and performance-based share programs.
Read more about climate change.
Opportunities
• Sharing best safety practices globally creates opportunities to improve
safety in all our processes.
• Safety leadership training improves management skills and ensure that
safety is maintained as a priority in the company.
• Investments in our production lines, latest technologies and ways of
working upgrade our workplaces to ensure safe environment for our
employees and strengthens engagement.
• Inclusive and diverse workforce ensures the 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 at every site across the company.
• Inability to attract a skilled and diverse workforce.
Outokumpu’s response
• Execute safety strategy to further improve safety performance, including
cross learning program to ensure alignment with corporate policies
and standards.
• Take pioneering steps in utilizing the state-of-the-art technology,
AI, by deploying three AI driven robots in Sweden, Germany and in
Finland 2024.
• Established comprehensive roadmap to strengthen diversity, equity, and
inclusion with clear targets approved by Outokumpu’s Board of Directors.
• Provide a communication channel, SpeakUp, enabling Outokumpu
employees and external stakeholders to report breaches of Outokumpu’s
Code of Conduct and other misconduct.
Read more about safety, our people, and ethics and compliance.
28/235
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
Outokumpu Annual report 2023
Sustainable sourcing
Legal disputes
Description
Outokumpu is part of a global supply chain, including raw material,
services, and other material suppliers worldwide. Sustainable sourcing,
with the process of selecting and managing suppliers, is critical across all
purchases, especially in raw material sourcing. Outokumpu is exposed to
risks related to for example sourcing in countries with a high sustainability
risk and dependencies on certain critical suppliers.
Risk area
ESG
Description
Outokumpu is a minority shareholder in its associated company
Voimaosakeyhtiö SF, which is the majority shareholder of Fennovoima Oy.
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 for supplier-related reasons. Several legal
proceedings are ongoing among various parties.
Risk area
Legal and
compliance
Opportunities
• Supporting our suppliers towards more sustainable operations and
eliminating any environmental or social harm, across the stainless-steel
value chain, to foster human rights and accelerate the green transition.
• Exceeding customer expectations by providing a traceable and
responsible supply chain.
• Merging best practices from general procurement and raw materials
procurement in the new one procurement function.
Threats
• Causing, contributing or being linked to social or environmental harm in
our supply chain.
• Competition over needed sustainable materials could increase sourcing
in high- risk countries.
• Non-compliance with different new supply chain regulations in Europe
and the U.S.
Outokumpu’s response
• Responsible sourcing is one of the focus areas in our
sustainability strategy.
• Strong steering through the established supplier sustainability team
including developing supply chain risk management processes.
• Supply chain activities are guided by the United Nations Guiding
Principles (UNGP), which are integrated into our Supplier Code of
Conduct, Supplier Requirements and Human Rights Policy.
Read more about the sustainable supply chain.
Outokumpu Oyj has been joined into arbitration proceedings over a dispute
between the Fennovoima and Rosatom entities related to the termination
of the EPC contract. Outokumpu disputes the existence of any contractual
relationship, obligation, or arbitration agreement between Outokumpu and
any Rosatom entity.
Opportunities
• Not applicable.
Threats
• Arbitration proceedings ultimately lead to a negative decision against
Outokumpu.
Outokumpu’s response
• Outokumpu disputes the existence of any contractual relation,
obligation, or arbitration agreement between Outokumpu and any
Rosatom entity.
Read more about legal disputes in note 6.3 and about Fennovoima in
note 6.6 in the financial statements.
Annual review
This is Outokumpu
Year 2023 in figures
Our year 2023
CEO’s review
Vision and strategy
Our impact
Stainless steel market
Innovation
Risks and opportunities
Sustainability review
Governance
Remuneration report
Financial year
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Outokumpu Annual report 2023 1
Sustainability
review
Annual review
Sustainability review
Sustainability strategy
Climate change and circularity
Sustainable supply chain
People and society
About reporting
Governance
Remuneration report
Financial year
Climate change is a threat to human well-
being and the health of the planet. The
science is clear: global warming should be
limited to 1.5°C. At Outokumpu, we
accelerate the green transition with low-
carbon stainless steel and we continue to
decarbonize our value chain with our
partners towards a world that lasts forever.
1
Annual review
Sustainability review
Sustainability strategy
Climate change and circularity
Sustainable supply chain
People and society
About reporting
Governance
Remuneration report
Financial year
Sustainability
strategy
Sustainability is about meeting the
needs of the present without
compromising the ability of future
generations to meet their own needs.
Today, we need urgent and bold actions
across societies to preserve our planet.
Steel plays a pivotal role in the green
transition and at Outokumpu, we work to
accelerate it every day.
Stainless steel has a crucial role in accelerating the
green transition. With up to 75% lower carbon footprint
compared to the global industry average, we support
our customers to reduce their value chain emissions –
the most challenging emissions to reduce.
The triple planetary crisis of climate change, nature and
biodiversity loss and pollution and waste – induced by
people – is pushing nature to breaking point. The global
population is expected to grow, leading to urbanization and
requiring more energy and – steel.
Outokumpu Annual Report 2023
31
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Outokumpu Annual report 2023 Annual review
Sustainability review
Sustainability strategy
Climate change and circularity
Sustainable supply chain
People and society
About reporting
Governance
Remuneration report
Financial year
From the basic structures of society to industry, mobility,
and household appliances, the demand for stainless steel
will grow. While the steel industry is a major contributor to
climate change, accounting for 7–9% of global greenhouse
gas emissions, it also plays a pivotal role in accelerating
the green transition.
Our vision at Outokumpu is to be the customer’s first
choice in sustainable stainless steel. We produce stainless
steel with up to 75%* lower carbon footprint than the
global industry average. All of Outokumpu’s stainless steel
mills can be considered as significant recycling facilities.
We have also set an ambitious climate target to further
reduce emissions across our value chain approved by
Science Based Targets initiative (SBTi) aligned with the
1.5°C target.
Outokumpu’s stainless steel helps to build a more
sustainable world, it is 100% recyclable, efficient and long-
lasting, and it empowers customers to reduce their own
carbon footprint. We were the first in the industry to offer a
product-specific carbon footprint, covering emissions from
cradle-to-gate, for our products in Europe. Product carbon
footprint enables customers to better understand how they
are reaching their emission reduction targets.
The cornerstone of Outokumpu’s business is to enable
growth and innovation through partnerships in sustainable
stainless steel. From our latest innovation Outokumpu
Circle Green®, with up to 93% lower carbon footprint when
compared to the industry average – to Inner Circle, which
aims to increase scrap flows across industries – we aim to
have a positive impact well beyond the steel industry to
drive the green transition forward. We believe that
decarbonizing the stainless steel industry is only possible
through collaboration.
Sustainability strategy and commitments
Sustainability at Outokumpu consists of three pillars:
environmental, social and governance. Outokumpu is also
committed to the United Nations’ Sustainable
Development Goals (find out more on page 36).
Outokumpu is committed to ambitious climate targets
aligned with the SBTi’s 1.5°C target. To reach the target,
Outokumpu aims to decrease direct (scope 1) and indirect
emissions (scope 2) as well as emissions from the supply
chain (scope 3) by 42% per tonne of stainless steel by
2030 compared to the 2016 baseline. Outokumpu’s long-
term target is to achieve carbon neutrality by 2050 in
scope 1 and scope 2 emissions. Besides reducing climate
impact, Outokumpu’s key environmental targets are high
recycling material content, energy efficiency and zero
environmental incidents.
By 2023, Outokumpu has reduced its emission intensity
by 27% from the 2016 baseline, by continuing to
implement our sustainability strategy further by increasing
the use of recycled materials, low-carbon electricity, energy
efficiency, improvements in operations and replacing fossil
fuels with renewable alternatives.
Outokumpu made significant steps in 2023 to reduce its
scope 3 emissions in the future by strengthening its supply
chain sustainability through new partnerships. In addition,
Outokumpu took actions to reduce emissions from its own
operations by, for example, investing in the carbon
neutrality target of the Kemi mine.
Outokumpu’s business model is based on circularity and
its target is to keep recycling material content over 90%. In
2023, we also conducted a risk analysis on biodiversity.
On the basis of the analysis, we are building site-level
roadmaps for actions and further evaluating the supply
chain impact on nature. During the year, there were 11
environmental incidents in Outokumpu's operations and
one at an old mining site. All of Outokumpu’s production
sites are certified according to ISO 14001.
If all stainless steel were to be replaced
by our stainless steel, up to 296 million
tonnes of greenhouse gas emissions
could be avoided globally. That equals to
737 million passengers’ one-way flights
across the Atlantic Ocean.*
In terms of social responsibility, human rights are the basis
of our business. We respect and protect our people – from
Outokumpu’s employees to workers in the value chain,
customers and local communities.
Outokumpu aims to be among the industry leaders in
safety with the vision of zero accidents. We focused on
building a strong safety culture by fostering common safety
principles, sharing good practices, and learning from past
incidents to create increased awareness. From 2022 to
2023, the total recordable incident frequency rate,
meaning work-related incidents, fell by 17%.
Our social responsibility targets also include improvement
of organizational health, strengthening diversity, equity and
inclusion (DEI), and supply chain sustainability. In terms of
DEI, we exceeded a diversity target of adding 40 diverse
leaders by the end of 2023, compared to the baseline in
July 2022: we had already increased the number by 57 at
the end of 2023. The overall ambition is to increase the
number of diverse leaders by 100 by the end of 2025.
We have also been working on equal pay and on external
pay equity certification, which we expect to conclude in
early 2024, and we reached our inclusion target: over 60%
of group employee respondents agreed on all areas related
to inclusion in our People Pulse survey.
* The calculation is based on Outokumpu's carbon footprint
compared to the global average of stainless steel: Outokumpu
stainless steel CO₂ emissions (2023): 1.52 kg CO₂e per kg of
stainless steel. Global average CO₂ emissions (2023): 7 kg CO₂e per
kg of stainless steel. (Outokumpu’s calculation based on data
provided by CRU and worldstainless.)
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Highlights in 2023
In 2023, Outokumpu continued to work towards its
ambitious climate targets. With the commitment to keep
global warming at 1.5°C, we managed to reduce our
emissions by 27% from the 2016 baseline. To continue
the decarbonization strategy, Outokumpu invested in a
pelletizing plant to produce biocoke at our site in Tornio,
Finland, to accelerate the reduction of direct emissions by
replacing fossil coke with renewable raw materials from
biomass. We also took a step towards decarbonization by
achieving one third of our target of the Kemi mine
becoming the first carbon-neutral mine in the world by
2025.
In addition to reducing emissions in Outokumpu’s own
operations, we took action to reduce emissions from our
supply chain by strengthening the future supply of
sustainable raw materials through partnerships with our
suppliers in nickel and molybdenum.
Stainless steel has a pivotal role in accelerating the green
transition across industries. To create value for our
customers with our low-emission stainless steel, we
launched new partnerships during the year with customers
from different industries. We joined forces with Siemens, a
technology company focused on industry, infrastructure,
transport, and healthcare, to reduce carbon emissions in
the production of medium-voltage switchgear. The leading
manufacturer of premium cookware Fissler, launched a
premium cookware made of Circle Green. We also
introduced Circle Green to the automotive industry by
collaborating with thyssenkrupp Materials Processing
Europe, a leading steel and aluminium service centre, and
Boysen Group, a premium exhaust system manufacturer.
Also Nordic Steel, Norway's leading competence centre in
steel, introduced low-carbon stainless steel in Norway. We
see a clear demand for low-emission stainless steel across
various markets and especially in low-carbon industries
such as hydrogen and clean energy sectors.
Collaboration with suppliers and customers is at the core
of our sustainability strategy and a great example of that is
the Inner Circle initiative launched in 2023. Through the
initiative, customers are connected to scrap suppliers to
demonstrate a closed loop for low-carbon stainless steel,
helping end-customers reach their climate targets.
Our commitment to sustainability received recognition
during 2023, and we were acknowledged as a Climate
Leader by the Financial Times. To contribute to the public
discussion on climate crisis and to demonstrate the pivotal
role of stainless steel in green transition, Outokumpu
participated in the United Nations Climate Change
Conference, COP28 in Dubai at the Finland pavilion.
Outokumpu also received the highest Platinum level
recognition for its strong performance in sustainability from
EcoVadis, a sustainability rating platform, which ranked
Outokumpu among the top 1% of companies assessed. In
addition, we finalized audits for the ResponsibleSteel
certificate for our business area Europe operating sites.
ResponsibleSteel is the world’s first global and
independent standard for responsibly sourced and
produced steel. It provides a tool to develop our
sustainability performance through an ambitious and
transparent industry-level framework.
In 2023, we supported customers to
reduce emissions by 12 million tonnes,
corresponding to over 30 million
passengers’ one-way flights across the
Atlantic Ocean.*
The collaboration between Outokumpu and Fissler, a German
family-owned premium cookware company, supports the mutual
mission of both companies to build things that last – and to show
the direction of reducing emissions from the appliance industry.
* The calculation is based on Outokumpu's carbon footprint
compared to the global average of stainless steel: Outokumpu
stainless steel CO₂ emissions (2023): 1.52 kg CO₂e per kg of
stainless steel. Global average CO₂ emissions (2023): 7 kg CO₂e per
kg of stainless steel. (Outokumpu’s calculation based on data
provided by CRU and worldstainless.)
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Outokumpu Annual report 2023 Sustainability highlights in 2023
Climate leader
Outokumpu was acknowledged as a Climate Leader by
Financial Times as the only stainless steel producer.
Outokumpu also received Platinum ranking from
EcoVadis, a global sustainability platform, rating
Outokumpu among the top 1% of over 100,000
assessed companies.
ResponsibleSteel
Outokumpu finalized the ResponsibleSteel audits for
all European manufacturing sites during 2023 and is
awaiting certification. ResponsibleSteel assesses
companies across the steel industry regarding
environmentally and socially responsible production.
Outokumpu at COP28
Outokumpu was invited to join as a partner at the UN
Climate Conference (COP28) to take part in
discussing the industry’s role in the green transition
and showcase how sustainable stainless steel plays
a pivotal role in the low-carbon economy.
Emission intensity
reduced by 27%
from 2016 to 2023
Avoided emissions
by using our
stainless steel
Our target is to reduce our
carbon emissions per tonne
of stainless steel by
12
million
tonnes
corresponding to over 30 million
passengers’ one-way flights
across the Atlantic Ocean.
42% by 2030 compared to
the baseline of 2016
Outokumpu achieved its highest recycled
material content ever in 2023:
95%
Outokumpu Annual Report 2023
New partnerships with
Siemens, Alfa Laval, and
several other customers.
Low-carbon
electricity
95%
of our electricity mix globally
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Employee
engagement index
remained high at
77
On a scale
from 1 to 100
Increase in diverse leaders
+57
Since 07/2022 baseline, against the
target of +40 by the end of 2023.
1st
ever Ethics and
Compliance Week
organized
– educating and inspiring
employees on responsible
and ethical business
practices
Improving
pay equity
Women’s 0.986€
= men’s 1€
Work-related accidents
decreased from 2016
to 2023
83%
TRIFR decreased from 8.7 to 1.5
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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. During the end of 2023,
Outokumpu started to conduct a double materiality
analysis in preparation for the Corporate Sustainability
Reporting Directive (CSRD), which the company will start
reporting on in 2024.
The analysis applies double materiality, which means both
the impact of and impact 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 the business model and high
potential for differentiation. Sustainability enablers have
been defined to have a lower level of potential for
differentiation. The topics defined for management at the
local level have value creation potential from execution on
the local operating level.
The selection of material topics covers both inside-out
topics that are related to corporate strategy as well as
outside-in topics that reflect stakeholder concerns.
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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 six goals in
the table to the right.
Commitment to global framework 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 ISO 9001 quality and ISO 14001 environment
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.
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.
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 2023: Share of low-carbon electricity was 95%.
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 2023: We employed directly over 8,300 employees and progressed
well towards a diversity target of adding 100 diverse leaders by the end of 2025 compared to the
baseline in July 2022, having added 57. Our Employee engagement index remained high at 77.
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 solutions. Highlight in
2023: Besides enabling new clients and industries to reduce emissions with Circle Green, we
launched a new initiative, Inner Circle, to increase scrap flows and circularity.
Goal 12: Responsible consumption and production
Products: Our stainless steel has a high recycled content rate, over 90%. Stainless steel is also the
single most recycled material globally. Operations: Our business is based on the circular economy. Our
mills are among the biggest material recycling facilities in the world. Highlight in 2023: Outokumpu
achieved its record high recycled material content rate of 95%.
Goal 13: Climate action
Products: Our stainless steel helped our customers’ reduce their carbon emissions by 12 million tons
in 2023. Operations: We have an ambitious climate target aligned with 1.5°C and we are committed
to reducing emission intensity across all scopes by 42% by 2030 from the 2016 baseline. Highlight in
2023: Outokumpu reduced emission intensity by 27% from the 2016 baseline. We also aim to reach
carbon neutrality of the Kemi mine by 2025 , and we achieved a third of the target in 2023.
Goal 17: Partnership for goals
Products: We are working together with our customers and partners to decarbonize different
industries. Operations: We are committed to global sustainability frameworks and to partnering with
our whole value chain to drive sustainable development. Highlight in 2023: From the automotive
industry to cookware, we partnered with Siemens, thyssenkrupp, Boysen Group and Fissler, among
others, with products made of Circle Green.
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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 Executive Vice President, Sustainability, People and
Communications at Outokumpu. 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 also has an ESG Advisory Council consisting of
three external advisors:
• Antoine Allanore, Professor of Metallurgy,
Massachusetts Institute of Technology
• Sirpa Juutinen, Independent Sustainability Advisor
•
Julia Woodhouse, Board member, member of the Audit
Committee, Outokumpu
The council’s role is to challenge and comment on the
company’s sustainability strategy and actions as well as
facilitate dialogue between Outokumpu and its
stakeholders. In 2023, the council discussed topics such
as decarbonization, low-carbon innovations, stakeholder
management, social responsibility, ResponsibleSteel
certification, and the commercial value of sustainability.
ResponsibleSteel certification
process in final stages
ResponsibleSteel is a global certification initiative for the steel industry, to promote responsible
sourcing and production of steel. It addresses holistically environmental, social, and governance
issues.
Outokumpu applied for the certificate and executed ResponsibleSteel’s in-depth auditing process,
to enable Outokumpu further create value to its customers by supporting them to choose more
sustainably produced steel with a third-party certification. ResponsibleSteel also strengthens the
sustainability work at Outokumpu across all areas even further with ambitious approach beyond
compliance.
The certification process was extensive, lasting almost two years and including site-specific self-
assessments, in-depth on-site audits and interviews with workers and contractors, to name a few.
In 2023, Outokumpu finalized all the stage 1 and 2 audits at its manufacturing sites in Europe.
Currently, we are waiting for the certification decision, to become the first stainless steel industry
company in the Nordics to receive the ResponsibleSteel certificate.
So far, Outokumpu has got excellent feedback on the achievements on decarbonization and
ensuring a good and safe place to work, among others. During the process, further actions were
identified on how to build on Outokumpu’s sustainability ambition – for example on stakeholder
engagement, social sustainability as well as biodiversity, and water management, across the value
chain. Once the process is finalized, the summary will be public, which we see to increase
credibility and transparency of our overall sustainability work both internally and externally.
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Making the green transition a reality
Where is Outokumpu on its sustainability journey?
Outokumpu has set ambitious targets to accelerate
decarbonization across the stainless steel value chain,
which inspired me to join this innovative company. We
have set a target of keeping global warming at 1.5°C. To
achieve this target, Outokumpu has put circularity at the
heart of our business and accelerated decarbonization
across its entire value chain. As part of our three-phase
strategy, we are currently integrating sustainability into the
core of our business. In the next few years, we will
continue to decarbonize our operations, strengthening our
sustainable value chain through partnerships, and create
value with sustainability for our stakeholders. Our aim is to
build a positive impact beyond the steel industry to drive
the green transition forward.
Sustainability means more to us than just reducing our
climate impact, which is the essence of our strategy. Our
people are at the heart of driving innovation to enable a
more sustainable future. When it comes to diversity, we
aim to have the number of diverse leaders up to 30% in all
international management teams by the end of 2025. We
have also been developing sustainable supply chains
processes in the steel industry together with our suppliers.
Where do you envision Outokumpu to be in future?
Low-carbon stainless steel plays a crucial role in
decarbonizing various industries. Renewable energy,
hydrogen, electric cars – and even your washing machine
at home all depend on stainless steel. The green transition
is an opportunity for us, businesses, people, and the
planet.
To support our customers even beyond our current product
portfolio, we introduced Outokumpu Circle Green®, the
world’s first stainless steel with up to 93% smaller carbon
footprint compared to the global average. Together with
our customers, we have been able to offer low-carbon
stainless steel products to different industries.
Supply chain emissions represent the majority of
companies emissions – usually being the most challenging
to reduce. By offering low-carbon solutions, we help other
industries reduce emissions in their supply chains. In
addition to our low carbon footprint, we want to emphasize
our positive impact – how by using our stainless steel our
customers reduce their emissions. In 2023, our products
reduced our customers’ emissions globally by 12 million
tons compared to the global average of stainless steel.
Where is sustainability going?
I was once told that sustainability is a journey that
continues without a finish line. A few years ago, the
discussions around sustainability were more on how to be
compliant and how to report the right things; however,
today, in addition to that, it is more about how to create
value by embedding sustainability into the strategy of a
company. This is where I believe Outokumpu has been at
the forefront in our industry, and where we can create even
more value in the future. At the same time, the world is
currently extracting resources faster than they can be
renewed and climate change, biodiversity loss and water
scarcity are a reality, threatening the well-being of humans
and the planet. We have no time to waste - companies
should be the ones leading the transition to low-carbon
economies.
What continues to drive me, despite the challenges, is
seeing the opportunity for companies to transform their
business. As COP28 proved with the historical agreement
to transition away from fossil fuels, there is still a strong
will to keep the 1.5°C target within reach. With new
regulation increasing, such as the Corporate Sustainability
Reporting Directive with the purpose of re-setting the value
creation agenda, sustainability is integrating even more
strongly into the core strategy of businesses. For
Outokumpu, this means continuously striving to support
our customers with solutions that help tackle the biggest
crisis of our time.
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Heidi Peltonen, VP, Sustainability at Outokumpu started in
her position in 2023. Heidi has dedicated her career to
building value with sustainability and partnering with
companies to accelerate change across the value chain.
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Climate
change and
circularity
This decade is critical in terms of climate
action. From ambitious climate targets
aligned with the 1.5°C ambition, to low-
carbon stainless steel as a solution for
various industries, Outokumpu
accelerates the green transition.
Did you know? Our stainless steel is
made of more than 90% recycled
materials. It also has up to 75% lower
carbon footprint compared to the global
industry average.
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Decarbonization across the value chain
Climate actions are required across companies’ value chains. Outokumpu has a high climate ambition and
approved science-based target to keep global warming at 1.5 °C. We are working towards this with a robust strategy,
measurable targets, and concrete actions, and we support our customers to further reduce their carbon footprint with up to 75%
lower carbon footprint than the industry average.
At Outokumpu, we are committed to mitigating climate
change. In 2021, Outokumpu committed to the Science
Based Targets Business ambition of keeping global
warming at 1.5°C and continues to work towards carbon
neutrality by 2050.
By 2030, Outokumpu aims to reduce its direct (scope 1),
indirect (scope 2), and supply chain emission intensity
(scope 3) by 42% from a 2016 baseline. Emission intensity
translates to a tonne of emissions generated by producing
a tonne of stainless steel. By 2023, we have reduced our
emission intensity by 27% from the 2016 baseline. The
key drivers for reduced emissions have been high recycled
material content, increased energy efficiency, low-carbon
energy, and improvements in our processes.
In 2023, SBTi announced the world’s first framework
“Steel Science-Based Target-Setting Guidance” for
companies in the steel sector, which Outokumpu
participated in developing the criteria for. Outokumpu has
currently set its SBTi target based on former steel sector
guidelines and continues to evaluate the sectoral
guideline.
Lowest carbon footprint in the industry
Outokumpu supports customers to reduce their carbon
footprint by having up to 75% lower carbon footprint
compared to the global industry average. The key enablers
for low-emission stainless steel are having its own low-
carbon ferrochrome produced in Kemi, high recycled
material content and the use of low-carbon electricity.
Outokumpu’s latest innovation, Circle Green, has the
smallest emission intensity in the world, up to 93% lower
carbon footprint than the global average. If all the
stainless steel in the world was produced with the same
methods used for Circle Green production, it would reduce
global carbon emissions from the entire stainless steel
value chain by 364 million tons per year. This equals to
over 900 million passengers’ one-way flights across the
Atlantic Ocean from London to New York.
Outokumpu was the first in the industry to offer a product-
specific carbon footprint (PCF) for our products in Europe.
PCF measures emissions caused by a product from the
extraction of raw materials to our gate – from cradle to
gate. It enables customers to evaluate their value chain
emissions and to minimize their carbon footprint by
selective material sourcing, and it helps them reach their
climate targets. Making this specific data available means
that our customers no longer need to rely on average
industry figures for their own carbon footprint calculations.
In 2023, PCFs were externally verified besides the last two
remaining sites, which are in the process of being
validated.
Where do our emissions come from?
Outokumpu’s emissions come from production (scope 1),
indirectly from the use of electricity (scope 2) and from
upstream emissions (scope 3). Due to the very minimal,
close to zero, generation of other emissions in the steel
industry, we report our emissions as CO2 emissions.
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Our low-carbon products like Circle Green play a crucial role in the
green transition of the stainless steel industry.
Outokumpu Annual Report 2023
Outokumpu Annual report 2023 Our direct emissions come mainly from production, the use
of fossil coke, which is used as a reductant in ferrochrome
production, LNG (liquified natural gas), and CO gas. Our
production is based on electric arc furnaces, which offer
the best available technique for stainless steel production.
We continuously work to increase the amount of low-
emission raw materials, replacing fossil fuels with
renewable alternatives and increasing energy efficiency.
Indirect emissions, on the other hand, come from the use
of electricity. Switching to low-carbon electricity and
improving energy efficiency are the key drivers in reducing
further indirect emissions.
Supply chain emissions are, for example, raw materials
such as ferroalloys, lime and dolomite, and downstream
transportation. Emissions arising from externally used
process gas and external services are included in supply
chain emissions. A certain number of slabs from the
divested melt shops are processed in our operations. This
number is seen as own crude steel production in CO2
emission intensity calculations.
Currently, 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.
By how much did we reduce our emission intensity?
In 2023, the total specific CO2 emissions were reduced by
27% compared to the baseline of 2016. The key drivers for
reduced emissions were the record high level of recycled
Carbon dioxide emissions
Tonnes
Direct emissions (scope 1)
Indirect emissions, market based (scope 2)
Indirect emissions, location-based (scope 2)
Upstream emissions (scope 3 with broader coverage)
Total
* Base year.
material content, the increased use of low-carbon
electricity, and energy efficiency.
making and working on innovations across industries to
discover news ways of reducing CO2 emissions.
Annual review
During 2022, we launched an ambitious program to
improve our energy efficiency by 8% by 2024 from the
January-September 2022 level. The strong focus on energy
efficiency continued throughout the year, and we are
approaching our target of improving our energy efficiency
by 8% by the end of 2024.
Our emission intensity from indirect use, electricity, was
reduced by about 86% compared to the base year mainly
due to 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.
In 2023, Outokumpu consumed in total 23,296,271 GJ of
primary fuels and electricity, a decrease of more than
1,700,000 GJ. The overall energy intensity decreased from
10.5 to 10.4 GJ per tonne crude steel.
Supply chain emission intensity, originating mainly from
the use of primary raw materials, decreased by 14%
compared to 2016. The decrease was supported by the
high share of recycled material content in our production,
94.6% and by sourcing low emission raw materials.
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
See more data on CO2 emissions in the sustainability data
tool on Outokumpu’s website.
Outokumpu’s CO2 emission intensity, tonnes of CO2
per tonne steel
3
2.5
2
1.5
1
0.5
0
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16*17*18*19* 20* 21 22 23 24 25 26 27 28 29 30
Financial year
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
2023
2022
2021
2016*
1,013,282
1,043,226
1,196,362
141,599
457,228
2,309,430
3,464,311
368,380
459,780
2,717,748
4,129,354
543,567
581,521
3,157,511
4,897,440
1,213,634
1,210,872
3,163,556
5,588,062
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Climate commitment to decarbonize our value chain
Outokumpu’s stainless steel
has up to 75% lower carbon
footprint than the global
industry average.
Scope 1–3 emission
intensity reduced by
We aim to reduce Scope 1–3
emission intensity by
27%
compared to the
baseline of 2016
42% compared to the
baseline of 2016
0.45
0.06
1.01
Direct emissions
from production
Emissions from extracting raw
materials, the use of fuels in
production and generated CO gas.
Indirect emissions from
the use of electricity
Purchased electricity.
Scope 1: Record high recycled
material content, increased energy
efficiency and use of biocoke to
reduce direct emissions.
Indirect emissions
from the upstream
Raw materials, fuel and energy
related activities, purchased goods
and waste generated.
Scope 2: Improved
energy efficiency and
increased use of low
carbon electricity.
Scope 3: Record
high recycled
material content,
renewable fuels and
continued to work
towards zero waste.
Scope 1: Replace
fossil coke with
biocoke and switch
to renewable fuels.
Scope 2: Continue
increasing share of
low-carbon energy
and improving
energy efficiency.
Scope 3: Continue to
increase recycled
material content and
develop low carbon raw
materials together with
suppliers.
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Decarbonizing our own operations
By 2030, Outokumpu aims to reduce its direct, indirect
and supply chain emission intensity by 42% per tonne of
stainless steel from a 2016 baseline. In 2023, we were
more than halfway toward the target with 27% reduced
emission intensity. The work towards the mid-term target
of 2030 and further to reach carbon neutrality by 2050
continues.
Outokumpu’s direct emissions come from fossil coke,
fossil fuels and CO gas. The majority of direct CO2
emissions originate from coke which is used as a reductant
in ferrochrome production. For the short-term target, a
significant share of fossil coke is to be replaced by biocoke
and this would reduce a significant amount of carbon
emissions. In the long run, Outokumpu continues to
investigate replacing the use of coal-based reductant. In
2023, Outokumpu made an investment decision in a
pelletizing plant for biocoke in Tornio, Finland, to
accelerate the reduction of direct emissions. This will help
to reduce carbon emissions by 82,000 tonnes, which
corresponds to the annual emissions of 8,000 Finns.
Reducing emissions from the use of heating fuels, i.e.
natural gas, propane, and a small amount of oil is possible
either by induction heating or by the use of low-carbon
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 biofuels at some operating sites. The
implementation of various digitalization projects is
estimated to help increase yield, energy, and material
efficiency in our operations which directly impact our
carbon emissions.
Further indirect emission reductions will be reached by
switching to low-emission electricity and replacing natural
and propane gas in heating. The strategy to further reduce
indirect emissions from electricity is to expand the low-
carbon electricity supply through certificates and
increasingly invest in renewable energy projects. In 2023,
Outokumpu bought guarantees of origin for 79% of
electricity from energy producers. In addition Outokumpu
Outokumpu Annual Report 2023
has access to certificates also through ownership and
power purchase (PPA) agreements.
During 2023, Outokumpu founded the EvoEnergy unit to
study and explore low-carbon investments, related to our
own energy production, carbon capture, and the hydrogen
economy.
During 2022, we launched an ambitious program to
improve our energy efficiency. Until the end of 2024,
Outokumpu now aims to improve its energy efficiency by
8% across the group compared to the January–September
2022 level. Prior to that, Outokumpu’s target had been to
improve energy efficiency by 0.5% annually.
An additional way to reduce direct emissions in the
atmosphere is carbon capture and storage/utilization
(CCS/CCU). Slag use in CCU is seen as one of the
potential techniques to reduce direct emissions. Flue gas
from our own processes could be used in an accelerated
carbonation technique and the outcome would be a
carbonated slag product replacing cement that can be
utilized as construction material.
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.
Decarbonizing the value chain
Supply chain emissions account for 67% of our entire
emissions. Scope 3 emissions originate from raw materials
such as ferronickel, burnt lime, dolomite, as well as other
alloying elements. We continuously work together with our
suppliers to identify new innovations and opportunities to
reduce our supply chain emissions.
Throughout 2023, we established new partnerships to
strengthen the supply of sustainable raw materials and
reduce emissions from it. For example, we acquired a
share in the Canadian company FPX Nickel and signed a
The first of Outokumpu’s three new cargo ships became
operational in Janurary 2024. They ships will support us in
emission reduction and help us comply with upcoming
environmental regulation.
letter of intent with Greenland Resources Inc., a company
specialized in low-emission molybdenum, to further
strengthen our sustainable supply chain.
During 2023, we managed to keep our recycled material
content at an all-time high of 95%. Looking ahead, we aim
to increase recycling as steel scrap and recycled metals
from any waste management can replace raw material use,
although the amount of scrap depends on the availability
of suitable scrap. Therefore, we partnered with CRONIMET
to further secure the sourcing and retain the supply of
high-quality scrap within Northeastern Europe and
launched Inner Circle to ensure a sustainable supply chain
for steel scrap.
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For the short-term target, raw material purchasing takes
the carbon footprint of the supplier into account to align
the purchasing to suppliers with lower carbon emissions.
Both the carbon reduction strategy and actual emission
intensity are criteria in our supplier performance
evaluation. Only suppliers with a certain level of
performance are eligible to become strategic partners for
Outokumpu. To ensure that we are reaching our ambitious
CO2 reduction targets, we track and report the CO2
emissions of our raw material purchases continuously
throughout the year, and we engage in trainings and
discussions, such as the UNGC Nordic Peer Learning Group
on Emissions Reductions Related to Material Sourcing.
Outokumpu’s decarbonization roadmap also includes
projects to reduce transport emissions. Two projects focus
on switching from road transport to electric train transport.
At the Kemi mine, Neste MY Renewable Diesel, made from
100% renewable raw materials – such as used cooking oil
and animal fat from food industry waste – is used to
replace fossil fuels in the machines, trains and alternative
power sources, and also at the Tornio mill as well as in the
transports between the mine and the mill. The fleets at the
Kemi and Tornio operations as well as contractor fleet will
completely switch to renewable diesel.
In addition, Outokumpu is acquiring three new cargo
vessels from its long-term transport partner, Finnish
shipping company Langh Ship to help minimize emissions.
Initially, the ships will run on liquefied natural gas, but later
that can be directly changed to liquefied biogas without
any changes.
Kemi mine to become
the first carbon-neutral mine
in the world by 2025
Our goal is to make the Kemi mine the world’s first carbon-neutral operating mine by
2025. The three key factors in the Kemi mine’s carbon neutrality are shifting from fossil
fuels to renewables, utilizing low-carbon electricity, and replacing natural and propane
gas in heating.
When realized this will mean a reduction of almost 40 million kilos in Outokumpu’s
greenhouse gas emissions. During 2023, Outokumpu achieved third of this target with
the use of renewable fuel which will reduce the Kemi mine’s annual greenhouse gas
emissions by nearly 11,300 tonnes.
Outokumpu also completed the significant project deepening the Kemi underground mine
from 500 meters to 1,000 meters. This will ensure a continuous supply of low-carbon
chrome, a key raw material in stainless steel, for decades to come.
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Recommended TCFD disclosures
Source of information in reporting
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.
a) Describe the board’s oversight of climate-related
risks and opportunities.
Sustainability strategy SR 31–32, FS 131–135
b) Describe management’s role in assessing and
managing climate-related risks and opportunities.
Sustainability strategy SR 37, Risks and opportunities
AR 19–29, FS 131–135, GC 104–117
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
Decarbonization across the value chain SR 39–46,
Risks and opportunities AR 28, FS 131–135
Decarbonization across the value chain SR 39–46,
Risks and opportunities AR 28, FS 131–135
Decarbonization across the value chain SR 39–46,
Risks and opportunities AR 28, FS 131–135
a) Describe the organization’s processes for
identifying and assessing climate-related risks.
Decarbonization across the value chain SR 39–46,
Risks and opportunities AR 28, FS 131–135
b) Describe the organization’s processes for
managing climate-related risks.
Decarbonization across the value chain SR 39–46,
Risks and opportunities AR 28, FS 131–135
c) Describe how processes for identifying, assessing,
and managing climate-related risks are integrated
into the organization’s overall risk management
Decarbonization across the value chain SR 39–46,
Risks and opportunities AR 28, FS 131–135
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
Decarbonization across the value chain SR 39–46,
Risks and opportunities AR 28, FS 131–135
Decarbonization across the value chain SR 39–46,
Risks and opportunities AR 28, FS 131–135
Decarbonization across the value chain SR 39–46,
Risks and opportunities AR 28, FS 131–135
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Reporting aligned with the TCFD recommendations
Outokumpu acknowledges the recommendations of 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
scenario well below 2°C and the 1.5°C ambition of the
Science Based Targets initiative. More information on the
Risks and opportunities and Review by the Board of
Directors.
Climate change scenario analysis
Available scenarios take into account countries’ energy
and climate-related policy commitments. 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).
Existing scenarios do not take into account the special
features of stainless steel production. Stainless steel is
produced mainly from scrap but requires the input of
ferroalloys to achieve the right composition. The sliding
scale for scrap input which is used in carbon steel
scenarios does not apply to stainless steel.
To translate the steel industry scenarios to 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 for the scenarios is set to 2050 in line with the
company’s carbon neutrality target. The assumption
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Outokumpu’s emissions scenarios, scope 1, 2 & 3,
emission intensity
2.50
2.00
1.50
1.00
0.50
0.00
16* 18* 20* 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50
Upstream emissions
Direct and indirect emissions
* Including discontinued operations
of the SDS includes the possible CO2 reduction projects at
different maturity grades according to the developed
carbon neutral roadmap. 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 biofuels
projects are further expanded. All projects are to be
realized during the journey in addition to the efficiency
improvements.
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 utilizing risk and control
management system for maintaining and sharing the data.
None of the physical risks have been identified as a
Outokumpu Annual Report 2023
material risk to our company. Since 2022, Outokumpu has
had its long-term incentive plans linked to the company’s
science-based climate targets.
According to the analysis, the most physical risk is flooding
caused by increased extreme weather conditions or
storms. Natural and catastrophic hazards could impact
deliveries and result in interruptions to operations or
facility damage at some sites.
The financial impact of the climate transition risk has been
estimated for the target period until 2030. The transition
risks to Outokumpu are driven by changes to climate
policies, which can have an adverse impact on
Outokumpu’s operating environment and financial position
as an increased price of greenhouse gas emissions and
the linked rising electricity price. The transition risk also
includes the risk of how decarbonization technologies
become viable and 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 opportunities.
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 a 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 its revenue.
The continuous increase of material recycling and energy
efficiency as well as the shift 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 a 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 a low- carbon society.
Emissions trading and fair competition
86% 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 in the
trading phase 2021–2030 of the emissions trading system
to Outokumpu involve 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.
The European Carbon Border Adjustment (CBAM) measures
will phase out the free allocation 2026–2034. Additional
uncertainty concerning the reduction of free allocations in
the second half of the ongoing period by further decreasing
benchmarks and a possible cross-sectoral reduction factor
will impact the company's position. Outokumpu forecasts it
will have an adequate quantity of the EU emission
allowances until the end of this decade, if the projected
decarbonization projects are realized.
Allowance prices are expected to further increase
especially as the the European Commission‘s Green Deal
requests further greenhouse gas reductions, and the
benchmark for free allocation will decrease.
There remains a risk that the carbon leakage avoidance
measures in the ETS will not effectively be overtaken by
the Carbon Border Adjustment Mechanism. CBAM does not
consider the high impact of the scope 2 emissions, nor
does it reflect the export of goods from the EU. However,
the main impacts of stainless steel raw materials, such as
ferronickel, ferrochrome, and ferromanganese are taken
into account.
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Low-carbon energy and energy efficiency
Our decarbonization strategy is highly focused on energy – both on improving the energy efficiency
of our operations and reducing emissions with low-carbon energy.
Stainless steel operations are energy intensive and our
Tornio mill is the biggest single energy user in the Nordics.
One of the enablers of our low carbon footprint, recycled
steel, needs to be 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
Last year, Outokumpu announced the decision to
significantly increase its energy efficiency improvement
target and prioritize related investments in the next two
years. This year, we continued to implement the ambitious
program, with the aim of improving energy efficiency by 8%
by the end of 2024 across Outokumpu's operations from
the January–September 2022 baseline.
Outokumpu is improving its energy efficiency by:
• minimizing energy losses during material processing,
• optimizing our energy consumption and fully utilizing our
energy management system, and
• enhancing overall yield.
The energy efficiency targets have been translated into
site-specific targets. Sites will have specific plans and
targets for improving energy efficiency and related
investments. We continue our efforts in implementing 39
investment initiatives to improve energy efficiency.
Energy efficiency development
Energy efficiency is calculated as a sum of different
process steps including ferrochrome. Total energy
efficiency was 3.12 MWh/t against the ambitious target of
2.95 MWh/t. During 2023, there was a strong focus on
energy efficiency, and we are approaching our target of
improving our energy efficiency by 8% by the end of 2024.
During 2023, we implemented approximately 100 projects
delivering 215 GWh of energy savings which cover about
35.8% of our commitment of 600 GWh.
Energy used in operations*
Gigawatt hours, GWh
Electricity
Carbon monoxide gas
Natural gas
Propane
Biofuel
Diesel, light and heavy fuel oil and
other
2023
2022
2021
3,729
3,973
4,384
537
574
678
1,611
1,775
1,990
462
7
125
483
492
149
152
Energy
6,471
6,953
7,696
Energy use in GI per tonnes crude
steel
10.4
10.5
10.2
* Heating of buildings not included as heating is insignificant
compared to process energy. Biofuel use not reported before 2023.
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Our stainless steel is used in many applications that drive the
green transition. Energy is also important to us in our production,
where we want to use as much low-carbon energy as possible.
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Origin of electricity, %
100
80
60
40
20
0
2019*
2020*
2021
2022
2023
Fossiles
Renewable sources
Nuclear
* Including discontinued operations
Low-carbon energy
Increasing the share of low-carbon electricity is one of the
key elements in Outokumpu’s decarbonization strategy. In
2023, 95% of our electricity sources came from low-carbon
(renewable and nuclear) sources. Outokumpu has also
signed supply agreements to increase low-carbon energy
for wind power and has ownership shares for hydropower
as well as combined heat and power. In 2023, Outokumpu
also started to evaluate the feasibility of a low-carbon
electricity increase through emerging nuclear technology,
small modular reactors in Tornio, and founded an
EvoEnergy unit to study and explore low-carbon
investments, related to our own energy production, carbon
capture, and hydrogen economy.
As primary energy sources, we use natural gas, propane, or
other fuels, such as diesel. Fossil fuels cover about 80% of
our total fuel consumption. Outokumpu does not yet
consume any significant amounts of fuel from renewable
sources in production processes, but we utilize our own
recovered carbon monoxide process gas, which accounts
for 20% of our total use of fuel. Outokumpu continues to
plan to switch to low-carbon fuels in production to replace
natural gas, propane, and other fossil fuels.
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 from recovered process gases, and in Dahlerbrück,
Germany, we have our own hydropower plant to generate
some 10% of the electricity needed in production.
Outokumpu is also a shareholder in a wind power park in
Tornio.
We have 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.
Market-based electricity emission factor,
kg CO2eg/MWh
250
200
150
100
50
0
2018*
2019*
2020*
2021
2022
2023
* Including discontinued operations
During 2023, 13% of electricity use came with guarantees of origin
from ownership in power production or from power purchase
agreements. 79% of electricity came with purchased guarantees of
origin.
95% of our electricity
sources came from
low-carbon sources in
2023.
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Improving our energy
efficiency during 2023
As Finland’s biggest single user of electricity with ambitious climate targets, improving
energy efficiency is critical to us. In order to tackle the uncertainty and further reduce
emissions, Outokumpu has since 2022 had a target to improve energy efficiency by 8%
by the end of 2024 across its operations from the January–September 2022 baseline.
Achieving this target would correspond to energy savings equivalent to the annual
electricity usage of 15,000 households.
During 2023, there was a strong focus on energy efficiency, and we are approaching
our target of improving our energy efficiency by 8% by the end of 2024. So far, our
actions have resulted in savings of EUR 10 million and a run-rate improvement of
35.8%.
We improved our energy efficiency by optimizing energy consumption, minimizing
energy losses during material processing and continually enhancing overall yield. Since
the start of the energy efficiency program, Outokumpu has accomplished
improvements in recovering and re-utilizing excess heat at its mills and continues to
identify additional potential improvements. We continue with the efforts to implement
39 investment initiatives.
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Accelerating the circular economy
Outokumpu’s business is based on the circular economy: our stainless steel products are made of over 90% recycled
material content. Our mills can be considered as significant recycling centers.
Accelerating circularity is the key enabler of our low carbon
footprint. Increasing the recycled content of stainless steel
is the most efficient way for us to reduce the supply chain,
scope 3, emissions. By constantly improving and
pioneering solutions for the circular economy instead of
relying on virgin raw material, we also mitigate biodiversity
loss.
Outokumpu has a target to use over 90% recycled material
content in its production, and its continuous development
is critical for us. Recycled steel from both stainless and
carbon steel is our most important raw material. We
produce new products out of it, recover and recycle it, and
sell by-products from the production process to replace
natural resources. All of Outokumpu’s stainless steel mills
can be considered as significant recycling facilities – only
at Outokumpu’s Tornio mill do we recycle over one million
tons of metals per year.
Record high recycled content rate
Recycled steel from both stainless and carbon steel is our
most important raw material. The total input of recycled
materials in our steel was 94.6% in 2023 against our
target of 92.5%. This includes steel scrap as well as
metals that are recovered from our waste streams such as
dust and slag. This is our record high rate to date.
Counting only the recycled steel, our recycled content was
90.9% in 2023, consisting of pre- and post-consumer
scrap in alignment with ISO 14021.
The result was impacted by the good availability of steel
scrap. For 2024, we are raising our target of total input of
recycled materials from 92.5% to 93%.
Highest recycling material content of
95% in our history drives our emission
reduction.
Materials used1)
1,000 tonnes
Alloys
Slag formers
Acids2)
Coal or coke
Biocoke
Other input - gas, electrodes
etc.3)
Chromite ore
Slab input
2023
2022
2021
385
398
75
210
1
293
871
448
418
33
227
0
236
961
52
587
482
41
272
0
269
1,166
70
1) The main materials used in Outokumpu’s production are non-
renewable, metals or minerals.
2) The 2023 data include 57576 t of recycled acids, not reported in
previous years.
3) In 2023 slab input and refractories included in this category.
Recycling in our own processes
One of the enablers of having such a high recycled
material content is the recovery and recycling of metals
from the production processes, such as from dust and
scales. We are continuously looking for the best ways to
recycle metals. These side streams are either treated on
site or by an external facility for recycling in our melt
shops.
In 2023, we recycled a total of 2 126 197 tonnes of metals,
equivalent the weight of 291 Eiffel towers.
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Outokumpu Annual report 2023 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 escaping 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.
Waste to landfill: zero waste as a long-term target
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. As the circular
economy is part of our DNA, waste management is our
focus and we reuse, recycle, and recover as much material
as is reasonable targeting zero waste.
By far the biggest waste streams at Outokumpu are tailings
sand from the Kemi mine and the second largest is slag.
However, not all produced slags are even categorized as
waste as some slags are by-products. In 2023, a new slag
treatment facility started up in Calvert, USA. Due to the
start-up late in the year, 86,900 tonnes of slag has been
stored during 2023, waiting to be processed in that
facility. While included in the generated amount, this
volume is not yet allocated to diverted or landfilled.
While waste is recycled whenever possible in our own
production, our production still generates landfill waste.
Our target for reducing waste going to landfill (other than
slag) is a 0.5% reduction per year. In 2023, waste to
landfill per tonne of stainless steel increased to 0.65
tonnes from 0.53 tonnes in 2022. This was mainly due to
an increase in tailings sand in the mining business.
Tailings alone were 0.54 tonnes per tonne of stainless
steel. The ultimate target is to have zero waste.
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. Oily waste is treated and recovered as energy.
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.
Slag as a by-product
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 refractory
and concrete production and for agricultural purpose. 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 2023, Outokumpu sold or used
0.94 million tonnes of slag as the main by-product of
operations.
In 2023, the use rate (including use, recovery, and
recycling) of all slag was 87.8 %. The remaining share of
slag was sent to landfill. The stored slag is not included in
these calculations.
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Waste management
Tonnes
Hazardous waste
Steelmaking dust
Oily sludge
Regeneration & hydroxide sludge
Neutralization sludge
Other waste
Non-hazardous waste from stainless
steel production
Scales
Slag1)
Other waste
Generated Diverted from landfill
142,466
71,537
11,011
23,111
17,760
19,046
1,553,556
12,034
253,323
83,076
68,370
49,832
11,011
2,453
5,073
86,881
12,034
35,966
38,881
Tailing sand (surface impoundment)
1,205,124
1) The sums do not add up to total generated slag due to the stored slag.
Outokumpu Annual Report 2023
Waste diverted from disposal by recycling
Landfill
74,096
21,705
20,658
17,760
13,973
1,379,771
130,453
44,194
1,205,124
Tonnes
Hazardous waste
Preparation for reuse
Recycling
Other recovery operations
Total
Non-hazardous waste
Preparation for reuse
Recycling
Other recovery operations
Total
Waste circulation
Onsite
Offsite
Total
46
4,242
53,422
57,710
1,168
29,836
11,968
42,971
9,155
1,505
10,660
35,432
7,473
1,005
43,910
46
13,396
54,927
68,370
36,600
37,309
12,973
86,881
155,250
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Total waste development, tonnes per steel
Total waste development, tonnes per tonne of steel
0.8
0.6
0.4
0.2
0
2019*
2020*
2021
2022
2023
Landfilled
Recovered
Recycled
*including discontinued operations
We are committed to
the circular economy
with 100% recyclable
and resource-efficient
stainless steel.
Every piece of scrap matters
Outokumpu launched a new circularity initiative, Outokumpu Inner Circle®, at the World
Circular Economy in Helsinki, Finland, in 2023. The first to join were our supplier partners,
CRONIMET Europe, IMR Recycling, Kuusakoski Recycling, Oryx Stainless Group, Paul
Jost, and Stena Recycling AB. In the next phase, we are inviting our customers to join the
initiative and to bring their scrap back into a sustainable closed loop economy.
“With the Inner Circle initiative, we are bringing our customers and scrap suppliers together
to ensure an efficient, transparent, and sustainable supply chain for steel scrap. Ultimately,
our vision is to create a visible closed loop for steel – a unique example of the circular
economy in action,” explains Max Menzel, Head of Sustainability & Technical Customer
Service at Outokumpu.
In the initiative, Outokumpu’s role is to steer the initiative and create networks between
customers and verified scrap suppliers. The scrap suppliers’ role is to ensure a sustainable
supply chain by providing scrap from the network’s partners and to distribute the scrap
sustainably. Customers who join the program will bring their scrap back into the cycle after
processing the material or by the end of the product’s life cycle via the scrap suppliers.
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Biodiversity and water management
Biodiversity loss is one of the most severe risks on a global scale, due to biodiversity’s vital contribution to human well-being.
As businesses rely on natural resources, we must also protect them. By maintaining high recycled material content in our
production, we reduce our climate emissions and mitigate biodiversity loss. In addition to the impact of our own operations’,
we work to minimize the impact of the value chain on biodiversity by, for example, assessing suppliers thoroughly.
Outokumpu uses over 90% recycled material in its
production, which reduces carbon emissions and mitigates
biodiversity loss. While 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, we still need to also rely on natural
resources.
Biodiversity
Outokumpu’s chrome mine in Kemi, Finland, is an
underground mine, without need for land, besides for its
old open pit, and without the use of chemicals, and
without an impact on climate development. Besides
minimizing the use of virgin raw materials, Outokumpu
assess its raw material suppliers meticulously, in order to
ensure the sustainability of the supply chain. In 2024, we
will continue to assess our value chain impact on
biodiversity together with our suppliers.
Ferrochrome made out of our own chrome has an
estimated 67% lower carbon footprint than the global
industry average. In fact, this is our only active mine, with
a target of being the first carbon-neutral mine in the world
by 2025. In the past, Outokumpu has operated mines both
in Finland and elsewhere, and today the old mines are
monitored.
In 2023, Outokumpu conducted a study with the purpose
of assessing direct biodiversity risks and impacts, based
on a systematic and scientific approach. Based on the
study, local sites identified an action plan to be
implemented during 2024.
Besides the mitigation actions, Outokumpu is engaged in
biodiversity initiatives such as building bird hotels at the
Kemi mine, establishing insect hotels in Avesta, Sweden
and creating a wildflower meadow for bees in Dillenburg,
Germany.
While Outokumpu’s production sites are not located in
sensitive areas, 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.
Biodiversity
Site
Calvert, US
Dahlerbrück, Germany
Kemi, Finland
Tornio, Finland
Total
Area in km2
Percentage
469.00
0.06
916.00
6.00
19.2%
0.3%
37.4%
24.5%
81.4%
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While the production of stainless steel does not have a significant
effect on its surroundings, we still protect biodiversity in the areas.
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and development. The studies show that impact of the
stainless and ferrochrome production on the sea area's
water quality and the biodiversity changes are minor.
Outokumpu follows up on incidents when target values for
emissions are exceeded, even if it does not amount to a
permit breach. Target value for emissions can vary from
one production site to another depending on local
conditions and assessments.
Water withdrawal and discharges
Million m3
Surface water
Seawater
Municipal water
Groundwater
Rainwater
2023
29.2
12.8
0.4
2.8
1.3
2022
29.1
11.6
0.5
2.6
1.2
2021
29.2
13.1
0.5
2.3
1.9
Water withdrawal by source
46.5
45.1
46.9
Water discharges
Cooling water out1)
Wastewater to municipal treatment
Discharge to surface water
Discharge to sea water
Emissions to water, tonnes
40.0
20.0
0.9
12.7
6.3
32.3
13.7
0.7
35.0
14.5
0.8
11.4
12.9
6.5
6.7
Metal discharges to water, tonnes
29.4
27.9
26.9
Nitrogen in nitrates, tonnes
764 1,648 1,049
1) In 2023 increase in cooling water out mainly due to improved
reporting practice. A production site that has not reported cooling
water out before, only withdrawal, is now reporting also on cooling
water.
Recycling water
Water is used in Outokumpu’s 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 at the company’s own treatment
plants or in municipal water treatment systems before it is
discharged. The main discharges into water are metals and
nitrates. The discharge is measured and supervised by the
authorities. In 2023, nitrate emissions were reduced by
54%, mainly as a consequence of the nitrate reduction
project in Calvert. Read more about the project on the next
page. In addition to the direct nitrate emissions of 764
tonnes, there is additionally 543 tons of nitrate emissions
that are not released but go for further treatment in
municipal waste water treatment facilities.
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 the 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 are
available.
All our production sites have valid environmental permits
and impact on water has been assessed either in
Environmental Impact Assessments or in discussion with
local authorities. For example, regular water impact
assessments at our biggest operating site in Tornio and at
the mining site in Kemi are available publicly. The most
recent assessment from 2021 covers meteorological and
hydrological development, factors impacting the sea area,
physical and chemical water quality, and fishery impact
Outokumpu Annual Report 2023
In our operations, we mainly use surface water from rivers and the
sea, often including rainwater. All wastewater is treated at the
company’s own treatment plants or in municipal water treatment
systems before it is discharged.
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Outokumpu Annual report 2023 Outokumpu operates a cold rolling mill in San Luis Potosí,
Mexico, in a dry, extremely high water stress area
according to Aqueduct assessment, where groundwater is
a scarce resource for people. The groundwater withdrawal
accounts for about 0.21 million m³. Water recycling and
treatment at this site are especially ambitious to minimize
the groundwater impact, 0.16 million m³ was reused at
site. The water discharge was at about 0.09 million m³ to
municipal sewer and 0.02 million m³ was used for
irrigation. The site has self-committed on specific
groundwater use and on high water treatments.
During 2023, Outokumpu also started to define a water
stewardship program. The aim is to improve planning and
management of water resources in a way that is socially
equitable, environmentally sustainable and economically
beneficial. Engaging with local stakeholders is one of the
key elements of the program development and
implementation.
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Slag pond
October 17, 2023
Improved water management
through reduction project
In Calvert, Alabama, Outokumpu's stainless steel is produced from melting to finishing. The process
requires use of water, for example, to cool high-temperature slag. Part of the cooling water used in the
mill is pumped from the nearby river, and later discharged back, after being treated in the wastewater
treatment plant. However, even though treated, the water contains nitrates that are being generated
in the stainless steel manufacturing process, specifically in the pickling lines.
The Calvert team decided to take action on how to reduce nitrates in the water. After receiving an
official approval from the state, around 800-meter pipe was built to take the used cooling water
containing nitrates from the acid regeneration plant in the mill into a separate pond with a clay liner.
“The project was fully implemented in mid-September. Looking at the annual data from the year
2023, we can see that we reduced nitrates discharged to the river close to 35%. As a result, the
actions taken improve the water ecosystem of the river”, tells Wayne Denton, Director, Environmental
Health Safety and Security at Outokumpu’s mill in Calvert.”
The team in Calvert has implemented a water conservation project before, saving more than
5 million gallons of water annually, since 2022, and they continue to develop environmental projects
to conserve the local environment.
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Minimizing impacts on the environment
We aim to reduce our impact on the environment by proactively developing our production processes, energy and
material efficiency. Outokumpu’s growing environmental efficiency is based on long-term efforts and continuous improvement.
Total number of environmental incidents at
operational sites
28
21
14
7
0
2019*
2020*
2021
2022
2023
Includes environmental incidents rated as at least medium category
incidents and permit breaches. No severe incidents occurred in
2023.
* Including discontinued operations
Outokumpu continuously improves how it protects the
environment, from reducing carbon emissions to mitigating
nature loss. Stainless steel production impacts the
environment also through dust emissions, ferrochrome
production processes discharging into the air, water used
and discharged from production, energy use, and waste
generated.
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 2023, there were three environmental permit breaches
at operational sites, none of which related to water
emissions, and one at an old mining site. In total, there
were 12 environmental incidents, 11 in operations and one
at old mining sites. Outokumpu reported each incident to
the 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 2023.
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.
During the last years, from 2019 to 2023, we have been able to
reduce our environmental incidents significantly, from 24 to 12 per
year.
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Outokumpu Annual report 2023 The Kemi mine discharges 2,522,000 m³ of water from the
area, including rainwater. 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.
The land use of mining is limited to the existing mining
area as the mining is underground. Tailing sand is
deposited in the tailing ponds of the mine area which will
be landscaped as a forest when full.
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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, such as nickel, are recovered from dust, sludges,
and scales in 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 182 tonnes in 2023. A large share of the
particles, 104 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.
Emissions to air
Tonnes
Dust
Nitrogen oxides
Sulfur oxides
2023
182
2022
223
2021
216
1,535
1,568
1,887
253
220
241
Grams per tonne crude steel
Particle emissions from the melt
shops
14.0
15.3
12.2
Steel melt shop particle emissions, grams/t
25.00
20.00
15.00
10.00
5.00
0.00
2019*
2020*
2021
2022
2023
*including discontinued operations
Limited impacts of the mining operations
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 the Kemi mine is
committed to the Finnish sustainability standard for
mining. During 2023, Outokumpu also achieved a third of
the carbon neutrality target for the Kemi mine by switching
to renewable fuels. Outokumpu will continue to work on
switching to low-carbon energy, finding alternative
solutions to replace natural gas and reducing value chain
emissions as close to zero as possible.
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 and chemicals are not used in the
process, which is based on gravity separation. The Kemi
mine is almost self-sufficient when it comes to 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
concentrator plant on the surface level.
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Sustainable
supply chain
Outokumpu is a part of the global supply
chain by producing stainless steel for
leading brands in demanding industries
around the globe.
Together with our suppliers, we
accelerate the green transition and
eliminate any environmental or social
harm, across the stainless steel value
chain.
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Fostering a sustainable supply chain
Our vision is to be the leader in sustainable procurement by embedding circularity and responsible sourcing of materials, products,
and services in the core of all procurement decisions without compromising on quality or financial efficiency.
Sustainable supply chain management is one of the
priorities in our sustainability work at Outokumpu. We
support our suppliers towards more sustainable operations
and eliminate any environmental or social harm, across the
stainless-steel value chain, to foster human rights and
accelerate the green transition.
Under the heading of sustainable supply chain
management we combine several activities, all with one
goal: creating a transparent, monitored and responsible
supply chain with partners that we know and that fulfil our
high standards – from the trader all the way back to the
mine where our raw material is coming from.
In 2023, we focused on improving the supply chain
transparency and solidifying processes to evaluate supplier
sustainability performance. As a result, our supply chain
mapping and data gathering now covers a broader scope,
even beyond direct suppliers. In addition, we developed the
supply chain risk management processes by utilizing our
global risk and control management process and system,
and by expanding the country based risk rating to cover all
categories.
Supply chain management and policies
To produce and offer sustainable stainless steel for
customers, we provide a traceable supply chain and have
stringent requirements on our suppliers in place.
Outokumpu’s supply chain activities are guided by the
United Nations Guiding Principles on Business and Human
Rights (UNGP), and the principles are integrated into our
our Supplier Code of Conduct, Supplier Requirements, and
Human Rights Policy. We are committed to the Modern
Slavery Act and take into account the OECD Due Diligence
Guidance for Responsible Supply Chains. Implementing the
ResponsibleSteel standards into our operations and supply
chain is an ongoing commitment.
All our suppliers must commit and adhere to the following
requirements:
• Suppliers need to act in accordance with all applicable
laws and regulations.
• All suppliers and subcontractors are expected to comply
with our Supplier Code of Conduct or have their own
similar Code of Conduct. Outokumpu’s Supplier Code of
Conduct covers the following key ethical principles: safe
and healthy workplace, sustainable future, human rights
and dignity, and good corporate citizenship.
• Outokumpu’s Supplier Requirements set the minimum
criteria regarding sustainability and ethical standards,
safety, environmental considerations, quality
management, supply and production control, product
liability, financial statement, intellectual property rights,
confidentiality and security, audits, and business
contacts.
• Suppliers need to maintain a quality management
system.
• Suppliers need to clearly define, document and share
their processes including material traceability.
• Outokumpu’s general terms and conditions.
Unified procurement for sustainability excellence
Building upon our commitment to sustainability, in 2023
we have integrated the raw material and general
procurement functions into one procurement organization.
Raw materials are all ingredients that are in the steel we
produce. General procurement covers the purchasing of
We want to provide a traceable supply chain and therefore we look
beyond our direct suppliers.
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Outokumpu Annual report 2023 Based on these indicators, suppliers are selected for on-
site reviews. Those reviews vary from site visit, to social
audit to human rights impact assessment, depending on
the identified risk.
Onboarding
A potential supplier is 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 and utilizes country-level
sustainability and compliance risks indices.
The onboarding process ensures the supplier commits to
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. Additional
financial screening is carried out for selected suppliers.
Monitoring
Outokumpu monitors its suppliers through self-
assessments, screenings, and audits. The majority of our
suppliers also go through a monthly compliance screening
for sanctions.
The EcoVadis platform is used for self-assessments, which
focus on the environment, labor and human rights, ethics,
and sustainable procurement. Already 45% of raw material
suppliers (70% of raw material spend) participate in
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goods and services needed for our production activities
and everything else we do at Outokumpu.
The unified structure not only optimizes efficiency but
positions us to navigate the dynamic global procurement
landscape with resilience and foresight. The two areas
remain, but the processes will be harmonized.
We want to provide a traceable supply chain and therefore
we look beyond our direct supplies. We have continued to
extend the documentation of our suppliers beyond tier 1,
especially in the raw material area.
Outokumpu has also continued the collection of supplier-
specific CO2 emission values for selected materials for the
reporting of scope 3 CO2 emissions and an improved
forecasting tool. New materials have been identified and
were included in the collection process in 2023.
We are actively preparing for the European Commission
Sustainability Reporting Directive and the Carbon Border
Adjustment Mechanism by assessing supply chain data
and devising actions to meet these forthcoming
expectations.
Supply chain due diligence
Continuous development of supply chain transparency and
monitoring is one of the priorities in our sustainability
work. Outokumpu applies a risk-based approach across all
supplier management stages: from the onboarding of a
new supplier to regular evaluations and assessments
during the partnership with the supplier.
Country-level risk assessment is one key tool for supplier
and supply chain risk mapping. The assessment is based
on the supplier’s operating countries and country risk
indices for trade sanctions, conflicts, state of the law,
human rights, and the environment.
Additionally, suppliers are assessed against, for example,
available certifications, previous audit results, self-
assessments such as EcoVadis, and overall performance
scorecard results.
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Outokumpu Annual report 2023 In 2023 we completed one social audit and two human
rights impact assessments. Additionally, we conducted
nine EHSQ audits.
More information about Outokumpu’s site visits suppliers
can be found on our website.
Supply chain grievances
The SpeakUp channel is an externally operated channel for
Outokumpu employees and external stakeholders to report
misconduct in our suppliers’ operations (as well as in
Outokumpu’s own operations). This can be done
confidentially and anonymously, if permitted by local laws
and regulations. The supplier sustainability team can also
be contacted via e-mail under
sustainable.sourcing@outokumpu.com
Allegations against our supplier’s sustainability (including
human rights and workers’ rights) are reported and
handled following our supplier-ESG incident management
process.
Conflict minerals and cobalt
During 2023, Outokumpu needed minor amounts of
tungsten and cobalt for specific products, Forta SDX 100
(EN 1.4501) and Ultra 254 SMO (EN 1.4547) respectively.
We follow the OECD Due Diligence Guidance for
Responsible Supply Chains of Minerals from Conflict-
Affected and High-Risk Areas and have special due
diligence procedures in place for these materials. In 2023,
the tungsten demand was fulfilled completely from
recycled sources and cobalt was sourced from low-risk
countries only.
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EcoVadis and the invitation of general procurement
suppliers has been initiated.
In general procurement, we completed a three-year project
on extended self-assessments for key suppliers.
Outokumpu’s self-assessment questionnaire includes
sections on ethics and sustainability, health and safety,
environmental management, quality, production and supply
control, supply chain and supplier management, and
company management. The total number of 141 suppliers
was assessed and data completeness was increased from
71% to 96%.
In addition, the overall performance of key suppliers is
regularly evaluated and includes sustainability criteria.
Only suppliers with a certain level of performance are
eligible to become strategic partners of Outokumpu.
Visits, on-site audits, and impact assessments
Suppliers are selected for visits, on-site audits and impact
assessments based on their sustainability-risk level.
Social audits are carried out on medium-risk suppliers that
have potential human rights impacts arising from the
supplier’s own operations or its value chain. Human rights
impact assessments (HRIAs) 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 expert 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.
Sustainability aspects (health and safety, environmental,
working conditions) are also included in regular EHSQ
audits. These audits are carried out both by Outokumpu
and a third party.
Based on the visits and audits, identified non-conformities
and improvement areas are discussed with the suppliers.
Needed actions are agreed and followed up.
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Outokumpu Annual report 2023 3 CO2 emissions. The mapping of suppliers beyond tier 1
will be broadened to selected new categories.
We will release and implement the renewed Supplier Code
of Conduct in all supplier categories. The long-term goal is
to have 100% of targeted suppliers commit to
Outokumpu’s Supplier Code of Conduct.
We anticipate the continuous evolution of regulations
related to supply chain transparency, ethical sourcing, and
environmental impact. Our plan involves staying informed
of these changes, ensuring compliance with existing laws,
and proactively adapting our practices to align with
emerging legislation, such as the Corporate Sustainability
Reporting Directive (CSRD) and Carbon Border Adjustment
Mechanism (CBAM).
Our long-term goal is
to have 100% of
targeted suppliers
commit to
Outokumpu’s Supplier
Code of Conduct.
Capacity building
During 2023, we have continued capacity building in the
areas of human rights, and the supplier sustainability team
has attended advanced training courses. Trainings in
various topical subjects have been given to category
managers and buyers, such as on sanctions, risk
assessment, supplier performance evaluation, and the
audit process.
Supplier management key figures 2023
Pieces/%
2023
Total count of suppliers (globally), pc
> 7,400
Local suppliers share of total spend, %
Countries where direct suppliers operate, pc
Onboarded suppliers, pc
Sustainability assessment score, pc
Sustainability assessment score, average
Spend of sustainability assessed suppliers, %
Desktop reviews, pc
Audits total, pc
Trainings, pc
Participation rate, %
64
58
230
139
59
43
141
13
4
90
Plans for 2024
We will continue with the development of our supply chain
sustainability management. Our aim is to unify supplier
management processes and utilize best practices on
supplier onboarding, risk management and performance
evaluation.
The EcoVadis platform will be introduced to all supplier
categories and all procurement personnel will be trained in
the EcoVadis concept, the new onboarding process, and
other new ways of working to ensure a harmonized
approach in supplier management.
We will continue with the work on supply chain
responsibility, executing regular desktop reviews and
sustainability audits, and finding solutions to reduce scope
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Ensuring a sustainable supply chain:
a chrome supplier in Zimbabwe
Why did you go to Zimbabwe?
Zimbabwe is a country rich in chrome and other raw
materials, so it is well known in the industry as supplier of
chrome ore and ferrochrome and we have sourced raw
materials from there. Zimbabwe is also a country facing
political instability, extreme poverty, high inflation, and
corruption. Therefore, we continued with a deep dive into
the raw material supply chain in Zimbabwe and based on
our own desktop review of the country and the maturity
level of the producers, we concluded that the sustainability
risk level was very high.
In accordance with our due diligence rules, we initiated a
human rights impact assessment (HRIA) of our suppliers in
Zimbabwe. The target was to assess the maturity level of
their human rights management processes, to identify the
potential human rights impacts of their operations, and to
better understand the context of the industry and country.
How was the assessment conducted?
When we identified that we need to conduct an HRIA of the
supplier, we engaged our external partner to support us in
the preparation and conduct of the assessment. Together
with them we started the background research by
collecting all available documents from the supplier but
also by engaging the supplier in online interviews in order
to get a deeper understanding of their maturity level.
The specific topics to investigate more were: workers’
working conditions and wages, environmental impacts such
as pollution, health & safety, and the chrome supply chain
(from the mine to the smelter).
As a next step, we conducted a field trip to Zimbabwe and
visited the site, to verify the current condition of actives
mentioned before, such as the wages and the working
conditions.The verification can be achieved by, for
example. through interviews and having in-depth
discussions. In this case, we had various discussions with
communities, NGOs, former workers, employees, the
management of the operation, the workers council,
subcontractors, and so on. Then we analyzed and
compared the discussions to the data gathered in order to
have a good and comprehensive understanding of the
situation.
Based on the discussions and observations, we prepared
the assessment report and made recommendations to the
suppliers to improve their human rights due diligence
practices.
What happens after the assessment?
The assessment always requires a lot of work from our
side, as well as from the suppliers side. We have aligned
the next steps with the suppliers and will stay in close
contact with them in order to follow-up the status of the
improvement actions. The aim of the assessment is always
the same, to ensure and foster human rights, together with
our partners.
Michael Papoutsis, Supplier Sustainability Manager
The Outokumpu supplier sustainability team monitors
suppliers continuously to identify and assess risks related
to human rights in order to help safeguard them and
improve sustainability of our supply chain.
Outokumpu’s Supplier Sustainability Manager Michael
Papoutsis joined the team in April 2022 and his
designated responsibility areas are our primary metal
suppliers (e.g. nickel, chrome, molybdenum, cobalt).
As part of his job, he assesses the sustainability risk
associated with suppliers of those materials. We have
defined that suppliers located in a high-risk country will be
taken into consideration for a human rights impact
assessment conducted by a third party, suppliers located
in a medium-risk country will be taken into consideration
for a social audit and in a low-risk country for a visit with a
focus on sustainability.
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People and
society
Respecting, protecting and promoting
human rights – from our employees,
workers in the value chain, customers to
local communities, and other
stakeholders – is at the core of
Outokumpu.
As an employer, we provide jobs for over
8,000 people and as a corporate citizen,
contribute to the economic and social
well-being of local communities where we
operate and societies around the world.
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Human rights as the foundation of our business
As a global company we have direct and indirect impacts on local, national and global communities.
We are committed to respecting, protecting and promoting the human rights of everyone who may be affected
by our activities or through our business relationships.
Outokumpu is committed to conducting its business with
high integrity and in a safe, sustainable and ethical
manner. Human rights and dignity form one of the four
pillars of Outokumpu’s Ethical Principles. We respect and
promote internationally recognized human rights as set out
in the key declarations and covenants such as the
International Bill of Human Rights, the ILO Declaration on
Fundamental Principles and Rights at Work, the Convention
on the Rights of the Child, and the Declaration on the
Rights of Indigenous Peoples.
We are signatories of the United Nations Global Compact
and are committed to the United Nations Guiding
Principles on Business and Human Rights (UNGP), and the
OECD Guidelines for Multinational Enterprises. We are also
members of ResponsibleSteel, which promotes human
rights as part of steel industry sustainability through the
ResponsibleSteel certification.
Human rights are addressed in several key documents that
steer our ways of working, such as Outokumpu's Human
Rights Policy, Code of Conduct and Corporate
Responsibility Policy. Human rights are also covered in the
more detailed documents with the focus on our supply
chain sustainability. These include the Supplier Code of
Conduct, our Supplier Requirements for Raw Materials and
our Supplier Requirements for General Procurement. The
aforementioned policies and guidelines are publicly
available at our website.
Outokumpu is committed to respecting and protecting the
human rights of everyone who may be affected by our
activities or through our business relationships. We expect
both our own employees and also our business partners,
including suppliers and sub-suppliers, to respect and not
infringe upon human rights. As a company with global
operations and complex supply chains, the range of
possible direct and indirect human rights impacts related
to our own employees and business partners is wide.
Topics such as health and safety, working conditions,
equality, non-discrimination, freedom of association, zero
tolerance for forced labor and child labor, indigenous
peoples’ rights and the right to a safe, clean, healthy and
sustainable environment are material to our operations
and our value chain.
The CEO has the most senior level of oversight and
accountability for human rights in Outokumpu.
Responsibilities cascade down via the Executive Vice
President for Sustainability, People and Communications,
who represents sustainability in Outokumpu’s Leadership
Team, to the Vice President for Sustainability, who is
responsible for the overall sustainability agenda at
Outokumpu, and further to the Head of Human Rights at
the Group sustainability team. As many of the identified
salient human rights risks and impacts are connected to
Outokumpu’s sourcing activities, the related
responsibilities are appointed to the Chief Procurement
Officer and further to the Head of Supplier Sustainability at
Group Procurement. The Group sustainability and
procurement teams work actively together to develop
Outokumpu’s human rights work in a balanced manner.
We have a strong commitment to respect human rights.
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Outokumpu Annual report 2023 Moving forward in 2023
Our dedicated human rights journey began in 2021 when
we committed to the United Nations Guiding Principles on
Business and Human Rights (UNGP). Consequently, 2022
was a year of implementing the basic elements of the
UNGP framework with the focus on establishing a human
rights policy, identifying the most salient human risks and
building internal capacity on the topic.
A specific focus has been directed at human rights risks
and impacts related to our raw material supply chains with
a dedicated supplier sustainability team. This is due to the
characteristics of the various raw materials we source that
are more prone to include human rights issues. Our
activities on human rights and other supplier sustainability
issues are presented in the section Sustainable Supply
Chain on page 59.
During 2023, more emphasis was put on strengthening the
human rights work across the organization at Outokumpu.
A global Head of Human Rights, Anna Vainikainen, was
appointed to the Group sustainability team in July 2023 to
lead this task. With human rights and our impacts on
people as the foundation, this role interlinks the various
dimensions of Outokumpu’s social sustainability and
brings the related functions closer together.
Moreover, having a comprehensive internal view on the
social sustainability management framework with a basis
on human rights supports how we respond to the Corporate
Sustainability Reporting Directive’s (CSRD) requirements
on social sustainability. We had close follow-up also on
other important regulatory developments on human rights,
such as the Corporate Sustainability Due Diligence
Directive (SC3D) and prepared for the requirements of the
German Supply Chain Due Diligence Act (LkSG) applicable
to us as of January 2024.
The next steps on our UNGP implementation journey were
strengthened by capacity building as representatives of the
Group sustainability and supplier sustainability teams
participated in the UN Global Compact Business and
Human Rights Accelerator training organized by the UNGC
Finland Network.
Outokumpu Annual Report 2023
In addition, the ResponsibleSteel certification process in
2023 provided an excellent external benchmark to
evaluate our current progress on human rights issues. The
ResponsibleSteel standard includes a specific set of
criteria for human rights. Human rights are also included in
the standard’s other criteria concerning responsible
sourcing, labor rights, engagement with local communities
and other stakeholders, among others. The scope of
certification covers our manufacturing sites in Europe but
also the Group functions as well as the related policies and
procedures were also evaluated. The audit findings
provided us with valuable feedback on developing our
human rights work further during 2024. The
ResponsibleSteel certification project is explained on
page 37.
Engaging stakeholders on human rights
Stakeholder engagement is a prerequisite for the
successful management of human rights issues. We
maintain a dialogue with our stakeholders to understand
better their expectations. Stakeholder views were included
also in the double-materiality analysis that was conducted
in 2023 according to the Corporate Sustainability
Reporting Directive (CSRD). The ResponsibleSteel
certification also focused on stakeholder engagement. The
audit process combined with a case study (Master’s
thesis) on this topic provided us with guidance on how to
develop our interaction with stakeholders even further.
Raising concerns
At Outokumpu, we encourage everyone inside and outside
the company to report to us potential and actual human
rights infringements. This also includes situations when we
are not directly causing or contributing to them but are
linked to the incidents through our operations, products, or
services.
Our internal and external stakeholders can raise their
possible concerns on human rights issues with Outokumpu
in various ways, including through the SpeakUp channel.
SpeakUp is an externally operated channel that enables
Outokumpu employees and external stakeholders to report
breaches related to human rights or other misconduct.
SpeakUp can be used confidentially and anonymously
when permitted by local laws and regulations. SpeakUp is
available on our website in several languages.
The Vice President, Sustainability, the Head of Human
Rights and the Head of Supplier Sustainability at
Outokumpu can also be contacted directly via e-mail. Their
contact details are available on Outokumpu's webpage.
Looking towards 2024
The human rights journey at Outokumpu will continue in
2024 with dedicated actions and ambitions. We will
update the human rights risk and impacts analysis with a
more in-depth look at our Group functions and
manufacturing operations globally. The results will support
us in steering the focus and identifying possible gaps in
our current approach. We will also continue to integrate
human rights better into our risk management systems and
other corporate procedures.
In terms of the UNGP implementation, measurable targets
with KPIs for our human rights work, additional grievance
mechanisms and providing remedy are among the key
topics for further development. Furthermore, we will work
on the ResponsibleSteel audit findings on human rights
and engagement with local communities and other key
stakeholders.
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Perpetual commitment to human rights work
to expand, and here also the Corporate Sustainability
Reporting Directive had an impact. Consequently, we
wanted to ensure that all aspects of sustainability are
covered in a balanced manner.
Human rights are intertwined with social responsibility –
broadly speaking social sustainability means our impacts
on people, both those who directly or indirectly work for
Outokumpu or are affected by us otherwise. In other words,
everything that is about social responsibility concerns
people, and everything that concerns people is linked to
human rights. I am very excited about my position,
because when we talk about the possibilities of the green
and just transition and the need to transform businesses
to be more sustainable, the people aspect also needs to
be kept onboard.
Why are human rights important?
Social sustainability is a prerequisite for sustainable
business: companies consist of people and their skills,
companies are an integral part of their local communities
with various impacts on economic and social welfare, and
their operations may have an impact on the local
environment or on the value chain. The way we impact
people – our own employees, our contractors and sub-
contractors, stakeholders in our supply chain as well as
communities – can be very different from one to another.
There are always human rights questions linked to our
business – they may just vary depending on the location of
our operations and the related legislative and societal
framework.
Human rights provide an alternative way of looking at our
direct and indirect operations and the related impacts on
people. It is fair to say that as a company, we have already
taken into account a long list of human rights questions –
but without necessarily understanding this connection. We
have a lot of things already well established, like ensuring
a safe place to work, but we have not really considered
these human rights questions before. Diversity, equity, and
inclusion are also something that have already been
important for us so that everybody can be themselves at
work, but it is a different question whether it has been
understood as a human rights question. Ethics and
compliance have also been our focus area for years – for
example there are different ways to speak up and these
have been highlighted in the organization over the years.
We have also put a lot of focus on human rights questions
in our supply chains. But there is always room for
improvement.
What happens next?
Our work on human rights continues as this is not a one-off
project but an ongoing process. The minimum level of our
work is determined by the legislation on human rights,
which will increase and become more demanding. Next
year, the German Supply Chain Due Diligence Act applies
to us with related reporting requirements. We are also
preparing for the Corporate Sustainability Due Diligence
Directive (CS3D).
We will also continue implementing the UN Guiding
Principles by updating our human rights risk and impact
assessment to ensure we focus our efforts correctly. Based
on the assessment findings, we will review our policies and
processes. Special focus will be put on capacity building,
providing remedy, and stakeholder engagement.
We have already done a lot on human rights in our raw
material supply chains and next we will pay more attention
to general procurement in close cooperation with our
supplier sustainability team. As our leverage in the supply
chains may be limited, it is also important to think about
how we could create positive impact through partnerships.
In all, we want to focus on those things through which we
can have the most impact on people.
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Anna Vainikainen joined Outokumpu in 2022 to lead the
ResponsibleSteel certification project for the European
manufacturing sites in Finland, Sweden and Germany and
then took lead of human rights at Outokumpu.
How did certification turn into human rights?
ResponsibleSteel covers all relevant sustainability aspects
for the steel industry, and a huge input was required to
implement the certification process by a wide range of
internal substance matter experts on environment, health
and safety, human resources, HR, risk management,
stakeholder engagement, communications and legal,
among others.
For us, the ResponsibleSteel project has provided a
systematic way of screening and evaluating our current
sustainability practices and identifying key elements to
build our sustainability agenda further. We got
confirmation that while we are ahead of the industry in
many areas, we also gained valuable insights on how to
further develop our sustainability from a holistic
perspective. The process also supported us in taking
further steps in environmental topics beyond
decarbonization, especially in biodiversity and water
stewardship. And, as so often happens, the project started
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Always working safely
Outokumpu is working towards its long-term vision of zero accidents. Everyone at Outokumpu
has the right to a safe and healthy working environment. We believe that a continuously strong
safety performance correlates with improved quality and operational efficiency.
Outokumpu aims to be the industry leader in safety with
the vision of zero accidents and continuously reduces the
accident record year on year to achieve this. Since 2016,
we were able reduce the total recordable incident
frequency rates (TRIFR) -–meaning work-related incidents –
by 83%, from 8.7 to 1.5.
From 2022 to 2023, recordable incidents fell by 17%. This
has been achieved with strong safety management,
strengthened safety culture, and the usage of state-of-the-
art technology such as robots, among others.
One of the major highlights in 2023 was Outokumpu’s
service center in Poland, which in December reached 10
years with zero accidents. Also, the Ferrochrome business
area – the Kemi mine and the ferrochrome operations in
Tornio – performed outstandingly in terms of safety and did
not have a single recordable incident during 2023. Further,
by January 1, 2024, the Kemi mine has gone 509 days
and the ferrochrome operations in Tornio 469 days without
any recordable incidents.
Managing safety proactively every day
Our proactive safety management system, which includes
hazard recognitions, Safety Behavior Observations (SBOs)
and preventive safety actions (such as Group works),
supports us in working toward our safety targets. Those
engage our employees and 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. Outokumpu’s 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.
Working safer year to year:
from 2016 to 2023, work-related
accidents fell by 83%.
Safety strategy in 2023
We achieved remarkable improvements in our safety
performance over the past years, and only in 2023 were
able to reach a reduction of 17% in recordable incidents
compared to 2022. Nevertheless, we have still incidents,
including near misses, which we strongly believe are
avoidable to reach our vision of zero incidents. The root
causes are mainly errors in our daily behavior and
complacency.
In 2023 we executed the strategy developed in 2022 with
a long-term target of zero accidents. Our safety strategy
and ambition consist mainly of three pillars:
• strengthening our safety culture,
• developing our safety management, and
• utilizing the latest safety technologies.
Our four safety principals guide our work – safety before volumes,
safety starts with me, no shortcuts and no repeats.
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To support the development of our safety culture, in 2023
we started to focus more intensely on a purpose-driven
approach. We researched via our global safety network,
which has representatives from each country, what is
driving our employees to work safely, and by utilizing that
knowledge, developed a customized training program “Act
safely with pride and care”, which takes into account also
cultural differences. In 2023 we piloted the program in
Sweden. The aim is to continue to roll-out the program at
different sites, based on the pilot’s findings.
In safety management development, we continued with the
well established cross-learning program and launched
phase II, which puts the emphasis on collaboration and
networking. As a new focus, the program focuses on global
group-wide standards related to crane handling, risk
management, permitting processes and finally LOTOTO
(lock out, tag out, try out) procedures. In addition,
Outokumpu initiated the roll out of a harmonized health
and safety reporting tool, aimed at enhancing efficiency
through digitalization.
As one of the first companies in the steel industry,
Outokumpu took pioneering steps in utilizing the state-of-
the-art technology, AI, by deploying three AI driven robots
in Sweden, Germany, and in 2024 in Finland, to automate
some parts of the inspection work in order to improve the
safety of employees. Find out more on the next page.
To conclude, the focus areas of the safety strategy
improved safety in 2023, namely focus on human factors
and culture, the use of state-of-the-art technology, and so
on, to ensure the success of our journey towards zero
incidents. In 2024, we will continue executing the strategy
and, for example, in the cross-learning program the focus
in phase III will be on process safety management.
Safety performance
Outokumpu uses total recordable injuries frequency rate
(TRIFR) per million working hours of employees and
contractors as the main safety performance indicator.
Group TRIFR decreased from the previous year and was 1.5
against the target of <1.9, from 1.8 in 2022. Group LTIFR
Outokumpu Annual Report 2023
(lost time injuries per million working hours) was 0.85
against the target of <1.0 from 0.8 in 2022.
The rate of all work-related accidents (total recordable
injuries and first-aid treated injuries per million working
hours) was 9.4 from (10.1).
The proactive safety action frequency was 12,074
(11,029). This includes reported hazard observations,
SBOs, and other preventive safety actions per million
working hours.
Work-related injuries by region, accident and employee type
BA Europe
BA Americas
Ba Fe Cr
Employees
Contractors
195677
TRIFR 1)
LTIFR 2)
Total recordable injuries 3)
Fatalities
Lost time injuries
Restricted work injuries
Group
1.50
0.85
30
0
17
4
1.80
1.30
22
0
15
2
1.20
0.20
7
0
1
2
0.00
0.00
0
0
0
0
1.73
1.07
26
0
16
2
0.80
0.20
4
0
1
2
1
Medically treated injuries
5
1) Total recordable injury frequency includes fatalities, lost time injuries, restricted work injuries and medically treated injuries, per million
working hours.
9
0
4
8
2) Lost time injuries including fatalities and lost time injuries, per million working hours.
3) Include fatalities, lost time injuries, restricted work injuries and medically treated injuries.
Work-related injuries per 1 million working hours
20
15
10
5
0
2019*
2020*
2021
2022**
2023
Lost-time injuries
Medically treated injuries
Restricted work injuries
First-aid-treated injuries
* Including discontinued operations.
** 2022 restated.
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The main direct causes of work-related injuries were the
use of forbidden or inappropriate work methods, temporary
carelessness and defects in machines and the 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 available at our sites. In
addition, occupational hygiene measurements are carried
out at Outokumpu’s sites to ensure a healthy working
environment.
The number of occupational diseases diagnosed in the
Group was 0 (0).
Total incident frequency
rate decreased
17%
from 2022 to 2023, from 1.8 to
1.5 per million working hours.
Meet Rosie!
Outokumpu pioneers the deployment of ANYbotics robots in the metal sector. The first
ANYmal robot arrived in June at our site in Krefeld, Germany, and our Krefeld
employees named the robot Rosie. Later in the year, the pilot was expanded to Tornio
and Avesta as well, with a total of three ANYmal robots to be deployed. It is estimated
that by transferring inspection tasks to the robot, employees’ exposure time to
hazardous substances can be reduced by more than 80% and possibly hazardous
repairs in maintenance could be reduced by 20%.
“The robots will have many tasks, such as reducing the time employees spend
inspecting acid areas and reducing the risk of fires due to overheating of bearings and
motors. In addition, the robots can shorten malfunction times since defects can be
detected at an early stage through temperature and sound profile measurements
before a failure occurs. However, they will not replace human workforce but instead
automate some parts of the inspection work. The introduction of the new robots is a
further step towards an even safer environment and increased efficiency of routine
processes”, says Thorsten Piniek, VP, Head of Health and Safety.
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Teamwork towards our targets
Thanks to continuously listening to employees and regular pulse surveys, we know for a fact
that our people are engaged in their work. Together as a team, we are navigating towards our targets.
Despite the challenging year in Europe, we made excellent
progress in the strategy execution towards our targets,
thanks to the dedication of Outokumpu employees.
Supporting the objective of strengthening the core of our
business, Outokumpu divested the majority of the Long
Products business area at the beginning of 2023. Our
melting, rod, and bar operations in Sheffield, UK, bar
operations in Richburg, US, and wire rod mill in Fagersta,
Sweden, were sold to Marcegaglia. We were pleased that
the new owner is a responsible and committed owner with
regard to developing the long products business further.
In August, the remaining Long Products operations in
Degerfors and Storfors, Sweden, were divested to Cogne
Acciai Speciali. Our priority was to find a new responsible
owner for these operations as well and luckily we were able
to do that. We are extremely grateful to all the personnel
of all the divested units for our joint journey as
Outokumpu.
Our team members in the Ferrochrome business area
reached a great milestone in October when we held the
inauguration of the Kemi mine expansion and took the first
steps towards our target of the Kemi mine becoming the
first carbon-neutral mine by 2025.
Outokumpu is a global leader in advanced materials and
we want to further strengthen this position. As a result, we
announced in November the intended restructuring
measures of our business area Europe operations in
Germany. Centralizing the expertise, product portfolio and
operations will allow us to reposition the Dillenburg site as
the core value creator within our Advanced Materials
business line alongside our mills in Sweden.
Making plans that have a negative impact on employees is
never easy, even when they are necessary. The
restructuring measures in Germany are expected to be
realized during 2024 and impacting close to 200 jobs.
During the negotiations, we hope to reach a mutual
understanding with our employees. We are actively
supporting the affected employees to find new
opportunities inside or outside the group and working
together with the employee representatives to agree on a
social plan.
For business area Americas, the market environment
remained more favorable in 2023, and we continued to
generate solid results. This demonstrates the benefit of
having a geopolitically diversified business. Our Americas
team has been working hard on the strategic plans,
including the ongoing feasibility study announced in August
to investigate options to expand our operations in Calvert,
Alabama.
Global actions to reach our ambitious diversity,
equity and inclusion targets
At Outokumpu, we are committed to fostering a working
culture where everyone feels welcome and safe regardless
of their backgrounds. We believe that a healthy diversity of
employees from different backgrounds and cultures is
essential for us to continue being successful in the future.
Our ambition for our personnel and leadership is to
represent the diverse societies we operate in. To achieve
this goal, Outokumpu has established targets and a
comprehensive roadmap to strengthen diversity, equity,
and inclusion (DE&I) throughout the company.
Stainless steel is a volatile industry, and to be able to continue
creating value, we need to focus on areas under our control. We
are on a journey to improve our competitiveness in Europe and
have taken prompt actions.
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Outokumpu’s DE&I targets towards 2025, defined in 2022
and approved by the Board of Directors, include:
Diversity targets: Increase diversity in leadership
• Add 100 diverse managers by the end of 2025
• Minimum of 30% of diverse leaders in all international
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)
Inclusion targets: Strengthen a 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
The results of our annual company-wide pulse survey on
inclusion and fairness, conducted in May–June 2023,
confirm that we are steadily progressing towards our goals.
We already see improvement in belonging, inclusion and
respectful treatment. Especially fair treatment was rated
significantly better in the 2023 pulse survey than in the
previous year.
Additionally, the overall survey results show that we have
received a 60% agreement score in all areas of inclusion
and that men and women perceive their working
environment, and how they are treated, in the same way.
The following sections show how diversity, equity and
inclusion are embedded in our human resources actions
and development, and how we are working towards our
targets.
Team dialogues contribute to
a welcoming working culture
The core of the journey towards our diversity, equity and inclusion targets is to strengthen the
inclusive working culture. Team dialogue is a concept created based on Outokumpu guidelines and
frameworks – Code of Conduct, ways of working and diversity, equity and inclusion initiatives – on
how to behave.
Team dialogue training is designed primarily for operators, technicians and their managers. The
training consists of small group discussions about a welcoming and safe working environment:
what is it, why is it important and how everyone can contribute to creating one.
Team dialogue sessions were launched gradually during 2023. The concept has been piloted at
sites in Tornio, Finland, Krefeld and Dillenburg, Germany and Calvert, US and the feedback has
been positive:
“This is both educational and fun; I think all teams will benefit from this.”
“Important topic and very engaging, thought-provoking exercises.”
“I believe this will be a good tool to show employees that managers do care and want to help out in
creating a better working environment.”
In 2023, already 27% of team members in operations took part in a team dialogue session.
Sessions are mandatory for all employees in operations to be completed by July 2024.
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Emphasizing diversity in our
short-term incentive plans
We made some modifications to our short-term incentive
(STI) plan for 2023 compared to the previous year. Safety
target rules were clarified and the adjusted EBITDA targets
were changed to adjusted EBIT targets. We also went back
to yearly financial targets.
We also introduced a new target: diversity. We at
Outokumpu believe that diversity, equity, and inclusion are
essential for us to continue being successful in the future.
Diverse teams bring in new ideas that promote innovation
and deeper customer and market understanding.
The diversity target was introduced for all STI plan
participants at senior management level, including
Outokumpu Leadership Team members.
The target was to add 40 diverse leaders to Outokumpu by
the end of 2023 compared to the baseline of July 2022, in
line with the overall ambition of increasing the number of
diverse leaders by 100 by the end of 2025. At the end of
2023, an increase of 57 diverse leaders was already
achieved.
A diverse leader is defined as a manager (i.e. an employee
with a minimum of one direct report) who is female and/or
belongs to an ethnic minority and/or whose nationality
differs from their working country.
In 2024, the current short-term incentive plan will become
a senior management plan, called Group STI, applicable
only for senior management. The plan will, to a large
extent, continue to be driven by the Group results.
Additionally, a new incentive plan called business STI will
be introduced. Participants will have a closer reach to the
KPIs included in the plan, with the introduction of function
and business targets instead of adjusted EBIT on a group
level. The business STI will also replace the sales incentive
plan (SIP).
Focusing on employee
engagement at production sites
In a globally operating company like Outokumpu, it is not always easy to reach out to the team
members and ensure awareness on important local and global topics. Therefore, a special emphasis
was given to communications at the production sites, enhancing employee engagement across the
organization.
With interviews and an online survey carried out at four production sites, we could identify
information profiles with varying demographics, channel and language preferences and activeness in
information search. The identified profiles help us understand the preferences of different groups
and serve to improve our information sharing methods and internal communications.
To support equal opportunities and access to internal information, a mobile phone pilot was
arranged among operators at the Tornio mill and the Kemi mine. Some 200 operators were involved
in the pilot enabling easy and secure mobile access to commonly used company applications.
Mobile reachability offers great opportunities for technical development supporting work satisfaction
and production efficiency.
Project teams have made proposals for 2024 for the next steps to enhance employee awareness
and engagement.
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Charting the course for equity
and workplace fairness
In 2023, we continued our commitment to creating and
sustaining a fair and equal workplace.
During the first quarter of 2023, our first pay equity
analysis was successfully rolled out, with the results used
as crucial inputs in the subsequent salary review process.
In the second half of 2023, we started work on a pay
equity certification process with Fair Pay Workplace, which
we expect to conclude in early 2024. This certification will
serve as tangible evidence of our dedication to fostering an
environment where everyone is treated equally and are
provided with the opportunity to thrive.
Job architecture is the cornerstone of fair compensation
practices. Our continuous efforts have facilitated the
alignment of job roles, creating a harmonized structure
ensuring our employees are fairly compensated based on
their responsibilities, experience, and contributions. This
approach improves clarity in job classifications and sets
the stage for transparent and equal compensation.
We made a strategic shift deploying cutting-edge statistical
tools to analyze compensation data, align job
architectures, establish standardized job codes, and foster
an environment that embraces equity.
In 2024, we are looking into tools and training options to
manage unconscious bias in decision-making to further
strengthen an inclusive and fair working environment.
Building capabilities
The training and coaching of our employees to
continuously develop has always been a priority for us at
Outokumpu. During 2023, we continued this work, so as to
enable the best execution of our business goals.
In addition to on-the-job learning, a total of 81,294 training
hours were delivered during 2023, the average employee
spending 8.19 hours in training during the year. The top
learning categories involving the majority of our employees
included safety, compliance, leadership, and inclusion.
Outokumpu Annual Report 2023
We rolled-out our mandatory ethics and compliance related
e-learnings. This year the target population was
administrative employees, which include all white collar
employees and blue collar managers in operations that
were active as of December 31, 2023. The topics included
Code of Conduct (98% participation rate) and Data
Protection (99%). In addition, Spend management training
was completed by 76% of white collar employees.
To support Outokumpu’s vision of being our customers’
first choice in sustainable stainless steel, we need to be
excellent in everything we do. The Manufacturing
Excellence team produced a training video series
especially for operations and first line managers to
increase their awareness of basic manufacturing
excellence topics. To make the most of this new learning
format, our target is to give all employees the opportunity
to access the training during the working hours. Thanks to
the commitment of the heads of operations and senior
management, we are well on our way to achieving this
target.
During 2024, we will continue investigating new
approaches in learning, enabling our subject matter
experts to train the organization even more effectively.
Empowering our team members and leaders
The best ideas often come from unexpected places, and
that is why we are committed to providing a working
culture that encourages creativity and experimentation.
We are particularly proud of the innovative ideas shared by
the Outokumpu team members, such as those related to
energy efficiency improvements or recycled and lighter
packaging solutions. These initiatives are crucial and help
us reduce both emissions and costs.
To harness AI to drive business value, we established in
2023 our own Digital Innovations Hub, where any
Outokumpu employee can share AI-driven innovation ideas.
By embracing AI, we position ourselves to adapt, innovate,
and meet the changing needs and expectations of our
customers. The steering group places particular emphasis
on ideas that strongly align with our company's strategic
objectives: sustainability, growth from productivity,
customer-focused steering and use of generative AI. During
the first months, we received over 50 ideas, a few of them
already leading to proof-of-concepts or pilots.
The global roll-out of Outokumpu’s Leadership Pipeline
training, started in 2019, was finalized in 2023. We have
reached a sustainable level of over 70% of trained leaders
at Outokumpu. We continue to maintain the program and
provide yearly training sessions for new leaders.
Recognizing that team building is an important leadership
task, we continued to support our leaders and teams with
our in-house Team Excellence training concept. The
internal facilitator pool offered altogether 34 Team
Excellence workshops during the year to support the
development of high-performing teams.
A 360° assessment pilot took place in business area
Europe, to support our leaders’ self-awareness and
development. We believe that reflecting is as important as
acting for our leaders to grow, and the aim for the future is
to provide tools to assess and develop leadership in a fair
and consistent way.
Leadership training modules
Leading Others
Leading Leaders
License to Lead, for operational
leaders
License to Lead Light, for team
coordinators in operations
Number of
completions in
2023
85
41
83
59
Average
feedback (1-5)
4.7
4.2
4.2
4.4
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To further explore the future options to support our leaders
globally, we piloted the Lunch & Learn concept in the
Americas business area, providing quarterly get-togethers
around diverse leadership topics. Regular touch-points also
allow the new leaders to familiarize themselves with the
Leadership Pipeline model.
To support emerging leadership potential in the company,
we have been building a pre-leadership program to be
launched early 2024.
Continuous listening to employees with pulse
surveys
We have enabled our employees to provide feedback on
their engagement with our company goals with regular
pulse surveys. The surveys are conducted with our external
partner Glint.
The Outokumpu Engagement index remained at an
excellent level compared to the external benchmark being
at 77, on a scale of 1–100. The response rates were at
good level and provide us with representative and reliable
results.
The Engagement index consists of two questions that are
the main drivers for engagement: “How happy are you at
Outokumpu?” and “Would you recommend Outokumpu as
a great place to work?” In May, we asked questions around
fairness and inclusion and the September pulse survey
focused on professional growth and development.
Our strengths in 2023 company-wide pulse surveys
Score vs.
external
benchmark
Response rate
People Pulse in May
Engagement index
I am treated fairly at work
People Pulse in September
Engagement index
How happy you are working at
Outokumpu
77 (+3)
79 (+2)
76 (+2)
78 (+4)
67
68
Learning by playing
Digitalization and artificial intelligence (AI) are changing the world we operate in. Our digitalization
game – Story of the Broken Crystal Ball – was launched in March 2023. While playing, one will
learn about the interesting world of digitalization, AI and robotics, and have fun with the team.
Each quarter, the team with the highest score is rewarded. Already over 100 teams of 2–3 people
have tried this new learning experience. Feedback has been very positive, and players have felt
inspired by the challenging tasks and new ways of learning. Go ChromeKings, DreamTeam60 and
other players!
During our Ethics & Compliance Week in September, we engaged Outokumpu colleagues in various
ethics and compliance themes. One fun way to learn and to test one’s knowledge was the E&C
bingo. Our team members took actively part in the conversations and the game, learning at the
same time how we play by the ethics and compliance rules.
As part of the global Cyber Security Awareness Month celebrated in October, we introduced
Outokumpu’s own Capture the Flag cyber security game. Anyone can play the digital game without
being tech-savvy or from IT. The goal of the game is to raise cyber awareness among our team
members pointing out that seemingly small things matter when outfighting the cyber villains. We
were delighted to see how our employees with various backgrounds took the challenge and
managed to pass the game. Cyber security culture is built in communities – together we make
Outokumpu cyber secure.
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Outokumpu Annual report 2023
Already in 2022, we introduced the continuous dialogue
model as part of the MPC process. The continuous
dialogue cycle lasts throughout the year, starting from the
set-up of the employee targets, ending at the annual
performance evaluation when the year changes.
Continuous dialogue aims at ensuring ongoing interaction
between our managers and employees: follow-up and
adjustment of targets and performance, continuous
feedback, employee development and discussion of
general topics like working environment, collaboration and
well-being, and the employee’s career aspirations.
In 2023, we continued raising employees’ and managers’
awareness of the importance of the MPC process by
sharing tips and best practices. Surveys of managers and
employees were conducted in March to get feedback on
how the renewed MPC process has been perceived and
how we can improve our practices to make sure that we
deliver on our promises. A series of manager workshops
was arranged to point out the importance of regular and
meaningful conversations with the team members, and the
importance of feedback for the team but also for own
managerial work.
Calibration sessions across the management teams are
facilitated by our HR business partners. Those help us
align understanding of our top performers or colleagues in
need of more support and development in the future. The
HR business partners are also there to support managers
in evaluating employee performance and behaviors in a fair
and transparent manner.
We have an ambition to improve the MPC process further
in 2024 – from past-looking into a more forward-looking
approach, putting more emphasis on employee skills and
competence development, career aspirations and
possibilities in the company. Managers have an important
role to play in setting the right targets, so that everyone
can do their share in reaching our common company goals.
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Besides the two company-wide pulse surveys in 2023, we
implemented employee lifecycle pulse surveys for
newcomers and leavers to support an equal and good
employee experience at Outokumpu.
The onboarding index, based on 30- and 90-days
onboarding surveys, was 79. This tells us that we are on
the same level as the external benchmark. Our strength in
the onboarding process is team support, with an average
index of 91. In the exit pulse survey, we achieved an index
of 77 to the question: “I would consider working again for
Outokumpu if the situation was right”, which was above the
external benchmark (+4).
Also, several targeted on-demand pulse surveys took place
to support our businesses and functions in important
topics. For example, an annual mental health pulse survey
was launched at our site in Calvert, U.S.
We are planning to roll out two company-wide surveys
again in 2024. First, we will repeat the health and safety
pulse to support the development of our safety culture.
Bridging Outokumpu business goals
and individual targets
Our performance management approach is an on-going,
year-round partnership between managers and employees.
It helps both parties to understand their main tasks, as
well as how they contribute to Outokumpu’s strategy
implementation and business targets. This approach is
built into our annual My Performance Commitment (MPC)
process.
The MPC process allows employees to understand their
role and input into the company’s strategy implementation,
supports our focus on building a high-performing company
culture and ways of working. The overall completion rate of
the MPC process, finalized at the beginning of 2023, was
71%. The participation rate has improved steadily during
the past years, and we are taking further actions to
highlight the importance and benefit of the discussions to
improve participation among operational employees.
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Outokumpu Annual report 2023 Close collaboration with the employee
representatives
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 our European operations. The Forum is
based on the European Works Council Directive. In May
2023, the Forum was arranged in Vilnius, Lithuania.
The Personnel Forum appoints the Group Working
Committee, which is responsible for the operative
cooperation between the management and employees.
During the year, the committee convened face-to-face
twice an also twice virtually.
Outokumpu’s working hours, minimum notice periods,
vacation times, wages, overtime compensation 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 2023, 79% of the Group’s employees were covered by
collective agreements (2022: 78%). In total, 4,210 days in
2023 were lost due to strikes (2022: 29).
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Bonding with local communities
We are always looking for ways to do more around diversity, equity and inclusion. The first Team
Member Networking Groups (TNGs) were formed in our Americas business area in 2021 to create
space for minority (African Americans, women, Latino/Hispanic) team members to share ideas with
peers who have similar values. TNGs are considered safe spaces for all team members to be seen,
heard and valued.
Since the launch of the TNGs, team members have embraced a multitude of activities and
initiatives that have not only celebrated the rich tapestry of cultures and backgrounds within our
company, but have also reinforced our commitment to supporting worthy local community
initiatives.
In 2023, Americas’ Full Spectrum TNG took on the challenge of reaching out to the next generation
of talent. During an annual football game, the TNG created a fun and inviting atmosphere for
college students to engage with Outokumpu staff. The group was able to share our company
culture and values as well as provide a platform for students and community members to learn
about future career opportunities.
Every year in October the world goes pink in support of raising awareness for breast cancer. The
Mexican Wonder Women and Iron Maidens TNGs both did their part to promote early detection and
support research as well as unite our sites around a cause that can affect many of us in one way or
another. The Calvert team participated in the American Cancer Society’s Making Strides Against
Breast Cancer Walk by proudly wearing pink Outokumpu shirts to show their support.
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Outokumpu Annual report 2023 Our people by region, incl. temporary employees
Employee group, gender and contracts
Finland
Germany
Sweden
The United Kingdom
Other Europe
Europe
The United States
Mexico
South America
Americas
Asia/ Rest of the world
Group total
2023
2,532
2,041
1,529
105
684
2022
2,415
2,018
1,542
105
677
2021
2,394
2,043
1,566
93
750
6,891
6,757
6,846
972
829
8
963
815
8
947
804
80
1,809
1,786
1,831
50
48
50
8,750
8,591
8,727
Employee group
Blue collar
White collar
Gender
Male
Female
Contract
Temporary
Permanent, full-time
Permanent, part-time
People
5,411
3,339
7,137
1,613
381
7,389
980
%
62 %
38 %
82 %
18 %
4 %
84 %
11 %
Males and females by employment type
Employee group
Temporary
Permanent
Permanent, full-time
Permanent, part-time
Male
259
6,878
5,990
888
Female
122
1,491
1,399
92
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Hires and leavers by region, age group and gender
Number of permanent employees
Group
Region
Europe
America
Asia/rest of the world
Age groups
<30 years old
30–50 years old
>50 years old
Gender
Male
Female
Total
8,369
6,536
1,785
48
1,001
4,427
2,941
6,878
1,491
%
78 %
21 %
1 %
12 %
53 %
35 %
82 %
18 %
Hires
381
265
113
3
125
220
36
248
133
Outokumpu Annual Report 2023
482
364
114
4
62
242
178
379
103
70 %
30 %
1 %
33 %
58 %
9 %
65 %
35 %
%
Leavers
%
Voluntary
leavers
226
%
Total
turnover
863
% Hiring rate %
Leaving rate
%
Voluntary
leaving rate
%
Average
turnover rate
%
4.6 %
5.8 %
2.7 %
5.2 %
76 %
24 %
1 %
13 %
50 %
37 %
79 %
21 %
174
49
3
43
150
33
165
61
77 %
22 %
1 %
19 %
66 %
15 %
73 %
27 %
629
227
7
187
462
214
627
236
73 %
26 %
1 %
22 %
54 %
25 %
73 %
27 %
4.1 %
6.3 %
6.3 %
12.5 %
5.0 %
1.2 %
3.6 %
8.9 %
5.6 %
6.4 %
8.3 %
6.2 %
5.5 %
6.1 %
5.5 %
6.9 %
2.7 %
2.7 %
6.3 %
4.3 %
3.4 %
1.1 %
2.4 %
4.1 %
4.8 %
6.4 %
7.3 %
9.3 %
5.2 %
3.6 %
4.6 %
7.9 %
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Outokumpu Annual report 2023
Personnel by years of service, permanent
employees
Regions by employee group, region and gender
Number of employees
Group
Europe
Finland
Germany
Sweden
The UK
Other Europe
Americas
The United States
Mexico
Other Americas
Asia/rest of the world
Asia/Oceania
Other countries
Total
8,750
Thereof blue
collar
%
There of
white collar
%
%
5,411
3,339
Thereof
male
7,137
%
Thereof
female
1,613
%
6,891
78.8 %
4,350
80.4 %
2,541
76.1 %
5,593
78.4 %
1,298
80.5 %
2,532
28.9 %
1,584
29.3 %
948
28.4 %
2,066
28.9 %
466
28.9 %
2,041
23.3 %
1,415
26.2 %
626
18.7 %
1,816
25.4 %
225
13.9 %
1,529
17.5 %
1,067
19.7 %
462
13.8 %
1,224
17.2 %
305
18.9 %
105
684
1.2 %
7.8 %
43
0.8 %
62
1.9 %
86
1.2 %
19
1.2 %
241
4.5 %
443
13.3 %
401
5.6 %
283
17.5 %
1,809
20.7 %
1,056
19.5 %
753
22.6 %
1,519
21.3 %
290
18.0 %
972
11.1 %
614
11.3 %
358
10.7 %
815
11.4 %
829
9.5 %
442
8.2 %
387
11.6 %
698
9.8 %
8
50
47
3
0.1 %
0.6 %
0.5 %
— %
—
5
5
—
— %
0.1 %
0.1 %
— %
8
45
42
3
0.2 %
1.3 %
1.3 %
0.1 %
6
25
24
1
0.1 %
0.4 %
0.3 %
— %
157
131
2
25
23
2
9.7 %
8.1 %
0.1 %
1.5 %
1.4 %
0.1 %
3000
2000
1000
0
-5
6-10
11-15 16-20 21-25 26-30
31-
Personnel by years of service
Personnel age profile, permanent employees
1500
1000
500
0
-25
26-
30
31-
35
36-
40
41-
45
46-
50
51-
55
56-
60
61-
Age profile
Annual review
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Outokumpu Annual report 2023
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Active collaboration with stakeholders
With several operation sites, we impact a variety of stakeholders around the world. Fostering transparent and active dialogue with
stakeholders to understand their views and expectations is an essential factor for the acceptability of our operations and success.
Outokumpu wants to be a reliable and trusted partner
towards our stakeholders: customers, employees,
investors, suppliers, and the communities we operate in,
and maintains an active dialogue with its stakeholders to
understand what their expectations and views are
regarding Outokumpu.
We conduct a regular materiality analysis to keep up-to-
date with the expectations of our stakeholders. The latest
double materiality analysis will be finalized at the
beginning of 2024. In 2023, we also participated in the
Reputation & Trust survey in Finland to examine the
general public’s view on our reputation. Our overall
reputation is moderate, and it has stayed the same for the
past five years.
During the past year, Outokumpu also engaged in dialogue
with various stakeholders in Europe, when taking part in
the ResponsibleSteel certification process. As part of the
process, stakeholder dialogues were carried out locally at
each site in Europe, consisting of, for example, workers
and various local community representatives in the areas
where we operate. Outokumpu is now in the process of
receiving the certificates for its European production sites.
Read more about our suppliers and our employees.
Customers
In the stainless steel market, Outokumpu is known for the
high quality and sustainability of our products,
comprehensive product portfolio, and 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.
Outokumpu is leading the change towards sustainable
stainless steel manufacturing globally, and has ambitious
climate targets approved by the Science Based Target
initiative. In terms of products, Outokumpu stainless steel
has up to 75% lower carbon footprint, to help customers to
reach their climate targets. We offer a product-specific
carbon footprint for our products in Europe, to enable
customers to evaluate their value chain emissions. Our
latest innovation, Outokumpu Circle Green®, launched in
2022, marks our biggest achievement in this pursuit to
date, with up to 93% lower carbon footprint compared to
the industry average and a potential to transform
industries. In 2023, we introduced it to different industries
and partnered with, for example, Siemens and Fissler.
During the year we also introduced a new customer portal
Connect, piloting it for the existing customers of our
previous web shops. The target was to improve our
customer experience and satisfaction as well as give
customers more transparency about material availability in
our European service centers. The portal helps us
automate order booking and there are different self-
services that relieve our experts to work on advising our
customers.
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Outokumpu joined COP28 in Dubai in December 2023 with Finnish
climate leaders and engaged in current climate crisis discussions.
Outokumpu Annual Report 2023
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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.
Outokumpu takes several measures to ensure the safe use
of our products. We offer safety information sheets for
stainless steel in the EU and material safety data sheets in
the U.S. For ferrochrome, we instruct our customers on
safe use. We also comply with relevant product
requirements such as REACH, RoHS and ELV, and we
strictly control that there is no contamination of
radioactive material in our steel. No health and safety
incidents caused by our products were reported to us in
2023.
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,
the 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.
Informing local residents on
small modular reactors
Outokumpu is investigating the opportunity to cut carbon dioxide emissions from its steel
production with emerging small modular reactor (SMR) technology. We are in the forefront of
decarbonizing the steel industry, and investigating the opportunities to utilize developing
technologies in the energy offering is a natural step for us in decreasing our carbon dioxide
emissions.
Pre-research related to the small modular reactor is ongoing, and it will include investigating
any possible technical solutions and financial profitability as well as environmental impacts.
Any possible investment decisions will take place at a later date.
A possible location for the SMR would be the area surrounding the Tornio plant, so in 2023 we
invited our neighboring communities in Tornio, Finland and Haparanda, Sweden to hear about
the project. Our Head of SMR project Kristiina Tiilas and Head of Energy Strategy Tony
Lindström described the project.
There were also questions, and we discussed with the residents about the small modular
reactors as a technique, the possible location of the small modular reactor, our pre-research
including environmental impacts, the possibility to produce also heat for example for district
heating as well as on the time schedule of the project.
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In 2023, we continued to invite the families of our team
members to family day events at our sites, which were
again very well received, allowing the families of our team
members to see our operations for themselves. We also
organize open-door events also for our neighbors at our
production sites as well as other stakeholders: in 2023, we
arranged an inauguration at our Kemi mine to celebrate its
expansion and to highlight its target of becoming the first
carbon-neutral mine in the world by 2025. Our ferrochrome
has 67% lower carbon footprint than the industry average,
which in part has an impact on our stainless steel having
the smallest carbon footprint in the market.
Before focusing on stainless steel, Outokumpu operated
mines in Finland and elsewhere. The decision to focus on
stainless was taken some twenty years ago, and our Kemi
mine is currently the only mine we operate: it is an integral
part of our stainless steel production. In 2023, Outokumpu
continued to monitor and visit its old mine sites in Finland,
both those where Outokumpu still has obligations and
those where they have ended. In Finland, work continued
for instance a the mines in Orivesi, working with the
current owner to empty one pit of waste, and Enonkoski. In
Enonkoski, we investigated the current situation to know it
thoroughly enough for us to be able to apply for an
environmental permit for complementary restoration
measures in the area. Outokumpu has environmental
permits at a few old mines. In 2023, there was one minor
environmental permit breach in Kotalahti where leachate
water is treated in a limestone-based treatment system
and biological ponds: the annual average of iron
concentration in leachate water released did not meet the
environmental permits' requirements. The incident is
reported as part of Outokumpu’s environmental incidents
in Minimizing environmental impacts.
Information on old mines
List of Outokumpu’s operating sites
Non-governmental organizations
Non-governmental organizations (NGOs) are an important
stakeholder group for Outokumpu: they provide us with
external views on expectations and views towards big
Outokumpu Annual Report 2023
companies like ours and our impact on 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
grateful to 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. Based
on for instance on their feedback, we have continued to
work on the transparency of our supply chain. In 2023, we
further strengthened the monitoring of our suppliers with
the help of media monitoring and continued to implement
our recent Supplier Code of Conduct and human rights
policy in our supply chain.
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 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.
Taxes by country*
Million euros
Finland
Sweden
Germany
Other Europe
The United States
Mexico
Asia and Oceania
Other countries
Group total
2023
32
0
30
4
6
11
0
0
84
2022
0
2021
0
0
1
2
3
6
1
3
15
0
1
1
2
3
1
0
7
*Due net loss in certain years, paid taxes are reported cash based
instead of booked taxes.
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 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 2023, Outokumpu’s membership fees and other
contributions to the associations amounted to EUR
954,000.
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
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Outokumpu Annual report 2023 donations are approved by the Leadership Team or by the
Board of Directors. In 2023, Outokumpu’s shareholders
approved the Board of Directors’ proposal for a donation of
EUR 500,000 to continue supporting relief efforts in
Ukraine and the neighboring countries.
Outokumpu supports research related to its field of
industry and maintains 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
Foundation and the Fund for the Association of Finnish
Steel and Metal Producers.
In 2023, Outokumpu spent some EUR 615,000 in
sponsorships.
Investors and shareholders
Outokumpu’s share is a so-called people’s share in
Finland, with households and private investors owning
approximately a quarter of its outstanding shares. The
largest shareholder is Solidium Oy, the Finnish-state owned
investment company, which 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 28.2% at the end of 2023.
Outokumpu has a strong focus on shareholder returns and
according to its dividend policy, aims to distribute a stable
and growing dividend to be paid annually. In 2023, we
distributed a total of EUR 152 million as dividends for year
2022. The dividend consisted of a base dividend of EUR
0.25 per share and an extra dividend of EUR 0.10 per
share for the exceptionally good result of the financial
year. The base dividend amount of EUR 0.25 was the basis
for future dividend distributions in accordance with the
policy.
Outokumpu Annual Report 2023
In 2023, we also completed the first share buyback
program in our history. The program started already in
November 2022 and under the program, we repurchased a
total of 19,836,205 of our own shares and used a total of
EUR 100 million for the share repurchases. Part of these
repurchases occurred already in 2022. In November 2023,
we launched another share buyback program, with a
maximum of 11 million shares. During 2023, we
repurchased a total of 13,903,534 of our own shares with
EUR 70 million. 2,642,455 shares were repurchased under
the new 2023 share buyback program and 11,261,079
under the 2022 program that ended on March 24, 2023.
On December 31, 2023, Outokumpu held 25,683,745
treasury shares. Through the share buyback programs,
Outokumpu seeks to mitigate and manage the dilutive
impact of the company’s outstanding convertible bonds.
Outokumpu continued its regular and active
communication with investors and analysts throughout the
year. Key topics in 2023 were Outokumpu’s strategic
considerations, capital allocation, shareholder returns,
weaker market environment, stainless steel price
development, energy market, cost inflation, sustainability,
and decarbonization.
During the year, Outokumpu participated in seven
conferences or roadshows, and, in addition to IR activities,
management met investors in 44 one-on-one or small
group meetings. On top of that, we arranged four breakfast
seminars for Finnish institutional investors after every
quarterly result and four pre-silent conference calls, which
were hosted by CFO Pia Aaltonen-Forsell and were open to
everyone to participate.
After a break of few years, the Annual General Meeting
2023 was held physically at the Dipoli congress center in
Espoo, Finland, in March 2023. Around 300 participants
attended the meeting, and altogether more than 900
shareholders participated either by attending or voting in
advance. Before the Annual General Meeting, we also
arranged an event, where CEO Heikki Malinen and CFO Pia
Aaltonen-Forsell were interviewed about current topics and
there was also a possibility to directly ask questions.
Principal shareholders on December 29, 2023
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Solidium Oy
Varma Mutual Pension Insurance
Company
Ilmarinen Mutual Pension Insurance
Company
The Social Insurance Institution of
Finland
State Pension Fund
Elo Mutual Pension Insurance Company
Mandatum Life
OP Life Assurance Company Ltd.
Nordea Life Assurance Finland Ltd.
Equity Fund Evli Europe
Nordea Pro Finland Fund
Etola Erkki Olavi
Danske Invest Finnish Equity Fund
Sinituote Oy
Helander Hannu-Jukka
OP-Finland Small Firms Fund
Säästöpankki Kotimaa - Equity Fund
Laakkonen Mikko Kalervo
Seligson & Co Equity Fund
Insurance Company Fennia Life
Shares
%
70,793,208
15.5
21,938,403
4.8
14,707,361
3.22
8,388,652
7,500,000
6,698,000
5,319,768
4,007,283
3,266,360
2,109,482
1,940,720
1,900,000
1,633,667
1,588,560
1,559,000
1,369,229
1,291,975
1,256,000
1,112,368
1,014,889
1.84
1.64
1.47
1.16
0.88
0.71
0.46
0.42
0.42
0.36
0.35
0.34
0.3
0.28
0.27
0.24
0.22
159,394,925
34.88
Nominee accounts held by custodian
banks
Treasury Shares
Other Shareholders
128,795,988
28.19
25,683,745
5.62
142,999,790
31.31
Total
456,874,448
100
In the Reputation & Trust among investors -survey,
arranged by Finnish company T-Media, Outokumpu
improved its ranking significantly, by more than 20 places.
Improving from 57th place to 35th, Outokumpu was one of
the companies with the best improvement.
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Outokumpu Annual report 2023 In 2023, Outokumpu’s share price was EUR 5.90 at its
highest and EUR 3.60 at its lowest (2022: EUR 6.48 at its
highest and EUR 3.51 at its lowest). The share price
closed at 4.48 at the end of year 2023, and decreased by
5% from the closing price of EUR 4.73 at the end of 2022.
The market capitalization was EUR 2,048 million at the
end of the year, compared to the level of EUR 2,161
million at the end of 2022.
During 2023, the average daily trading volume in
Outokumpu shares on Nasdaq Helsinki was 1,5 million
shares. 386 million Outokumpu shares were traded in total
on Nasdaq Helsinki during the year (2022: 720 million
shares).
Outokumpu’s shares are listed on the Nasdaq Helsinki
Large Cap list under the trading code OUT1V and
incorporated into the Finnish book-entry securities system.
Outokumpu’s shares are also traded on various alternative
platforms.
Shareholders by group on December 29, 2023
Market capitalization and share price development
Monthly trading volume, million shares
Annual review
7.50
5.00
2.50
—
3
2
1
0
50
40
30
20
10
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Month-end market capitalization, €/ million share
price, €/ share
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Outokumpu share price development in 2023
Dividend/share, €
140
120
100
80
60
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
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Financial year
Nominee registered and non-Finnish holders 28.56%
Finnish institutions, companies and foundations 30.49%
Solidium Oy 15.5%
Households 25.45%
Solidium Oy is wholly owned by the Finnish state Source: Innovatics
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018
2019
2020
2021
2022
2023
Outokumpu
Nasdaq Helsinki
Dividend per share
Extra dividend
For 2023, dividend is a proposal by the Board of Directors. In 2022,
the dividend included a one-time extra of EUR 0.10 per share for the
exceptionally good result of the account period.
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Outokumpu Annual report 2023
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Conducting business with high integrity
Every employee at Outokumpu has a role in making ethical choices that help to build a world that lasts forever.
The group-wide ethics and compliance program steers the sustainable and ethical decision-making and compliant
business practices at Outokumpu. The first ever Ethics and Compliance Week highlighted the importance of
conducting business with high integrity to all employees globally.
Ethical business – how do we ensure fair play?
The Outokumpu Ethics and Compliance (E&C) Week was
organized for the first time in September 2023 with
success. The purpose of the week was to raise awareness
and provide information about important E&C themes to all
Outokumpu employees globally to enable everyone to do
the right thing and conduct business fairly and in a
responsible and ethical manner. The E&C Week consisted
of many engaging activities and meaningful discussions. As
part of the E&C Week, employees were encouraged to take
part in the keynote speech, other presentations and
discussions and various E&C events organized locally at
Outokumpu’s sites.
Being a trusted business partner
Trade sanctions compliance was one of the key themes
presented during the E&C Week due to its importance and
topical nature. Outokumpu is committed to complying with
all applicable sanctions regulations, and we expect our
suppliers, sub-suppliers and other business partners to
also act as trusted partners and comply with these
requirements as well. Within the trade compliance area,
Outokumpu applies a Know Your Business Partner
program, following which business partners are identified
and monitored based on risk. Sanctions monitoring is part
of this process. Outokumpu is also constantly monitoring
and is committed to complying with applicable export and
import restrictions. Furthermore, our employees are
regularly trained in the adherence to sanctions regulations.
Due to the Russian invasion of Ukraine, we continued to
concentrate on trade sanctions compliance as a priority
work also during 2023 to ensure that all applicable
sanctions regulations are complied with. In addition to the
enhanced third-party screening activities, as well as
adapting and complying with new sanctions regulations
and conducting trainings for the employees within the
trade sanctions area, Outokumpu’s Know Your Business
Partner-related processes and documentation were
reviewed and updated, also taking into consideration the
possible risks related to the circumvention of sanctions.
Launch of a new legal and compliance podcast
A new legal and compliance podcast was launched during
the E&C Week. The purpose of this internal podcast is to
share information about various E&C topics with
Outokumpu employees in an easily digestible way, helping
employees to comply with Outokumpu’s internal policies
and to make ethical decisions as part of their daily
activities at Outokumpu – it is up to all of us to do the right
thing!
The theme for the first podcast was competition law
compliance and especially compliance with the rules
regarding information exchange. Outokumpu is committed
to complying with applicable competition laws and
regulations and is continuously investing significant efforts
in this area, including further developing various
competition law compliance risk mitigation tools and giving
trainings on this important topic.
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Outokumpu continuously raises awareness about ethics and
compliance (E&C) topics to ensure fair play. During the E&C Week,
employees discussed key questions such as: What do ethics and
integrity mean to you? What is the role of responsible and ethical
business practices as part of our sustainability journey?
Outokumpu Annual Report 2023
Outokumpu Annual report 2023 conducts trainings and shares information on a regular
basis on various E&C topics to help ensure that our
employees globally know how to apply E&C rules and
ethical principles in their daily decision-making. At
Outokumpu, E&C related trainings are given both through
mandatory e-learnings as well as face-to-face trainings,
webinars and discussions.
As part of the effective implementation of Outokumpu’s
E&C Program, the Group E&C team continued the E&C
Visibility Tour and conducted face-to-face trainings and
met teams online to raise awareness on topical E&C
matters, such as anti-corruption, data privacy, competition
law compliance and trade sanctions in 2023. In addition,
98% of administrative employees completed the Code of
Conduct e-learning and 99% of administrative employees
completed the Data Protection e-learning in 2023. In
addition to the data protection-related e-learning and other
data privacy training sessions organized to the employees,
the further development of Outokumpu’s global data
protection program continued. We are also in the process
of renewing all E&C related e-learnings and the plan is to
launch those e-learnings in 2024.
Our ethical choices
build a world that
lasts forever.
Emphasis on the anti-corruption program
Outokumpu has a strict zero tolerance policy for any form
of corruption and bribery. For this purpose, Outokumpu has
an anti-corruption program in place as part of the group-
wide E&C Program. The purpose of the program is to help
to mitigate risks related to corruption and bribery and it
contains various elements, such as a detailed internal
guidance document, the Anti-Corruption Instruction. We
also have a specific instruction in place for the use of
intermediaries and consultants. There is also an anti-
corruption e-learning as well as other forms of trainings
available on corruption and bribery risks. During 2023, the
different elements of the anti-corruption program were
under review and assessment. In general, E&C risks are
assessed as part of the Group risk management
framework. In addition, we are continuously developing
internal controls over identified risk areas, including anti-
corruption.
Demystifying internal investigations
We encourage everyone to report their concerns and speak
up. When concerns are reported they will be treated with
strict confidence and assessed and reviewed in
accordance with our internal investigations procedure. At
Outokumpu it is our global policy not to tolerate any
retaliation of individuals raising concerns in good faith.
As part of the E&C Week activities, we reminded
employees about the ways to raise and report concerns at
Outokumpu, including through Outokumpu’s SpeakUp
channel. It is an externally hosted channel where concerns
can be reported confidentially and anonymously, to the
extent allowed by applicable laws and regulations. In
addition, a presentation about our internal investigations
procedure was given to the employees in cooperation
between Internal Audit and the Group E&C team as part of
the E&C Week, in order to further increase the
transparency in how internal investigations are conducted.
Focus on engaging trainings and communications
as part of the E&C Visibility Tour
All Outokumpu employees are responsible for conducting
business with high integrity. Outokumpu's Group E&C team
Outokumpu Annual Report 2023
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O
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 2023.
Sustainability information is also
available on our website.
Outokumpu Annual Report 2023
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Scope of the report
Outokumpu has published its sustainability review as part of the Annual Report 2023.
Sustainability information is also available at www.outokumpu.com/sustainability.
Outokumpu Oyj reports on the material developments of
continuing sites and changes in 2023 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 2023, including Sustainability
Review, was published in March 2024.
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 96 in
the Sustainability Review. The Financial Statements 2023
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 accordance with
International Financial Reporting Standards (IFRS).
Outokumpu’s accounting principles for the Group’s
consolidated financial statements are available in the
related note to the consolidated financial statements.
All financial 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. Using the GRI
guidelines as a basis, economic responsibility figures have
been calculated as follows:
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 paid (cash-flow based). 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 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.
Outokumpu Annual Report 2023
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Remuneration report
Financial year
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 defined as sites with
production processes and our finishing line and logistic
hub in the Netherlands,
Environmental responsibility
All energy and environmental information is 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 CO2 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.
CO2 emissions of electricity are calculated and monitored
by the emissions factor of Outokumpu’s electricity mix of
38 kg CO2/MWh (2022: 93 kg CO2/MWh), given by the
electricity supplier for the used electricity and calculated
as weighted average. It includes 100% of electricity use in
EU market which is coming with guarantees of origin from
ownerships in power production, and the purchase of RECs
in the US. In addition, the location-based electricity
emissions are disclosed. They are calculated by the
published country- specific emissions factors of the
electricity generation of 2021 or 2022 if available.
CO2 emissions outside the company (scope 3), except
electricity, are covered by more than 95%. The main
impact comes from purchased goods, mainly alloys. Also
emissions from business travel and waste generated are
reported, at least partly, as well as downstream
transportation of products. The emissions are calculated
as follows:
• For alloys: by emissions factors of the life-cycle
assessments of relevant associations. Emission factor
Outokumpu Annual Report 2023
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
CO2 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.
When calculating the CO2 intensity, the total volume of
own crude steel production and purchased crude steel was
used as divider since that corresponds to total processed
and sold products. For other environmental indicators like
water and waste only Outokumpu´s own steel production
was taken into account.
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.
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-
hazardous are reported as dry tonnes and classified
according to national legislation. In 2023, waste is
reported as generated, diverted from landfill and landfilled.
The offsite and onsite recycling and recovery are reported.
Waste treated goes to energy recovery and is counted as
diverted from landfill.
Slag use rate is calculated as the total amount of slag that
is used compared to the generated slag. Stored slag is not
considered in this calculation. Slag that is classified as a
by-product is included in the slag use rate, but not in the
waste management tables, since it has not been a waste.
Customers’ CO2 savings are calculated with the difference
of world’s stainless steel footprint of 7 tonnes CO2 per
tonne crude steel with 40% scrap recycling and 30% of
nickel pig iron production and Outokumpu’s footprint of
1.70 tonnes CO2 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 2023.
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
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About reporting
Governance
Remuneration report
Financial year
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.
A bonus is an additional payment for good
performance.These figures are reported without social
costs or fringe benefits.
• Restricted work injury (RWI) does not cause the
individual to be absent, but results in that person being
restricted in their capabilities 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).
• 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 observations (SBOs) are safety-based
discussions between an observer and the person being
observed. Other preventive safety action includes proactive
measures.
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 and managers of operators that were active as
of December 31, 2023.
Training days per employee
The number of days spent by an employee in training when
each training day is counted as lasting eight hours.
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.
Hiring rate = New Hires / total number of permanent
employees by year-end
Average turnover rate = (Leavers + New Hires) / (total
number of permanent employees by year-end × 2)
Days lost due to strikes
The number of days lost due to strikes is calculated 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.
Safety indicators
include our
employees,
contractors and
visitors.
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Outokumpu Annual report 2023 Statement of use Outokumpu Oyj has reported with reference to the GRI Standards 2021 for the period from 01.01.2023 to 31.12.2023.
GRI 1 used GRI 1: Foundation 2021
Applicable GRI Sector Standard No applicable GRI Sector Standard
Annual review
Sustainability review
Sustainability strategy
GRI standard
Disclosure
Omission
Location in Annual report 2023
Assured
Climate change and circularity
Sustainable supply chain
People and society
About reporting
Governance
Remuneration report
Financial year
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
Corporate Governance Statement CG 99-117, back cover
Scope of the report SR 88
Reporting period, frequency and contact point
Scope of the report SR 88, back cover
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
Scope of the report SR 88
Scope of the report SR 87-90, Independent practitioner’s limited assurance report SR 96-97
This is Outokumpu AR 4-5, Our impact AR 11, Stainless steel market AR 12-16
Breakdown by gender
and region not reported
People and society SR 64-79
Corporate Governance Statement CG 99-117
Corporate Governance Statement CG 99, 107
Corporate Governance Statement CG 100
Corporate Governance Statement CG 104-106
Delegation of responsibility for managing impacts
Corporate Governance Statement CG 104-106
Role of the highest governance body in
sustainability reporting
Communication of critical concerns
Remuneration policies
Corporate Governance Statement CG 104-106, Review by the Board of Directors FS 131-135
Corporate Governance Statement CG 114-117
Remuneration statement CG 118-122
Statement on sustainable development strategy
Review by the Board of Directors FS 131-135
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
Human rights as the foundation of our business SR 65-66, Conducting business with high integrity SR
85-86
Human rights as the foundation of our business SR 65-66, Conducting business with high integrity SR
85-86
Human rights as the foundation of our business SR 65-66, Conducting business with high integrity SR
85-86, Review by the Board of Directors FS 99-117
No significant instances
of non-compliances
have occurred in 2023
Active collaboration with stakeholders SR 82
Active collaboration with stakeholder SR 80-84
Teamwork towards our targets SR 71-77
x
x
x
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Outokumpu Annual report 2023 Material topics
GRI 3: Material topics
3-1
3-2
Process to determine material topics
List of material topics
Sustainability strategy SR 31-35
Sustainability strategy SR 35
GRI 201: Economic performance
201-1
201-2
Direct economic value generated and distributed
This is Outokumpu, Our year 2023 AR 4-5, Our impact AR 11, Active collaboration with stakeholders
SR 80-84
Financial implications and other risks and
opportunities due to climate change
Decarbonization across the value chain SR 40-46, Review by the Board of Directors FS 131-135, Risks
and opportunities AR 20, 28
GRI 203: Indirect economic impacts
203-2
Significant indirect economic impacts
Active collaboration with stakeholders SR 80-84, Strength and resilience AR 7, Our impact AR 11
GRI 204: Procurement practices
204-1
Proportion of spending on local suppliers
Fostering a sustainable supply chain SR 59-62
GRI 205: Anti-corruption
205-2
Communication and training about anti- corruption
policies and procedures
GRI 206: Anti-competitive behavior
98% of administrative
employees trained. Training
by region or on governance
bodies not reported
Conducting business with high integrity SR 85-86
Legal actions for anti-competitive behavior, anti-
trust, and monopoly practices
No legal actions pending or
completed during 2023
Conducting business with high integrity SR 85-86, Review by the Board of Directors FS 124-140
Tax governance, control, and risk management
Country-by-country reporting
Corporate Governance Statement CG 105
Active collaboration with stakeholders SR 80-84
Materials used by weight or volume
Recycled input materials used
Accelerating the circular economy SR 50-52
Accelerating the circular economy SR 50-52
Reclaimed products and their packaging materials
Active collaboration with stakeholders SR 80-81
206-1
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
Energy consumption within the organization
Energy intensity
Reduction of energy consumption
GRI 303: Water and effluents
303-1
303-2
303-3
303-4
303-5
Interactions with water as a shared resource
Management of water discharge-related impacts
Water withdrawal
Water discharge
Water consumption
Information on dissolved
solids is not available
Information on dissolved
solids is not available
Low-carbon energy and energy efficiency SR 47-49
Low-carbon energy and energy efficiency SR 47-49
Low-carbon energy and energy efficiency SR 47-49
Biodiversity and water management SR 53-55
Biodiversity and water management SR 53-55
Biodiversity and water management SR 53-55
Biodiversity and water management SR 53-55
Biodiversity and water management SR 53-55
Annual review
Sustainability review
Sustainability strategy
Climate change and circularity
Sustainable supply chain
People and society
About reporting
Governance
Remuneration report
Financial year
x
x
x
x
x
x
x
x
x
x
x
x
x
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Outokumpu Annual report 2023 GRI 304: Biodiversity
304-1
GRI 305: Emissions
305-1
305-2
305-3
305-4
305-7
GRI 306: Waste
306-1
306-3
306-4
306-5
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
GRI 308: Supplier environmental assessment
308-1
308-2
New suppliers that were screened using
environmental criteria
Negative environmental impacts in the supply
chain and actions taken
GRI 401: Employment
Biodiversity and water management SR 53-55
Decarbonizing across the value chain SR 40-46
Decarbonizing across the value chain SR 40-46
Decarbonizing across the value chain SR 40-46
Decarbonizing across the value chain SR 40-46
Minimizing impacts on the environment SR 56-57
Accelerating the circular economy SR 50-52
Accelerating the circular economy SR 50-52
Accelerating the circular economy SR 50-52
Accelerating the circular economy SR 50-52
Fostering a sustainable supply chain SR 59-63
Fostering a sustainable supply chain SR 59-63
Only total waste to landfill
reported
401-1
New employee hires and employee turnover
Team work towards our targets SR 78
GRI 403: Occupational health and safety
403-1
403-2
403-4
403-5
403-8
403-9
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
404-3
Programs for upgrading employee skills and
transition assitance programs
Percentage of employees receiving regular
performance and career development reviews
Always working safely SR 68-70
Always working safely SR 68-70
Always working safely SR 68-70
Always working safely SR 68-70
Always working safely SR 68-70
Number of hours worked not
reported
Always working safely SR 68-70
Team work towards our targets SR 71-79
Team work towards our targets SR 71-79. Details of gender and employee category not available.
Annual review
Sustainability review
Sustainability strategy
Climate change and circularity
Sustainable supply chain
People and society
About reporting
Governance
Remuneration report
Financial year
x
x
x
x
x
x
x
x
x
x
Outokumpu Annual Report 2023
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Climate change and circularity
Sustainable supply chain
People and society
About reporting
Governance
Remuneration report
Financial year
GRI 405: Diversity and equal opportunity
405-1
Diversity of governance bodies and employees
Information on governance
bodies by age groups is not
reported. BoD not reported
by age group
as not reasonable.
Review by the Board of Directors FS 134-135, Teamwork towards our targets SR 71-79
x
GRI 406: Non-discrimination
406-1
Incidents of discrimination and corrective actions
taken
GRI 407: Freedom of association and collective bargaining
407-1
GRI 408: Child labor
408-1
Operations and suppliers in which the right to
freedom of association and collective bargaining
may be at risk
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 compulsory labor
GRI 411: Rights of indigenous people
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 114-117
Fostering a sustainable supply chain SR 59-62, no risk within own operations
Fostering a sustainable supply chain SR 59-62, no risk within own operations
Fostering a sustainable supply chain SR 59-62, no risk within own operations
Fostering a sustainable supply chain SR 59-62, no risk within own operations
Minimizing impacts on the environment SR 56--57, Active collaboration with stakeholders SR 80-84
x
Fostering a sustainable supply chain SR 59-63
Fostering a sustainable supply chain SR 59-63
Outokumpu does not make any donations to political parties or groups, see Code of Conduct https://
www.outokumpu.com/en/sustainability/sustainability-downloads, Active collaboration with
stakeholders SR 80-82
x
x
x
x
x
Company’s own indicators
Resource efficiency
Recycled material content and recycled (steel)
content acc. Iso 14021
Accelerating the circular economy SR 50-52
Energy
Energy efficiency
Low-carbon energy and energy efficiency SR 47-49
Climate change
Science Based Target
By-products
Slag use rate
Decarbonization across the value chain SR 40-46
Accelerating the circular economy SR 50-52, 2023 in figures AR 5
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Outokumpu Annual report 2023 ResponsibleSteel content index*
ResponsibleSteel Principle (International Standard Version 2.0)
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
Sustainability strategy SR 31-38
Sustainability strategy SR 31-38
Fostering a sustainable supply chain SR 58-63
Teamwork towards our targets SR 71-79
Conducting business with high integrity SR 85-86
Fostering a sustainable supply chain SR 58-63
Not applicable due to no confirmed plans to decommission or close sites
Always working safely SR 68-70
Teamwork towards our targets SR 71-79
Fostering a sustainable supply chain SR 58-63
Human rights as the foundation of our business SR 65-67
Active collaboration with stakeholders SR 80-84
Active collaboration with stakeholders SR 80-84
10. Climate change and greenhouse gas emissions
Decarbonization across the value chain SR 40-52, Low-carbon energy and energy efficiency 47-49
11. Noise, Emissions, Effluents and Waste
12. Water Stewardship
13. Biodiversity
Accelerating the circular economy SR 50-52
Minimizing impacts on the environment SR 56-57
Biodiversity and water management SR 53-55
Biodiversity and water management SR 53-55
* Outokumpu has not yet been certified by the ResponsibleSteel initiative but this table indicates which part of the Sustainability Review 2023 contains information on Outokumpu’s sustainability work related to the
ResponsibleSteel Principles and respective requirements.
Annual review
Sustainability review
Sustainability strategy
Climate change and circularity
Sustainable supply chain
People and society
About reporting
Governance
Remuneration report
Financial year
Outokumpu Annual Report 2023
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Remuneration report
Financial year
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 from 1 January 2023
to 31 December 2023, disclosed in Outokumpu Oyj’s
Annual Report 2023 available on the Company’s website
(hereinafter the Selected sustainability information).
Outokumpu Annual Report 2023
Selected sustainability information
The selected sustainability information within the scope of
assurance covers:
•
Indicators as set out in GRI Standards of the Global
Reporting Initiative –standards and Company’s internal
reporting instructions as identified in the GRI content
index in the Company's Sustainability Review 2023.
• EU taxonomy reporting as disclosed in Outokumpu Oyj’s
Board of Directors’ report of Outokumpu Oyj’s Annual
Report 2023.
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 2023, the GRI
Standards of the Global Reporting Initiative, Regulation
(EU) 2020/852 and supplementing Delegated Acts
(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
is free from material misstatement, whether due to fraud
or error.
Practitioner’s independence and quality
management
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 Management (ISQM) 1, which requires the firm
to design, implement and operate a system of quality
management including policies or 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
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.
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Outokumpu Annual report 2023 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:
•
Interviewing senior management of the Company.
• Conducting site visits in Finland and United States of
•
America.
Interviewing employees responsible for collecting and
reporting the Selected information 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.
• Testing 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.
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 2023 is 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
conclusion that we have reached.
Helsinki 28 February 2024
PricewaterhouseCoopers Oy
Tiina Puukkoniemi
Janne Rajalahti
Partner, Authorised Public
Accountant (KHT)
Partner, Authorised Public
Accountant (KHT)
Sustainability Reporting &
Assurance
Audit Partner
Annual review
Sustainability review
Sustainability strategy
Climate change and circularity
Sustainable supply chain
People and society
About reporting
Governance
Remuneration report
Financial year
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Outokumpu Annual report 2023 4
Governance
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders' Nomination Board
Executive Management
Internal control and risk management
Remuneration report
Financial year
Outokumpu complies with the
laws and regulations applicable
to a Finnish public company,
the company’s Articles of
Association and the Corporate
Governance Policy.
Outokumpu Annual Report 2023
98
Corporate Governance Statement 2023
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 Officer
(CEO), have the ultimate responsibility for the
management and operations of the Outokumpu Group.
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.
Our latest Corporate Governance
statement and updated corporate
governance information can be found on
the Group’s Corporate Governance
website.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders' Nomination Board
Executive Management
Internal control and risk management
Remuneration report
Financial year
Outokumpu Oyj’s Annual General Meeting 2023 was arranged in
March 2023 at the Dipoli congress center in Espoo, Finland.
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Governance
Regulatory and structural framework
Board of Directors
Shareholders' Nomination Board
Executive Management
Internal control and risk management
Remuneration report
Financial year
Board of Directors
Composition and operations of the Board of Directors December 31, 2023
All Board members are independent of the company. The CVs of the Board of Directors are also available at our webpages.
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.
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
Kati ter Horst
Vice Chairman of the Board of
Directors
b. 1968, Finnish citizen
M.Sc. (Econ.), MBA
(International Business)
Outokumpu Board member
2016–
Vice Chairman 2022–
Member of the Remuneration
Committee
Independent of the company
and its significant shareholders.
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
Chairman of the Board of Directors (March 2023–) and
member of the Board of Directors (2022–2023):
Stora Enso
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
Chairman of the Board: Finnish Bankers’ Association
2002–2004
Mr. Jordan holds several positions of trust in
foundations and non-profit associations.
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
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Board of Directors
Shareholders' Nomination Board
Executive Management
Internal control and risk management
Remuneration report
Financial year
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.
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
Several management positions: Klöckner-Werke AG
1983–1995
Scientist: Betriebsforschungsinstitut Düsseldorf 1980–
1983
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
Chairman of the Supervisory Board: Günter Papenburg
AG (privately held) 2023–
Chairman of the Supervisory Board: Max Aicher Stahl
AG (privately held) 2023–
Member of the Supervisory Board: H2APEX Group SCA
2024–
Member of the EIB Group Climate and Environment
Advisory Council: 2021–
Chairman of the German Steel Industry Employers’
Association 2020–2023
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
Chairman/member of the Supervisory Board: Aurubis AG
2009–2021
Member of the Supervisory Board: TÜV Nord AG 2008–
2023
Member of the Supervisory Board: Öffentliche
Versicherung Braunschweig (Insurance) 2002–2022
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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Outokumpu Annual report 2023 Jyrki Mäki-Kala
Member of the Board of Directors
b. 1961, Finnish citizen
M.Sc. (Econ.), Vaasa, Finland
Outokumpu Board member
2023–
Chairman of the Audit
Committee
Independent of the company
and its significant shareholders.
Work experience
Chief Financial Officer: Neste Oyj 2013–2022
Chief Financial Officer: Kemira Oyj 2008–2013
Several managerial positions: Kemira Pulp and
Paper 2005–2008
Several managerial positions: Nokia Chemicals/Finnish
Chemicals (later Kemira
Chemicals) 1988–2005
Positions of trust
Member of the Board of Directors: Orthex 2022–
Chairman of the Audit Committee: Anora
(formerly Altia) 2021–
Chairman of the Board of Directors: Neste Marketing &
Services 2017–2022
Member of the Board of Directors: Tesi (Finnish Industry
Investment Ltd) 2019–2021
Member and Chairman of the Board of Directors:
Nynas AB 2018–2021
Member of the Board of Directors: Pohjolan Voima
2008–2013
Member of the Board of Directors: FC Energia 1998–
2005
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders' Nomination Board
Executive Management
Internal control and risk management
Remuneration report
Financial year
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.
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 Board of Directors and of the
Remuneration Committee: TietoEVRY 2023–
Member of the Board of Directors and Member of the
Audit Committee: Neles 2020–2021
Chairperson of the Nomination Board: Mandatum 2023–
Member of the Nomination Board: Anora 2021–
Member of the Nomination Board (2018–2020) and
Chairperson of the Nomination Board: TietoEVRY 2020–
2023
Chairperson of the Nomination Board:
Metso 2018–2020
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Outokumpu Annual report 2023 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.
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
Board member, member of the Audit and Risk
Committee, of the Nomination Committee and of the
Remuneration Committee: London Metal Exchange
(LME) 2023–
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), of the Nomination and Compensation
Committee (2019–) and of the Strategic Committee
(2021–): 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).
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders' Nomination Board
Executive Management
Internal control and risk management
Remuneration report
Financial year
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.
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
2020–2023
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.
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Outokumpu Annual report 2023 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, 2023, 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, 2023
Board member
Kari Jordan
Heinz Jörg Fuhrmann
Kati ter Horst
Päivi Luostarinen
Jyrki Mäki-Kala
Petter Söderström
Pierre Vareille
Julia Woodhouse
Total
Number of shares
300,000
16,939
39,609
16,939
10,700
11,608
61,768
36,787
494,350
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
Outokumpu Annual Report 2023
company’s management and operations and it has the
duty at all times to act in the best interest of the company.
of value or nature, taking into account the size,
structure, and field of the Group’s operations.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders' Nomination Board
Executive Management
Internal control and risk management
Remuneration report
Financial year
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 annual limits for the Group’s capital
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;
• Decide on the Group’s external financing and treasury
matters as follows and as further defined in the Board
Charter;
i. All financing arrangements, which exceed EUR 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 EUR 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;
• Decide on any other commitments by any of the Group
companies that are out of the ordinary either in terms
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;
• Monitor the adequacy and allocation of the Group’s top
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;
• Ensure that policies outlining the principles of managing
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.
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Remuneration report
Financial year
With respect to internal control
and risk management:
• Discuss and approve interim reports, statements, 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 2023, 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.
Outokumpu Annual Report 2023
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 2023. Board
meetings will be held as regularly as deemed necessary,
but at least five times every year. In 2023, the Board of
Directors had 16 meetings, and the attendance rate was
99%.
Breakdown of individual attendance
at Board meeting
16 meetings in 2023
Kari Jordan
Heinz Jörg Fuhrmann
Kati ter Horst
Jyrki Mäki-Kala (as of March 30,2023)
Vesa-Pekka Takala (until March 30, 2023)
Päivi Luostarinen
Petter Söderström
Pierre Vareille
Julia Woodhouse
Attendance
16/16
16/16
15/16
11/11
5/5
16/16
16/16
16/16
16/16
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 2023.
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 seven times during 2023, and the
attendance rate was 100%.
Breakdown of individual attendance
at Audit Committee meetings
7 meetings in 2023
Attendance
Jyrki Mäki-Kala (as of March 30, 2023)
Päivi Luostarinen
Petter Söderström
Vesa-Pekka Takala (until March 30, 2023)
Julia Woodhouse
6/6
7/7
7/7
1/1
7/7
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Committee prepares
proposals to the
Board concerning the
Remuneration Policy
and the Remuneration
Report.
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Regulatory and structural framework
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Shareholders' Nomination Board
Executive Management
Internal control and risk management
Remuneration report
Financial year
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 five times during
2023, and the attendance rate was 96%.
Breakdown of individual attendance at
Remuneration Committee meetings
5 meetings in 2023
Kari Jordan
Heinz Jörg Fuhrmann
Kati ter Horst
Pierre Vareille
Attendance
5/5
5/5
4/5
5/5
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
2023.
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Financial year
Jordan, Chairman of the Outokumpu Board of Directors,
served as the fifth member of the Nomination Board.
The Nomination Board convened two 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 2024 Annual
General Meeting of Shareholders.
Four of the
Nomination
Board members
represent the four
largest shareholders.
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.
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 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.
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.
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
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 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.
Shareholders with the right to appoint representatives to
the Nomination Board in 2023 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, Managing Director of Solidium Oy, Pekka Pajamo,
CFO at Varma Mutual Pension Insurance Company, Jouko
Pölönen, President and CEO of 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
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Outokumpu Annual report 2023 Executive Management
Biographical details of the CEO and the Leadership Team on December 31, 2023
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
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
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,
IT, 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 control and risk management
Remuneration report
Financial year
Positions of trust
Vice Chairman: Confederation of Finnish Industries (EK)
2023–
Vice Chairman: Technology Industries of Finland 2023–
Board member: Neste Corporation 2023–
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
Positions of trust
Board member and Audit Committee member:
UPM 2023–
Chair: Association of Finnish Steel and Metal Producers
2023–
Board member (2017–2023) and Audit Committee
Chair (2018–2023): Uponor
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Outokumpu Annual report 2023 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
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders' Nomination Board
Executive Management
Internal control and risk management
Remuneration report
Financial year
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,
energy, and investment steering
Employed by Outokumpu since
2018.
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
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Outokumpu Annual report 2023 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.
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 2020–2022
Chairman of Board: Chamber of Commerce in Lapland
2020–2021
Council member: International Chromium Development
Association 2019–2023
Board member: EuroAlliages 2018–
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders' Nomination Board
Executive Management
Internal control and risk management
Remuneration report
Financial year
Marc-Simon Schaar
Chief Procurement Officer
b. 1976, German citizen
M.Sc. (International Business)
Chief Procurement Officer
2023–
Member of the Leadership Team
2023–
Responsibility: Raw material and
general procurement
Employed by Outokumpu since
2012.
Work experience:
Senior Vice President, Raw Materials: Outokumpu
2021–2023
Senior Vice President, Treasury, Risk Management,
M&A and Investor Relations: Outokumpu 2020–2022
Senior Vice President, Finance, business areas Europe
and Ferrochrome: Outokumpu 2016–2020
Senior Vice President, Head of Group Controlling
(FP&A), M&A and Management Information Systems:
Outokumpu 2014–2016
Vice President: Head of Special Projects:
Outokumpu 2013–2014
Senior Manager: Accounting, Controlling and Post-
Merger Integration: Inoxum 2012–2013
Manager Transaction Advisory Services: EY 2006–2011
Positions of trust:
Member of the Board of Directors: OSTP Holding Oy
2017–
Chairman of the Finance Committee: Fennovoima Oy
2021–2022
Member of the Board of Directors: Outokumpu Nirosta
GmbH 2014–2019
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Outokumpu Annual report 2023 Johann Steiner
Executive Vice President –
Sustainability, People and
Communications
b. 1966, German citizen
M.Sc. (Econ.)
Executive Vice President –
Sustainability, People and
Communications 2023–
Member of the Outokumpu
Leadership Team 2013–
Responsibility: Sustainability,
people and communications
Employed by Outokumpu since
2013.
Work experience
Chief Human Resources Officer:
Outokumpu 2020–2023
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
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders' Nomination Board
Executive Management
Internal control and risk management
Remuneration report
Financial year
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.
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Outokumpu Annual report 2023 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 U.S., 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 control and risk management
Remuneration report
Financial year
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Outokumpu Annual report 2023 Outokumpu shares and share-based rights (parents
or subsidiaries) owned by Leadership Team
members and his/her controlled corporations on
December 31, 2023
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.
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.
Organization structure on Dec 31, 2023
Members of the leadership team
Heikki Malinen
Pia Aaltonen-Forsell
Thomas Anstots
Stefan Erdmann
Martti Sassi
Marc-Simon Schaar
Johann Steiner
Niklas Wass
Tamara Weinert
Total
Number of shares
117,361
48,248
95,270
40,000
29,420
85,230
186,749
28,177
50,001
680,456
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
Outokumpu Annual Report 2023
Operational
management targets
to secure significant
and sustainable
growth in the value of
the company.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders' Nomination Board
Executive Management
Internal control and risk management
Remuneration report
Financial year
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Board of Directors
Shareholders' Nomination Board
Executive Management
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Remuneration report
Financial year
Internal control 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.
Outokumpu applies the COSO Internal Control – Integrated
Framework (2013) as main guidance for the internal
control system. Outokumpu’s internal control system is
based on the Internal Control Policy and related
instructions, common ways of working with clearly defined
roles and responsibilities, and processes run on a digital
platform. 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.
As a listed company, we need to comply
with a variety of regulations and ensure
that key operational and reporting
targets are met.
Internal controls over financial reporting
This section provides a description of how the internal
controls over financial reporting are organized at
Outokumpu. 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.
Outokumpu’s Internal Control Policy defines main roles,
responsibilities, principles, and objectives for the Group’s
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.
The Group’s internal control function supports and
develops efficient internal control management processes
and is responsible for control testing. Components of the
system include control environment, risk assessment,
control activities, information and communication as well
as monitoring activities.
Outokumpu’s consolidated financial statements have been
prepared in accordance with IFRS Accounting Standards as
adopted by the European Union. 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.
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
threats are handled through regular reporting and status
review meetings.
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Outokumpu Annual report 2023 •
•
•
•
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
guidelines in the Outokumpu Group and scope, roles
and responsibilities for risk management activities.
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 control and risk management
Remuneration report
Financial year
Risk assessment
Risk assessment involves a dynamic and iterative process
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 risks for the most relevant parts of the
financial reporting process.
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 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 various measures and include reviews of
financial reports by 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.
Information and communication
Group-wide policies and principles are available to all
Outokumpu’s employees. Instructions relating to financial
reporting are communicated to all involved parties. The
main communication channels employed are regular
controller meetings, Outokumpu’s intranet as well as
digital platforms and databases. Outokumpu’s Group
Functions Board discusses and reviews among other topics
issues over internal controls. Furthermore, Finance
Leadership Team meetings are organized regularly to
discuss and address issues e.g. relating to the financial
reporting process.
Control activities highlights
• During 2023, the maturity of the digital platform for risk
and control management was improved by developing
reporting capabilities which supports monitoring and
decision making by management.
• Coverage of internal controls improved by including new
areas, like business area Americas financial reporting
process controls, in the digital control platform. A
separate review of the inventory management process
was conducted and implementation of additional
internal controls in the process has been initiated.
• Group’s internal control function started control testing,
a measure by which control design and effectiveness
are assessed. Results of the testing is presented to the
attention of the control owners for further consideration.
• Strengthening of segregation of duties management
(SoD) continued in 2023 with the implementation of
GRC functionality into the SAP S/4HANA environment.
Furthermore, the development of SoD governance and
process continued with a target to start SoD reporting
and risk mitigation in 2024.
• Outokumpu implemented a new financial planning,
reporting and consolidation tool. Financial reporting
related controls were reviewed and fine-tuned to reflect
the new reporting process.
• Preparations for the next rollout of the SAP S/4HANA
together with other related IT systems continued.
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 in the finance function 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
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Governance
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Board of Directors
Shareholders' Nomination Board
Executive Management
Internal control and risk management
Remuneration report
Financial year
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
assurance procedures as well as maturity of the system of
internal controls are reported to the Audit Committee and
the Group Functions Board on a regular basis.
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 Audit Committee. Internal audit monitors,
together with the Group’s ethics and compliance function,
adherence to Group principles, policies, and instructions,
and leads investigations into fraudulent and noncompliant
behaviors and activities.
Key activities in 2023
•
Internal audit performed nine audits, including one
special audit. The results of the audits as well as
progress in related actions are reported to the relevant
management, the Audit Committee, and the external
auditor.
• Total of 48 misconduct reports were recorded (2022:
45), most of the reports leading to recommendations
for management actions.
Planned key activities for 2024
• During the year, from 7 to 9 site and thematic audits
are expected.
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.
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 Audit
Committee on ethics and compliance related matters.
Ethics and compliance related matters are also regularly
handled in the Compliance Steering Group which consists
of the Group Functions Board, Head of Internal Controls
and Internal Audit, General Counsel and Head of
Compliance. The Compliance Steering Group met four
times in 2023. 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, business lines
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.
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 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 – a 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.
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Outokumpu Annual report 2023 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 and
Associated companies, Solidium Oy, 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 participate in
Outokumpu Annual Report 2023
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, was
audited by PricewaterhouseCoopers Oy, and the
responsible auditor was Janne Rajalahti, Authorized Public
Accountant. PricewaterhouseCoopers Oy was 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 30,
2023 and has been the Auditor of Outokumpu for seven
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 Board Audit Committee continuously
monitored the non-audit services purchased by the Group
from PricewaterhouseCoopers at the global level. In 2023,
the auditors were paid fees totalling EUR 3.2 million, of
which the non-auditing services accounted for EUR 0.3
million.
Annual review
Sustainability review
Governance
Regulatory and structural framework
Board of Directors
Shareholders' Nomination Board
Executive Management
Internal control and risk management
Remuneration report
Financial year
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Outokumpu Annual report 2023 Remuneration
report
Annual review
Sustainability review
Governance
Remuneration report
Introduction
Fees of the Board of Directors
Remuneration of the CEO
Financial year
The principles of remuneration include
shareholder value creation, competitive
remuneration, incentives aligned with business
strategy, and pay for performance. Sustainability
targets are included in our incentive plans.
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Outokumpu Annual report 2023 Introduction
This report has been prepared according to the Finnish
Corporate Governance Code 2020 and approved by the
Board of Directors. It will be presented to the Annual
General Meeting in April 2024.
The report presents how Outokumpu rewarded the Board
members and the President and CEO for 2023. The
materialized remuneration is in line with the Remuneration
Policy of the governing bodies of Outokumpu, approved at
the Annual General Meeting in 2020.
Outokumpu’s Annual General Meeting on March 30, 2023
approved the remuneration report 2022 in an advisory
vote. Approximately 85% of the votes cast voted in favour
of the remuneration report. In this remuneration report
2023, we further increased the transparency of our
disclosures, notably on performance measures in incentive
plans.
In 2023, the Annual General Meeting elected Jyrki Mäki-
Kala as a new Board member. Jyrki’s financial steering
skills and experience with sustainability work provide an
excellent addition to the capabilities of our Board of
Directors.
For 2023, 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, bleaker
performance provided lower rewards for all employees.
Sustainability in all its aspects continues to be at the core
of our operations. Following the definition of our long-term
ambitions for diversity, equity, and inclusion in 2022, in
2023 we introduced a diversity target in our short-term
incentive plan, for all key leaders except the CEO. CO2
emission reduction also remained a key target in our long-
term incentive program, the Performance Share Plan.
Going forward, we will continue to review our remuneration
framework to ensure they support value delivery for our
stakeholders.
Perfomance and remuneration trends 2019–2023
from 2018 baseline
400%
350%
300%
250%
200%
150%
100%
50%
—%
Annual review
Sustainability review
Governance
Remuneration report
Introduction
Fees of the Board of Directors
Remuneration of the CEO
2018
2019
2020
2021
2022
2023
Financial year
Adjusted EBITDA
Operating cash flow
Board of Directors remuneration
CEO remuneration
Average salaries and wages
Development of financial performance and remuneration
Adjusted EBITDA 1), € million
Operating cash flow, € million
Board of Directors 2), €
CEO 3), €
Employee average 3)4), €
Ratio CEO/employee average
2023
517
325
2022
1,256
778
2021
980
597
2020
250
322
2019
263
371
917,501
898,200
780,600
658,400
705,800
2,603,709 1,965,022
795,840 1,264,729 2,534,480
62,152
66,013
62,677
53,637
53,922
42
30
13
24
47
1) 2019–2020 including discontinued operations.
2) Total remuneration paid to the Board of Directors, including annual remuneration and meeting fees for all
members.
3) Total remuneration paid to the CEO, including salary, employee benefits and incentives. Heikki Malinen
started as the CEO on May 15, 2020.
4) 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. From 2021 onwards, the calculation is based on full-time equivalent (FTE).
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Outokumpu Annual report 2023 Fees of the Board of Directors
Board of Directors’ remuneration and meeting fees paid in 2023 and 2022
Annual review
Sustainability review
Governance
Remuneration report
Introduction
Fees of the Board of Directors
Remuneration of the CEO
Financial year
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 2023, Jyrki Mäki-Kala joined the Board of Directors
as a new member. Vesa-Pekka Takala left the Board of Directors at the Annual General
Meeting in 2023.
Observing general market trends and in accordance with the proposal by the Nomination
Board, the Annual General Meeting 2023 decided to increase the 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
2023
2022
Annual remuneration
Meeting fee
Annual remuneration
Meeting fee
174,000
93,500
72,500
800
800
800
1,600
169,000
93,500
72,500
600
600
600
1,200
Paid in 2023
Annual compensation
Members of the Board of Directors
Share portion
Cash portion Meeting fees1)
Kari Jordan, Chairman
Kati ter Horst, Vice Chairman
Heinz Jörg Fuhrmann, Member
Päivi Luostarinen, Member
Jyrki Mäki-Kala, Member and Chairman
of the Audit Committee 2)
Petter Söderström, Member
Vesa-Pekka Takala, Member 3)
Pierre Vareille, Member
Julia Woodhouse, Member 4)
Total
0
0
29,458
29,458
37,996
29,458
0
29,458
29,458
174,000
93,500
43,042
43,042
55,504
43,042
0
43,042
43,042
18,886
26,750
21,843
20,625
12,800
19,202
7,614
25,338
40,943
185,286
538,214
194,001
Total
192,886
120,250
94,343
93,125
106,300
91,702
7,614
97,838
113,443
917,501
1) Meeting fees are entered in the table on the year when they are paid and include committee meeting
fees and tax on benefits/gifts.
2) Appointed as a Board member on March 30, 2023.
3) Board member until March 30, 2023.
4) Meeting fees include 10,500€ meeting fees for the ESG (environmental, social and governance) Board
Members of the Board of Directors
Share portion
Cash portion Meeting fees1)
Total
Paid in 2022
Annual compensation
Kari Jordan, Chairman
Eeva Sipilä, Vice Chairman 2)
Kati ter Horst, Vice Chairman 3)
Heinz Jörg Fuhrmann, Member
Päivi Luostarinen, Member
Petter Söderström, Member
Vesa-Pekka Takala, Member 4)
Pierre Vareille, Member
Julia Woodhouse, Member 5)
Total
169,000
21,000
190,000
29,463
29,463
29,463
37,996
29,463
29,463
91,600
43,037
43,037
43,037
55,504
43,037
43,037
4,200
22,200
22,200
19,200
14,400
19,200
27,000
32,200
185,311
531,289
181,600
4,200
113,800
94,700
91,700
86,900
112,700
99,500
104,700
898,200
1) Meeting fees are entered in the table on the year when they are paid and include committee meeting
fees.
2) Vice Chairman until March 31, 2022.
3) Vice Chairman as of March 31, 2022.
4) Board member until March 30, 2023.
5) Meeting fees include 7,000€ meeting fees for the ESG (environmental, social and governance) Board.
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Outokumpu Annual report 2023 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.
Heikki Malinen’s base salary remained unchanged during 2023, but he started to use a
company car, which is reflected in the higher value of fringe benefits.
In 2023, the CEO earned a smaller short-term incentive than in 2022, reflecting the
damped performance in severe market conditions. A share reward was paid out based on
the performance from 2020 to 2022.
The service contract of the CEO is valid until further notice. He is entitled to a severance
payment of 12 months, and the notice period is 6 months for both parties. Heikki
Malinen’s retirement age is 65 years. He participates in the Finnish statutory pension
system, and in 2023 there was no supplementary pension plan at place.
Overall CEO remuneration
EUR
Base salary 1)
Short-term incentives 2)
Long-term incentive 2)
Benefits 3)
Total remuneration
2023
986,190
871,388
729,208
16,923
2022
891,632
1,064,700
0
8,690
2,603,709
1,965,022
1) The total payment is higher than the annual base salary of EUR 950,000 because of accrued holidays
and holiday pay from previous years paid in 2023.
Short-term incentive of the CEO
In 2023, the CEO’s short-term incentive earning opportunity stayed unchanged at 50% of
the annual gross base salary on a target level and 100% on a maximum level. The outcome
was 54%or EUR 515,755. It will be paid in March 2024.
Annual review
Sustainability review
Short-term incentive earning opportunity
EUR
Threshold
Target
Maximum
1) Percentage of annual base salary.
CEO’s short-term incentives in 2023
% 1)
0.5 %
50 %
100 %
€
4,750
425,000
950,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
Safety
Adj. EBIT
Strategy
Max €
Pay-out €
Governance
Remuneration report
Introduction
Fees of the Board of Directors
Remuneration of the CEO
Financial year
2) Incentives are entered in the table for the year when they are paid. Short-term incentives are earned
during the previous year. Long-term incentives are earned during the previous three years.
Short-term incentive earning opportunity and performance measures
3) Benefits include telephone and car but exclude insurances and post-employment benefits (statutory
pension).
CEO pay mix
28%
34%
39%
2023
49%
51%
2022
Performance measures
Safety (TRIFR) 1)
Adjusted EBIT, million €
Strategy implementation (score 1–5)
1) Total recordable injury frequency rate.
Weight
Achievement
Payout, %
Payout, €
10 %
70 %
20 %
100 %
1.5
274
5
100 %
35 %
100 %
95,000
230,755
190,000
54 %
515,755
Base salary and benefits
Short-term incentive
Long-term incentive
2) 1 = no payout, 2 = 25%, 3 = 50%, 4 = 75%, 5 = 100%. Discretionary assessment of strategy phase two
implementation and delivery of projects that are key for Outokumpu’s future.
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Outokumpu Annual report 2023 Long-term incentives and shareholding of the CEO
In 2023, the long-term incentive target and maximum levels remained at 50% and
respectively 75% of the annual base salary at time of grant. The Performance Share Plan
(PSP) 2021-2023 partly met its performance criteria and the executives participating in the
plan, including the CEO, will receive 73.3% of the shares granted at target level. The
rewards will be paid in 2024.
Long-term earning opportunity
Threshold 1)
Target 1)
Maximum 1)
No of shares
granted (gross) 2)
Grant date
No of shares
earned (gross)
No of shares
delivered (net)
Share delivery date
Share price at
delivery, €
Value of the
reward (gross), €
PSP 2023-2025 PSP 2022-2024 PSP 2021-2023 PSP 2020-2022 PSP 2019-2021
25 %
50 %
75 %
25 %
50 %
75 %
25 %
50 %
75 %
22 %
44 %
67 %
14 %
28 %
56 %
115,600
85,300
168,800
130,451
48,500
10/3/2023
15/3/2022
15/3/2021
15/5/2020
15/5/2020
123,730
130,451
71,902
By
31/03/2026
By
31/03/2025
By
31/03/2024
21/02/2023
5.59
729,208
0
0
–
–
0
1) In percentage of annual base salary at the time of grant. In PSP 2019–2021 and 2020–2022, the levels
were prorated to time in position during the performance period.
2) Number of gross shares at target level. The number of shares was determined using the average share
price of 90 calendar days prior to Board approval.
Long-term earning performance measures
CEO share rewards and ownership
200,000
150,000
100,000
50,000
0
2022
2023
2024
2025
2026
Grant from ending plan period
Vesting
Shareholding
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 of the net shares
received from the share-based incentive programs must be used to fulfil that ownership
recommendation.
Annual review
Sustainability review
Governance
Remuneration report
Introduction
Fees of the Board of Directors
Remuneration of the CEO
Financial year
Shares owned by the CEO
On December 31, 2023
Number of shares owned
Closing share price, €
Value of the shares, €
2023
117,361
4.484
526,247
55 %
2022
45,459
4.73
215,021
23 %
PSP 2023–2025
PSP 2022–2024
PSP 2021–2023
Value of the shares in % of annual base salary
Return on capital employed
Weight
Measurement
Outcome
CO2 emission per ton crude steel
Weight
Measurement
80 %
80 %
100 %
Average of 2023,
2024 and 2025
Average of 2022,
2023 and 2024
Q4/2022–Q3/2023
73.3% of target
20 %
20 %
SBTi target 2025
(1.52)
SBTi target 2024
(1.58)
–
–
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Outokumpu Annual report 2023 Financial
year 2023
Outokumpu’s performance was solid in
2023. Despite the shift in the market
environment, operative results
remained good and the year ended
with a net debt free balance sheet.
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
Audit
Information for shareholders
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
Audit
Information for shareholders
Review by the Board
of Directors
In 2023, we experienced a shift in the global stainless steel market, which is reflected in
our annual results. Despite the more challenging operating environment, especially in
Europe, our operational performance remained strong. In 2023, Outokumpu’s adjusted
EBITDA amounted to EUR 517 million (EUR 1,256 million). The comparison period was
exceptionally strong from a market perspective and therefore, we delivered our best annual
result ever in 2022.
In 2023, our stainless steel deliveries decreased compared to the previous year. Market
environment in the first half of the year was relatively solid in both Europe and Americas,
but the second half turned out to be challenging in Europe. In the midst of changing
conditions, we took immediate measures to manage our costs and improve our profitability.
Our financial result, however, decreased compared to the previous year and was negatively
impacted by significantly lower realized prices for stainless steel in the European market.
As a result of lower profitability, our ROCE was -2.1% (22.6%). Net result amounted to EUR
-111 million and earnings per share to EUR -0.26 (EUR 2.40). Both our net result and
earnings per share as well as ROCE were negatively impacted by restructuring, divestments
and the EUR 264 million impairment booking related to the renegotiated hot rolling
agreement in business area Americas. This is a result of the strategic assessment, which
we concluded during the year and found that the continuation of the procurement of hot
rolling services in business area Americas is the best solution for Outokumpu. This was a
great step on our strategy journey to extend our partnership in the U.S. until year 2051.
Outokumpu’s balance sheet remained strong in 2023, and as a result of solid cash flow we
ended the year with no net debt. It is crucial to have a buffer in these volatile times and
this shows why de-risking of the company was considered a priority in the beginning of our
In 2023, Outokumpu successfully exited the Long Products business as it was
considered non-core. Majority of the Long Products business was divested in the
beginning of the year on January 3, 2023. The exit was completed on August 1, 2023
when the remaining Long Products units were divested. 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 2023 three-phase strategy journey. Cyclicality of the stainless steel industry prevails, but our
strong financial position and increased resilience help us to withstand changing conditions.
Adjusted EBITDA, € million
Business area Europe’s adjusted EBITDA amounted to EUR 148 million (EUR 680 million),
and stainless deliveries decreased compared to the previous year. Business area Americas’
performance remained solid in 2023. Stainless steel deliveries decreased and business
area delivered adjusted EBITDA of EUR 285 million (EUR 384 million). Business area
Ferrochrome’s adjusted EBITDA amounted to EUR 96 million (EUR 220 million) and
ferrochrome production decreased from the previous year due to weaker market conditions.
Throughout the year, we diligently executed our strategy and focused especially on
measures to restore our profitability and improve our competitiveness. In the second phase
of the strategy, we aim to improve our EBITDA run-rate by EUR 200 million and by the end
of 2023, we had almost achieved our target. As part of our strategy, we also aim to keep
our net debt to adjusted EBITDA ratio at below 1.0 in normal market conditions and have
an increased focus on shareholder returns as well as an ambitious aim to reduce our CO2
emissions further. During 2023, we proceeded decisively towards our strategic targets. We
also kept our focus on shareholder returns and launched yet another share buyback
program at the end of the year.
In 2023, we took important steps forward on our climate strategy and successfully reduced
our CO2 emissions in line with our SBTi climate target. We continued to execute energy
efficiency improvements, which have a positive impact on both our costs and CO₂
emissions. The share of our recycled content even further increased and in 2023, our
production was based on 95% recycled raw materials. As a result of various actions taken
across the group, by the end of 2023, we had reduced our carbon emissions by 27%
compared to year 2016. We supported our customers to reduce their emissions by over 12
million tonnes. During 2023, we also strengthened our future supply of low carbon raw
materials through new partnerships. Within safety, we managed to further improve our
performance to the best level in history, reflecting our strong commitment towards zero
incidents.
2023 was a solid year for Outokumpu. We kept out balance sheet strong in a weaker
stainless steel market and ended the year with a negative net debt. This gives us
significant resilience and strength to withstand changing conditions.
Market development
CRU adjusted downwards the expectations concerning global apparent consumption and
estimates that total global apparent consumption of stainless steel flat products in 2023
will remain at the previous year's level, showing only a very minor increase of 0.1%.
However, in EMEA apparent consumption of stainless steel flat products is estimated to
decrease by 18.3% in 2023 compared to the previous year.
(Source: CRU Stainless Steel Flat Products Market Outlook November 2023)
1,500
1,200
900
600
300
0
2019*
2020*
2021
2022
2023
Stainless steel deliveries, 1,000 tonnes
2,500
2,000
1,500
1,000
500
0
2019*
2020*
2021
2022
2023
Net debt, € million
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0
-100
2019*
2020*
2021*
2022*
2023
*Including discontinued operations
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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
Audit
Information for shareholders
Outokumpu Annual report 2023 Results
€ million
Sales
Adjusted EBITDA
Adjustments
Loss on disposal of shares in Group companies and
businesses
Restructuring costs
Inventory write-down
Onerous contracts provisions
Litigation provisions
EBITDA
EBIT
Net result for the financial year
Earnings per share, €
Diluted earnings per share, €
Adjusted EBITDA margin, %
Return on capital employed, rolling 12 months (ROCE), %1)
2023
6,961
517
-26
-50
-20
-7
—
416
-100
-111
-0.26
-0.22
7.4
-2.1
2022
9,494
1,256
-10
—
—
—
2
1,248
992
1,086
2.40
2.22
13.2
22.6
1) The balance sheet component in 2022 includes the equity component of discontinued operation.
During January–December 2023, Outokumpu’s sales decreased to EUR 6,961 million (EUR
9,494 million) and adjusted EBITDA amounted to EUR 517 million (EUR 1,256 million).
The decrease in adjusted EBITDA was mainly driven by a substantially weaker market
environment in Europe. The previous year was exceptionally strong and in 2023 the market
shifted. Due to the same reason as well as the impairment booking in business area
Americas and other adjustment items, ROCE for the rolling 12 months was -2.1% (22.6%).
In January–December 2023 total stainless steel deliveries were 9% lower compared to the
previous year. Realized prices for stainless steel were at a significantly lower level in
Europe, but also declined in the Americas. Lower profitability in business area Ferrochrome
negatively impacted the group result and costs in business area Europe increased
compared to the previous year. Raw material-related inventory and metal derivative losses
amounted to EUR 44 million in January–December 2023 (losses of EUR 131 million). Other
operations and intra-group items' adjusted EBITDA totaled EUR -12 million (EUR -28
million).
EBIT amounted to EUR -100 million (EUR 992 million) and net result declined to EUR -111
million (EUR 1,086 million) in 2023. Negative development was mainly driven by a lower
profitability as well as notable adjustment items related mainly to impairment, divestments
and restructuring. Net result in 2022 was positively impacted by the recognition of the EUR
297 million deferred tax asset..
Strategy execution
Outokumpu launched its three-phase strategy in November 2020. In the first phase, the
aim was to de-risk the company by the end of 2022. This was completed six months ahead
of schedule. As a result, Outokumpu started the second phase in July 2022, and this phase
will run until the end of 2025.
In the second phase of the strategy, the aim is to strengthen Outokumpu's core. The
company aims to improve its EBITDA run-rate by an additional EUR 200 million and
maintain a net debt to adjusted EBITDA ratio 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 remains committed to capital
discipline, limiting its capital expenditure to EUR 600 million for years 2023-2025, while
also increasing its focus on shareholder 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.
At the end of the year 2023, Outokumpu had completed a total of 475 projects towards
the EBITDA run-rate improvement target of EUR 200 million since the start of the second
phase. By the end of the year, the company had improved its EBITDA run-rate by EUR 186
million and therefore, almost achieved its target.
In business area Americas, Outokumpu's target is to increase its cold rolling capacity by
80kt in the second phase of the strategy. At the end of 2023, the company was ahead of
its target and had increased its cold rolling capacity by 55 kilotons in total. In San Luis
Potosi, Mexico a significant number of actions had been implemented, allowing Outokumpu
to offer to the market 32 kilotons of additional capacity of cold rolled prime product. In
Calvert, Alabama, Outokumpu increased its cold rolling capacity by 23 kilotons through
yield improvements and de-bottlenecking. Projects to turn this increased capacity into
revenue are ongoing.
In the fourth quarter, on November 29, Outokumpu announced it had negotiated a long-
term extension to its hot rolling partnership with AM/NS in business area Americas until
2051. The contract is subject to four years prior written notice with the earliest effective
termination date being October 1, 2042. Outokumpu had been evaluating different options
for its hot rolling arrangements to achieve its commercial ambitions in the attractive North
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Outokumpu Annual report 2023 American market. One option under consideration was to build its own hot rolling mill,
however, as a result of the evaluation, continuing with the partnership was considered the
best solution. Outokumpu aims to strengthen its position in North America and is
evaluating a possible cold rolling capacity expansion, which would enable the company to
grow in North America. Decisions regarding the cold rolling capacity expansion are foreseen
within a year.
minority interest in CRONIMET North-East GmbH, the holding company for CRONIMET’s
Northeastern business in Europe and the partnership agreement was completed after the
reporting period on January 24, 2024. In the fourth quarter, Outokumpu also signed a letter
of intent with Greenland Resources Inc. to strengthen the future supply chain of low-
emission high-quality molybdenum and in the second quarter, the company acquired a
9.9% share of FPX Nickel to strengthen the supply chain of sustainable nickel.
In 2023, Outokumpu announced it has begun preparations for the third phase of its
strategy, which will start in 2026 and will most likely require new investments. The
company’s focus in the third phase will be to strengthen its market position further and to
develop more globally diversified operations including Americas expansion, European
competitiveness, value-chain integration and sustainability leadership along with the
possible biocoke investment.
On December 18, Outokumpu announced that it is investing EUR 30 million in a pelletizing
plant for biocoke in Tornio, Finland to accelerate the reduction of direct emissions. The
company also continues to plan for further investments to capacity for a biocoke production
in the future. Further investment decisions are expected during 2024 provided that the
financial feasibility is proven.
In business area Europe, in the middle of the challenging market conditions, the focus has
been on improving profitability and competitiveness. On November 7, Outokumpu
announced restructuring plans for its German operations in order to ensure its
competitiveness in Europe and strengthen global market leadership in advanced materials.
The company is planning to transfer precision strip operations from Dahlerbrück to
Dillenburg and to centralize production. The intended change would both consolidate
underutilized capacity and create significant synergies. In addition, Outokumpu is also
closing the service center in Hockenheim and will transfer volumes to other locations.
Throughout the second phase of the strategy a strong focus has been on the steering
model in business area Europe. Especially in the commodity business, Outokumpu has
been able to improve steering and thereby benefit from being more agile while facing
challenging market conditions. This, combined with the ongoing focus on improving the
digital customer experience and continuing efficiencies in scrap utilization, business area
Europe contributed strongly to the EBITDA run-rate improvement throughout 2023.
In business area Ferrochrome, Outokumpu is targeting significant emissions reductions for
the Kemi mine to become carbon neutral by 2025. In October, the company took a
significant step forward in reaching this target by replacing fossil fuels with renewable
solutions provided by Neste, the world’s leading producer of renewable diesel. With
renewable fuels, the annual greenhouse gas emissions of the Kemi mine will be cut by
almost 11.3 million kilos, which corresponds to the removal of approximately 4,000
passenger cars from Finnish traffic for a year.
Outokumpu is a significant user of energy which impacts both costs and emissions. As part
of the sustainability journey, the company has set an ambitious target to improve energy
efficiency by 8% across the group by the end of 2024 compared to the January–September
2022 level. This corresponds to energy consumption of around 600 GWh. At the end of the
year 2023, Outokumpu had achieved a run-rate improvement of 215 GWh in context of
energy consumption, resulting in savings of more than EUR 10 million.
During 2023, Outokumpu took significant actions to strengthen its supply of sustainable
raw materials. In the fourth quarter, Outokumpu announced it has signed an agreement to
become a shareholder in Envigas AB, a leading European producer of biocarbon, with an
ownership share of 20%. The company also announced it is expanding collaboration with
CRONIMET to take circularity to new heights and to secure access to high-quality scrap
near Outokumpu's sites in Europe. The company signed an agreement to acquire a 10%
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Outokumpu Annual report 2023 EBIT, € million, and return on capital
employed, %
Net result, € million, and earnings
per share, €
Equity-to-assets ratio and debt-to-
equity ratio, %*
Capital expenditure and
depreciation, € million
1,000
800
600
400
200
0
-200
30
25
20
15
10
5
0
-5
1,200
1,000
800
600
400
200
0
-200
3
2.5
2
1.5
1
0.5
0
-0.5
70
60
50
40
30
20
10
0
-10
250
200
150
100
50
0
2019* 2020* 2021 2022 2023
2019*2020* 2021 2022 2023
2019
2020
2021
2022
2023
2019* 2020* 2021
2022
2023
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. In 2023 no
discontinued operations impact in the balance
sheet.
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, %
2023
2022
359
82
502
-60
-0.1
325
170
170
-1.6
63.8
492
141
644
-10
0.0
778
158
160
-0.3
59.2
Operating cash flow for full-year 2023 was EUR 325 million (EUR 778 million, incl.
discontinued operations). The decrease in the annual operating cash flow compared to the
previous year was mainly driven by weaker profitability, partly offset by positive
development in net working capital. During full-year of 2023, net working capital decreased
by EUR 54 million, while there was an increase of EUR 587million in the previous year. The
difference in net working capital development compared to the previous year was mainly
driven by lower metal prices as inventory volumes remained relatively stable. Inventories
stood at EUR 1,581 million at the end of December (December 31, 2022: EUR 1,783
million). The inventory decrease in full-year of 2023 was EUR 202 million. Capital
expenditure amounted to EUR 170 million in the full-year of 2023 (EUR 158 million).
Net debt amounted to EUR -60 million at the end of December (December 31, 2022: EUR
-10 million, incl. discontinued operations). The completion of the divestment of the majority
of the Long Products business had a EUR 94 million positive impact on net debt, while the
dividend payment of EUR 152 million for the year 2022 had a negative impact on net debt.
In the fourth quarter, the impact of the announced EUR 50 million share buyback program
is included in net debt. This comprises of EUR 12 million cash impact and EUR 38 million
financial liability. Gearing amounted to -1.6% at the end of December (December 31,
2022: -0.3%, incl. discontinued operations).
Net financial expenses in full-year 2023 decreased to EUR 37 million (EUR 71 million) and
were driven by higher interest income, lower loan-related fees and market price impact.
Interest expenses increased to EUR 60 million (EUR 44 million), mainly due to an overall
higher interest rate environment.
Cash and cash equivalents amounted to EUR 502 million at the end of December
(December 31, 2022: EUR 644 million, incl. discontinued operations) and overall liquidity
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Outokumpu Annual report 2023 reserves were EUR 1.3 billion (December 31, 2022: EUR 1.4 billion). In 2023, Outokumpu
prepaid EUR 141 million of the remaining outstanding pension loans.
On December 31, 2023, Outokumpu had a total of EUR 800 million of outstanding
committed credit facilities, which were fully unutilized. In 2023, Outokumpu extended its
current EUR 700 million multicurrency revolving credit facility by one year and it will mature
in February 2027.
In 2021, Outokumpu signed a deal on three cargo vessels with Langh Ship to reduce CO2
emissions in transports. The company will take these cargo vessels into use during the first
half of 2024. The net debt impact is expected to be approximately EUR 38 million in the
first half of 2024, of which approximately EUR 25 million in the first quarter.
Business areas
Outokumpu has three business areas, which are also Group’s operating segments. In 2023,
the company exited the Long Product’s business, which was previously one of Outokumpu’s
business area. The divested Long Products businesses were classified as assets held for
sale and reported as discontinued operations as of September 2022. More information
about the business areas can be found in note 2.1 in the consolidated financial
statements.
Europe
Stainless steel deliveries
1,000 tonnes
Sales
Adjusted EBITDA
Adjustments to EBITDA
EBITDA
Operating capital
Return on operating capital, rolling 12 months
EUR million
EUR million
EUR million
EUR million
EUR million
%
2023
1,367
4,818
148
-52
96
1,850
1.5
2022
1,423
6,266
680
—
680
1,864
28.9
In 2023, business area Europe’s sales decreased to EUR 4,818 million (EUR 6,266 million)
and adjusted EBITDA amounted to EUR 148 million (EUR 680 million).
Stainless steel deliveries decreased by 4% compared to the previous year. Market
environment was substantially weaker and profitability was negatively impacted by
significantly lower realized prices for stainless steel. Variable costs increased in 2023
compared to the previous year as a result of higher consumable and energy prices, and
also fixed costs were slightly higher. Raw material-related inventory and metal derivative
losses amounted to EUR 27 million (losses of EUR 135 million in 2022). Adjustments to
EBITDA include the impact from restructuring plans in Germany.
Business area Europe’s return on operating capital amounted to 1.5% at the end of 2023
(28.9%) mainly due to lower profitability, but was supported by improvements in working
capital management.
In 2023, apparent consumption in EMEA decreased by 18% compared to 2022 (Source:
CRU, November 2023). EU cold-rolled imports from the third countries decreased to a level
of 19% from the previous year's level of 35% (Source: EUROFER, January 2024). Distributor
inventories were below the average levels at the end of 2023.
Americas
Stainless steel deliveries
1,000 tonnes
Sales
Adjusted EBITDA
Adjustments to EBITDA
EBITDA
Operating capital
Return on operating capital, rolling 12 months
EUR million
EUR million
EUR million
EUR million
EUR million
%
2023
552
1,892
285
-16
270
594
25.8
2022
654
2,695
384
2
387
990
32.4
In 2023, business area Americas’ sales decreased to EUR 1,892 million (EUR 2,695
million) and adjusted EBITDA amounted to EUR 285 million (EUR 384 million).
Stainless steel deliveries decreased by 16% compared to the previous year. Negative affect
on profitability from lower realized prices for stainless steel was offset by positive raw
material related impacts. Variable costs remained relatively stable and fixed costs slightly
decreased. Raw material-related inventory and metal derivative losses amounted to EUR 1
million (losses of EUR 36 million in 2022).
Business area Americas’ return on operating capital amounted to 25.8% at the end of
2023 (32.4%), and was negatively impacted by the impairment booking related to the
renegotiated hot rolling agreement.
In 2023, the apparent consumption decreased by 23% compared to 2022. The share of
cold-rolled imports into the US decreased to a level of 22% compared to a level of 26% in
the previous year. (Source: American Iron and Steel Institute, AISI). Distributor inventories
were below the average levels at the end of 2023.
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Outokumpu Annual report 2023 Ferrochrome
FeCr production
Sales
Adjusted EBITDA
Adjustments to EBITDA
EBITDA
Operating capital
Return on operating capital, rolling 12 months
1,000 tonnes
EUR million
EUR million
EUR million
EUR million
EUR million
%
2023
390
467
96
-3
93
894
5.0
2022
430
633
220
—
220
867
20.7
In 2023, business area Ferrochrome’s sales decreased to EUR 467 million (EUR 633
million), while adjusted EBITDA amounted to EUR 96 million (EUR 220 million).
Ferrochrome production was 9% lower compared to the previous year, mainly due to weak
market conditions and the major maintenance break in one of the ferrochrome furnaces.
Profitability was negatively impacted by a significantly lower ferrochrome sales price in
2023. Variable costs increased compared to the previous year due to higher electricity
price, while fixed costs decreased and were positively affected by lower maintenance costs.
Business area Ferrochrome’s return on operating capital amounted 5.0% at the end of
2023 (20.7%).
Sales by business area, 6,961 € million
3% 2%
27%
68%
Europe
Ferrochrome
Americas
Other operations
Capital expenditure by business area, 170 € million
24%
19%
38%
19%
Europe
Ferrochrome
Americas
Other operations
Discontinued operations: divestment of the Long Products business
In 2023, Outokumpu successfully exited the Long Products business as it was considered
non-core. The majority of the Long Products business was divested already at the beginning
of the year and the exit was finalized in the third quarter when the divestment of the
remaining units was completed.
On July 12, 2022, Outokumpu signed an agreement to divest the majority of its Long
Products business operations to Marcegaglia Steel Group, a leading global industrial group
in the steel processing sector.
The prerequisites for the completion of the transaction were, among other things, the
necessary approvals by the competition authorities. Outokumpu announced the approvals
on December 14, 2022.
On January 3, 2023, Outokumpu completed the divestment of the majority of the Long
Products business. The transaction was carried out as a share sale and, as a result of the
transaction, melting, rod, and bar operations in Sheffield, the UK, bar operations in
Richburg, the US, and wire rod mill in Fagersta, Sweden, were sold to Marcegaglia. The
transaction excluded Outokumpu Long Products AB units in Degerfors and Storfors,
Sweden.
The total consideration for the transaction on a debt and cash-free basis was EUR 228
million. Provisional cash proceeds for the equity and net debt item were EUR 214 million,
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Outokumpu Annual report 2023 with EUR 5 million paid into an escrow account. The transaction costs in total were EUR 8
million and are presented in the net result for the period from discontinued operations.
The received proceeds, net of cash disposed, were EUR 94 million. The gain on divestment
reported in the net result from discontinued operations was EUR 5 million, mainly as the
accumulated translation differences were reclassified into net result at the time of the
divestment. The consideration is still subject to the release of the escrow account. In
2022, Outokumpu recognized in the net result from the discontinued operations an
impairment loss of EUR 33 million.
On April 1, 2023, Outokumpu signed an agreement to divest the remaining Long Products
operations in Degerfors and Storfors, Sweden to Cogne Acciai Speciali, a world leader in the
production of long stainless steels and nickel alloys based in Italy. On August 1, 2023,
Outokumpu completed the divestment. The company's plate operations in Degerfors were
not affected by the divestment. The enterprise value of the transaction was EUR 12 million
and it had a positive cash impact for Outokumpu. Outokumpu booked a loss of EUR 26
million in the third quarter.
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 statement 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 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 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 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. From basic structures of society to industry,
mobility, and household appliances, the demand for stainless steel will grow. As a product,
stainless steel is a strong, corrosion-resistant, hygienic, and aesthetic material with a high
strength-to-weight ratio and no need for maintenance. 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.
Outokumpu’s vision is to be the customer’s first choice in sustainable stainless steel.
Climate change is one of the megatrends driving Outokumpu’s business, together with
economic and population growth and urbanization. At the same time, sustainable stainless
steel has a significant role in society by enabling green transition – from hydrogen to
electric vehicles. Outokumpu believes that the market for climate solutions supporting the
transition towards low-carbon economies will increase on the way to 1.5°C scenarios and
present an opportunity for companies ahead of the climate journey.
Outokumpu has built its business on circular economy, using 94.6% recycled materials in
the production of stainless steel during 2023. By converting scrap and metal waste into
new products the company also minimizes the use of virgin resources. Through this,
Outokumpu reduces its carbon emissions but also mitigates biodiversity loss and impact on
nature.
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 production,
ferrochrome operations, melting, hot rolling and cold rolling, as well as finishing and service
centres. 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 & targets
This section focuses on the most material sustainability topics for Outokumpu and its
stakeholders in relation to value creation and risk management. Outokumpu conducted a
materiality analysis mapping stakeholders’ expectations and assessing business impact in
2021 which worked as the basis for the current sustainability strategy. Based on the
analysis, Outokumpu focus areas on sustainability are emission reduction, circular
economy, waste management, sustainable supply chain and innovative technologies. At
end of 2023, Outokumpu conducted a double materiality analysis during 2023 to prepare
for Corporate Sustainability Reporting Directive (CSRD), which the company will start
reporting on in 2024.
Outokumpu is a signatory of the United Nations Global Compact. Outokumpu is committed
to the UN's Sustainable Development 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 partnerships for
goals.
Sustainability at Outokumpu consist of three pillars: environmental, social and governance.
To demonstrate the commitment to sustainability in all aspects, Outokumpu finalized the
certification process for the ResponsibleSteel standard for its operating sites in business
area Europe during 2023. ResponsibleSteel is a standard developed to recognize steel
sites that are being operated in a responsible manner with the focus on the most material
sustainability issues identified and agreed upon by the members and stakeholders.
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Outokumpu Annual report 2023 Outokumpu is currently in the process of waiting for the certification, after finalizing the
audits of the sites during 2023. Outokumpu received also a Platinum rating from Ecovadis,
the global sustainability rating platform, ranking Outokumpu among the top 1 % of the
assessed companies.
•
Increasing the share of diverse leaders in all international leadership teams to 30% and
add 100 diverse managers by the end of 2025
• Verifying pay equity by an external certification
• Reaching 60% agreement score on all areas of inclusion and across all diverse employee
As part of its ambitious sustainability strategy, Outokumpu has a climate target approved
by Science Based Targets aligned with the 1.5 °C climate ambition and the long-term target
is to become carbon neutral by 2050. Outokumpu’s environmental targets are:
• Reducing Scope 1, 2 and 3 greenhouse gas emissions 42% per tonne of stainless steel
by 2030 from 2016 baseline (the target setting includes biogenic missions and
removals from bioenergy feedstock).
Increasing recycled material content to 92.5% in 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% in 2023.
Outokumpu supported customers to reduce their emissions by over 12 million tonnes in
2023. Outokumpu has supported customers across various industries to even further
reduce emissions with Circle Green stainless steel with up to 93% lower carbon footprint
compared to the global average. The exceptionally significant emission reduction is
achieved through low-carbon energy use, sustainable raw materials, and improvements to
the production process. More about Outokumpu’s climate solutions and decarbonization
roadmap can be found on the Sustainability Review.
The European Carbon Border Adjustment Mechanism (CBAM) will be introduced in 2026 to
avoid carbon leakage which will impact also steel producers. CBAM measures will also
phase out the free allocation under EU ETS 2026–2034. Outokumpu forecasts to have an
adequate quantity of the EU emission allowances until the end of this decade if the
projected carbon emission reduction projects are realized. Outokumpu also has a strong
position due to own ferrochrome production in Finland and the low carbon footprint of its
production.
Outokumpu is committed to the United Nations Guiding Principles on Business and Human
Rights and has clear targets on diversity, equity, and inclusion. Safety is integrated to all
our decision-making, and the long-term target is to have achieve zero-level in injuries.
The social targets of the company are:
• Achieving a total recordable injury frequency rate of <1.9 per million working hours
• Achieving high employee engagement index rate in the organizational pulse surveys
group in our people pulse survey
Outokumpu has built its business foundation on ethical principles and conducts its
operations with a commitment to ethical business practices and strives for continuous
improvement and transparency in its sustainability governance.
Governance targets:
• Employees trained on Outokumpu Code of Conduct
More information about ethics & compliance in the Sustainability Review.
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 EVP Sustainability, People and
Communications. The Outokumpu Leadership Team follows the progress of Outokumpu’s
sustainability targets continuously. Business areas and functions are responsible for
ensuring that operations within their own organizations and business lines are aligned with
the targets 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 challenging and
commenting the sustainability strategy, roadmap and actions as well as facilitating
dialogue between Outokumpu and its stakeholders. The council consists of three external
advisors. More information about the council can be found on Outokumpu’s website.
Outokumpu also has internal and cross-functional ESG teams in place developing and
supporting the implementation of the company’s sustainability strategy. Outokumpu works
across cross-functionally including Group sustainability, operations, procurement,
communications, compliance, HR and safety functions.
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
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Outokumpu Annual report 2023 • Cardinal Safety Rules
• Approval Policy
• Competition Law Compliance Policy
• Acceptable Use of IT Policy
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
competition 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.
Supplier Code of Conduct outlines Outokumpu’s expectations for suppliers. Complying with
the Supplier Code of Conduct is considered a minimum requirement for business
engagement with any of Outokumpu’s business units. Outokumpu has 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.
The internal audit function, flanked by external audits consistently monitors and tests
adherence to corporate guidance and standards, while the sustainability organization
follows-up on environmental performance and legality monthly. Regular internal
environmental 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 as well as 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 responsibility and quality management. In raw material procurement, a
supplier’s sustainability performance is assessed by sustainability platform EcoVadis, which
Outokumpu plans to also introduce to the General Procurement.
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 discrimination, whether it is based on
ethnic origin, nationality, religion, political views, gender, sexual orientation, age or any
other factor.
Outokumpu expects its suppliers and contractors 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
management and other criteria.
More information about Outokumpu’s sustainability related risks can be found in the
Annual review of the Annual report.
Environmental performance
The impacts to environment from stainless steel production are the use of virgin materials,
energy, dust emissions into the air, waste created in the production process and water
discharges from production plants. By 2023, Outokumpu managed to reduce emissions
intensity by 27% from 2016 baseline. During the year Outokumpu also reduced its
customers emissions by over 12 million tonnes compared to the global average of stainless
steel.
All Outokumpu sites have environmental permits that set the basic framework for
operations. In 2023, there were three environmental permit breaches in operational sites
and one in an old mining site. The permit breaches that occurred were temporary,
identified, and had no or only minimal impact on the environment. There were no significant
environmental incidents during 2023.
Outokumpu’s operations under the EU Emissions Trading Scheme (ETS) will continue to
receive free emissions allocations according to efficiency-based benchmarks and historical
activity for the next five years. In 2023, the ETS free emission allowances of Outokumpu
were below emissions within the ETS system, 0.86 million tonnes (0.9 million tonnes in
2022).
The energy efficiency improved by 0.9% compared to the previous year. Outokumpu also
switched to low-carbon electricity across its production sites in Europe.
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Outokumpu Annual report 2023 Outokumpu had an all-time high material recycling (all metallic input from waste streams,
such as scrap or metals from slag and dust treatment per tonne of stainless steel),
resulting in 2023 to 94.6% (93.9% in 2022). The recycled steel content of our stainless
steel, defined according to ISO 14021, was 90.9 % in 2023 (89.8% in 2022). 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 maximizing utilization of recycled material, Outokumpu aims to reduce
landfill waste and reuses waste from its production processes. 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 2023, the use rate of slag, meaning the share of slag used (e.g. in construction or
agricultural purpose) compared to all slag produced was 87.8% (86.5%). In addition to
production waste, tailing sand from mining is the most significant waste item to be
deposited in the mine site. Landfill waste intensity increased due to higher production of
tailing sands in the mining business.
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.
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, %
2023
1.52
10.4
87.8
0.647
94.6
2022
1.70
10.5
86.5
0.530
93.9
Social & governance performance
Outokumpu’s main indicator for safety performance 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. Group TRIFR declined from the previous
year and was 1.5 against the target of below 1.9, from 1.8 in 2022.
Outokumpu’s personnel on full-time equivalent basis increased by 112 during the year and
totaled 8,469 at the end of December 2023 (8,357). Total wages and salaries amounted
to EUR 531 million in 2023 (EUR 544 million). Other employee benefit expenses totaled
EUR 182 million in 2023 (EUR 178 million).
As part of its sustainability strategy, Outokumpu is also focusing on strengthening diversity,
equity and inclusion within the company. We have progressed well against our target of
having 30% diverse leaders in all key leadership teams by 2025: at the end of 2023, 10
out of 12 key leadership teams had reached the target and the overall diversity among
these leaders was 43%. We have also been working on an external pay equity certification,
which we expect to conclude early 2024. Finally, we reached our inclusion target: 60% of
group employee respondents agreed on all areas related to inclusion in our People Pulse
survey.
In our annual pulse survey about inclusion and fairness conducted during 2023, all areas of
DE&I topics scored above 60%. Compared to 2022’s pulse survey, we already see
improvement in belonging, inclusion, but a slight decrease in respectful treatment.
Especially fair treatment was rated significantly better in the survey than previous year and
above benchmark group. Additionally, the overall results show that men and women
perceive their working environment and how they are treated the same way. The
improvement opportunities are still in providing equal opportunities to all employees.
Personnel on December 31
12,000
10,000
8,000
6,000
4,000
2,000
0
2019*
2020*
2021
2022
2023
Personnel reported as full time equivalent number.
*Including discontinued operations
During 2023, Outokumpu continued to develop the management of sustainable supply
chain to create a transparent and responsible supply chain with partners with the highest
standard. During the year, Outokumpu placed particular focus on improving the supply
chain transparency and solidifying processes to evaluate supplier sustainability
performance. In addition, Outokumpu developed the supply chain risk identification
processes by activating use of new group level risk management tools and expanding
country-based risk rating to cover all categories.
In accordance with our due diligence process, we initiated a human rights impact
assessment on our suppliers in Zimbabwe. The target was to assess the maturity level of
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Outokumpu Annual report 2023 Key social indicators
Diversity
Employees
male, %
female, %
Managers
male, %
female, %
Board of Directors
male, %
female, %
Safety
2023
2022
82
18
81
19
62
38
83
17
83
17
62
38
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Total recordable injury frequency rate, per million working
hours
1.5
1.8
Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
their human rights management processes, to identify potential human rights impacts of
their operations, and to better understand the context of the industry and country. The
specific topics we investigated on were workers’ conditions and wages, environmental
impacts such as pollution, health and safety and the supply chain of the chrome. Based on
the final assessment report, we provide recommendations to our suppliers and stay in close
contact with them to see the results. In the previous year 2022, Outokumpu also
conducted a human rights risk assessment of one supplier in Guatemala and visited several
suppliers in Colombia.
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
externally operated communication channel to report misconduct confidentially and
anonymously, if allowed by laws and regulations. The SpeakUp channel is available as a
communication channel in Outokumpu’s reporting process if other reporting channels do
not feel suitable.
In 2023, 48 reports of potential misconduct were recorded through the various reporting
channels. These incidents have been assessed and, if needed, further investigated.
Consequently, proper corrective and preventative measures have been or will be taken.
The effective implementation of Outokumpu’s group-wide Ethics and Compliance (E&C)
Program continued in close co-operation with the business areas, business lines and group
functions during 2023. As part of these activities, the first ever E&C Week was organized in
September 2023. The purpose of the week was to offer information and increase
awareness about important E&C themes to all Outokumpu employees worldwide,
encouraging everyone to do the right thing, conduct business fairly and in a responsible and
ethical manner, and speak up if any concerns arise. The E&C Week was full of many
engaging activities, such as presentations and local events organized in several Outokumpu
sites.
Trade sanctions compliance was one of the key themes during the E&C Week and
throughout the year 2023. Outokumpu is committed to complying with all applicable laws
and regulations, including sanctions regulations. Due to the Russian invasion of Ukraine,
Outokumpu continued to concentrate on trade sanctions compliance as a priority work also
during 2023 to ensure that all applicable sanctions regulations are complied with.
Improvement actions were also taken in other key E&C areas in 2023 such as within the
anti-corruption, competition law compliance and data protection areas.
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Outokumpu Annual report 2023 EU taxonomy reporting
EU taxonomy is a classification system for categorization of sustainable business activities
that could substantially contribute to the EU’s environmental goals. Companies required to
report non-financial information need to disclose the taxonomy eligibility and alignment of
their economic activities.
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.
Taxonomy sales (turnover) is presented in accordance with IFRS, in line with the sales in
the Group’s consolidated financial statements. Outokumpu’s principles for defining sales
(turnover) can be found in note 2.2 in the Group’s 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
operations, sales from service centers are excluded from eligibility. The impact of service
centers is however insignificant 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 is excluded from
eligibility. 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.
In 2023 the Commission published additional technical screening criteria related to water,
circular economy, pollution prevention and biodiversity (EU 2023/2486) and amendments
to the previously published Climate change Mitigation and Adaptation Acts (EU
2023/2485).
Outokumpu has invested in and holds stakes in energy companies in order to secure low
emission electricity. However, Outokumpu does not hold a direct nuclear ownership, our
ownership is considered immaterial and is not included in the group taxonomy key
performance indicators.
Outokumpu representatives from finance and sustainability have evaluated Outokumpu
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
2023
Sales (Turnover)
Capital expenditure
Restricted operating expenditure
2022
Sales (Turnover)
Capital expenditure
Restricted operating expenditure
Total
€ million
6,961
146
652
9,494
153
736
Eligible and
aligned, %
Eligible and
non-aligned, %
Non-eligible
90
75
83
91
42
82
0
0
0
0
0
0
10
25
17
9
58
18
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.
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.
In 2022 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, this
assessment was reviewed in 2023, no changes that affect the outcome of the evaluation
was identified.
• Criteria for DNSH to climate change adaptation: 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
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 nonmaterial
as the activity is insignificant compared to total eligible sale, thus fulfilling the DNSH
criteria for pollution prevention and control.
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.
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Outokumpu Annual report 2023 Taxonomy capital expenditure is presented and measured as cash-based. Taxonomy capital
expenditure consists of purchases of property, plant and equipment and purchases of
intangible assets. Taxonomy capital expenditure is presented in accordance with IFRS and
in line with Outokumpu’s consolidated statement of cash flows. Equity investments at fair
value through other comprehensive income and investments in associated companies 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. The increase in the eligible and aligned share of capital
expenditure is driven by the substantial non-eligible Deep mine expansion investment in
business area Ferrochrome in 2022.
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 taxonomy-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 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.
Only one taxonomy-eligible economic activity has been identified as relevant and taken into
account in the calculations, together with one environmental objective. While recycling of
metallic scrap is at the core of Outokumpu’s business, the collection and sorting of scrap
as outlined in the Circular Economy criteria document is not considered an economic
activity in itself for Outokumpu. 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
Outokumpu’s research and development (R&D) provides leading technical expertise
covering the whole range from the production process to fabrication of the company’s
products at our customers. Outokumpu has three R&D centers located in Avesta, Sweden,
in Krefeld, Germany and in Tornio, Finland. R&D activities are focused to two key themes:
sustainable production process technologies and future products and customer
applications. In 2023, Outokumpu’s total R&D expenditure amounted to EUR 14 million,
representing 0.2% of the annual sales (2022: EUR 15 million and 0.2%).
As a leader in sustainable stainless steel, Outokumpu has recognized since a long time its
responsibility to provide customers with all the technical information they need to select
the best grade for their requirements. In 2023, Outokumpu published its 12th edition of
the Outokumpu’s Corrosion handbook, fully revised and updated. It covers the latest
additions to the company’s expanding portfolio of corrosion-resistant materials which now
include nickel alloys.
To strengthen Outokumpu’s portfolio a new ferritic grade, Therma 4622Nb™, was launched.
This grade has an enhanced high temperature creep resistance above 1000°C. That makes
it ideal for a wide range of applications such as automotive exhaust systems, furnace
equipment, annealing boxes, air heaters and burner nozzles.
As part of its commitment to decarbonize its operations and supply chain, Outokumpu
further developed its initiative in replacing fossil coke with renewable raw materials from
biomass. In 2023, the company made a decision to invest 30 million euros in a pelletizing
plant for biocoke in Tornio, Finland and acquired a share of Swedish Envigas AB to ensure
sustainable raw materials in the future. Replacing fossil coke, which is used in the
ferrochrome production process as a reductant, with biocoke is one of the company’s ways
to reduce its direct emissions.
The circular economy is another key area of Outokumpu’s research and development.
Examples include the use of waste heat with the help of new technologies or the reuse of
refractories in the company’s melt shops. Born from the idea to go as low as possible with
CO2 emissions, Outokumpu produced Outokumpu Circle Green® product which has up to
93% lower carbon footprint than the global average. In December 2023, Circle Green
celebrated its second birthday.
Risks and uncertainties
Outokumpu is exposed to various risks and uncertainties that may have an adverse impact
on its business and operations. The adverse development of the global economy,
geopolitical conflicts including the Israel-Hamas war, the recent tension in the Red Sea and
the continued war in Ukraine have increased the risks and uncertainties to which
Outokumpu is exposed. However, the company has taken prompt measures to manage and
control these risks.
The main uncertainties relate to inflation, slow growth in China, geopolitical conflicts that
could disrupt global supply chains, energy prices and the slowdown of the global economic
growth. All these adverse consequences could impact Outokumpu's operating environment,
business, and stainless steel demand.
Throughout 2023, electricity prices have declined but the uncertainties in volatility and
price peaks remain and may expose Outokumpu to increased energy costs. During the
fourth quarter, the main driver of the volatility in the electricity prices in the Nordics was
the cold weather and the limited wind and hydro balance availability. Possible increases in
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Outokumpu Annual report 2023 the price of electricity would mainly affect business area Ferrochrome, due to the high
amount of electricity needed in ferrochrome production. The activities implemented in
relation to electricity optimization are enabling mitigation of peaks in spot market
electricity prices and for 2024, Outokumpu’s energy portfolio has been hedged with roughly
two thirds of the estimated consumption.The nuclear power plant Olkiluoto-3 in Finland
continued to balance the electricity market in Finland with good electricity availability.
Gas availability in Germany remained sufficient during the fourth quarter with limited
uncertainties for the remaining winter period. The uncertainties over gas are mainly related
to increased energy price sensitivity to adverse events in the geopolitical situation,
especially developments in the Middle East. Any severe disruption or possible further
sanctions in the natural gas supply could affect the prices or availability of gas for
Outokumpu’s operations in Europe. Outokumpu acquires energy gases from the European
market, for which Russia is one of the indirect suppliers.
Outokumpu does not purchase any scrap or nickel of Russian origin for its operations. The
risk of possible disruptions in its raw material supply chain due to sanctions is considered
to be limited. At the end of 2023, indirect supply from Russia still exists for a very limited
amount of raw material, and the company is demanding that its supplier finds alternative
sources globally.
The company remains exposed to risks related to volatile metal prices, especially nickel.
Volatile metal prices may impact Outokumpu’s result, among other financial risks.
In addition, cyber security threats and dependencies on critical suppliers expose
Outokumpu to the risk of operational disruptions and additional costs. In the fourth quarter,
Outokumpu announced that with respect to its critical supplier dependency in the US it has
successfully extended the existing hot rolling agreement with its current partner AM/NS on
mutually acceptable terms until October 1, 2051. The contract is subject to prior written
notice of four years, with the earliest effective termination date being October 1, 2042.
The EU safeguard measures, renewed in June 2023 by the European Commission, are in
place until June 2024 which decreases the risk of a sudden import surge. In August 2023,
the anti-circumvention investigation on cold rolled stainless steel from Indonesia was
initiated and this has decreased the risk of imports from Taiwan, Turkey, and Vietnam.
Outokumpu Oyj has been joined in arbitration proceedings over a dispute between
Fennovoima and Rosatom entities related to the termination of the EPC (Engineering,
Procurement and Construction) contract. Outokumpu disputes the existence of any
contractual relationship, obligation, or arbitration agreement between Outokumpu and any
Rosatom entity.
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.
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 favour of the claimant and has been appealed by
Outokumpu. On June 15, 2023 the court of appeal cancelled the ruling of May 4, 2022 and
referred the dispute back to the court. Outokumpu is of the view that the claims asserted
against it are without merit and and continues to defend against them. Appropriate
provisions are in place.
Joinder to arbitration dispute between Fennovoima and Rosatom entities
Outokumpu Oyj has been joined into arbitration proceedings over a dispute between
Fennovoima and Rosatom entities related to the termination of the EPC (Engineering,
Procurement and Construction) contract. Outokumpu disputes the existence of any
contractual relationship, obligation, or arbitration agreement between Outokumpu and any
Rosatom entity.
Shares and share capital
On December 31, 2023, 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
25,683,745 treasury shares. The average number of shares outstanding was 435,090,240
in 2023. The closing share price at the end of the period, on December 29, was EUR 4.48.
Principal shareholders and share price development is presented in the Stakeholder
engagement section in the Annual report.
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Outokumpu Annual report 2023 Share buyback program
On March 24, 2023, Outokumpu completed its share buyback program of up to EUR 100
million and repurchased a total of 19,836,205 shares.
On November 29, 2023, Outokumpu launched a share buyback program of up to EUR 50
million under the authorization of the Annual General Meeting. The maximum number of
shares to be repurchased under the program is 11 million, representing approximately 2.4%
of the company’s total number of shares. The program commenced on December 1, 2023,
and ends no later than on March 21, 2024.
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 23,041,290 treasury shares, representing approximately 5.0% of the company’s total
number of shares.
During the year 2023, Outokumpu purchased a total of 13,903,534 of its own shares with
EUR 70 million. 2,642,455 shares were repurchased under the new 2023 share buyback
program and 11,261,079 under the 2022 program that ended on March 24, 2023. On
December 31, 2023, Outokumpu held 25,683,745 treasury shares.
Management shareholdings and share based incentive programs
On December 31, 2023, the members of the Board of Directors and Outokumpu Leadership
Team (OLT) altogether held 1,174,806 shares, corresponding to 0.26% of the total number
of shares.
Outokumpu has established share-based incentive 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 2023, after deductions for applicable taxes, a total of 217,503 shares were delivered to
the OLT participants in 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, 2023–2025 and their continuation for the period
2024–2026 was approved by the Board of Directors in December 2023. For vesting
conditions see note 3.4 in the consolidated financial statements.
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
Outokumpu Annual Report 2023
earning criteria which are linked to the CO2 emission reduction target according to
Outokumpu’s Science Based Targets initiative (SBTi) commitment. 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%.
Annual review
Sustainability review
More details on the share-based incentive programs can be found in the note 3.4 in the
consolidated financial statements.
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
Audit
Information for shareholders
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. Their
shareholding is also 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.
Changes in management and Board of Directors
On June 7, 2023, it was announced that Marc-Simon Schaar has been appointed as Chief
Procurement Officer and member of Outokumpu Leadership Team. Marc-Simon Schaar has
worked at Outokumpu since 2011 in senior roles in finance, M&A, and raw materials
procurement, most recently as SVP, Raw Materials Procurement. Chief Procurement Officer
is a new role in the company and reports to CEO Heikki Malinen.
On March 30, 2023, Vesa-Pekka Takala left the Board of Directors and the Annual General
Meeting 2023 elected Jyrki Mäki-Kala as a new member, for a term of office ending at the
end of the next Annual General Meeting.
Corporate governance
Outokumpu’s Corporate Governance Statement can be found at the Outokumpu website.
Annual General Meeting
Outokumpu’s Annual General Meeting 2023 was held on March 30, 2023, at the Dipoli
congress center in Espoo, Finland. The Annual General Meeting supported all the Board of
Directors’ and the Shareholders’ Nomination 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 2022.
The Annual General Meeting decided that a base dividend of 0.25 euros and an extra
divided of EUR 0.10 per share, totaling EUR 0.35 per share, be paid for the financial year
2022. The Annual General Meeting also 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. In addition, the
Meeting also approved the proposals by the Shareholders’ Nomination Board regarding the
members of the Board of Directors and their remuneration.
139
139/235
Outokumpu Annual report 2023 The Annual General Meeting decided in accordance with the proposal by the Nomination
Board that the Board of Directors consists of eight (8) members. Kari Jordan, Heinz Jörg
Fuhrmann, Kati ter Horst, Päivi Luostarinen, Petter Söderström, Pierre Vareille and Julia
Woodhouse were re-elected and Jyrki Mäki-Kala was elected as new member, all for the
term of office ending at the end of the next Annual General Meeting. Vesa-Pekka Takala left
the Board of Directors with the Annual General Meeting in 2023. Kari Jordan was re-elected
as the Chairman and Kati ter Horst was elected as the Vice Chairman of the Board of
Directors.
Nomination Board
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 remuneration for the Annual General
Meeting.
On August 31, 2023, the four largest shareholders 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
January 22, 2024.
Board of Directors’ proposal for profit distribution
According to the dividend policy, Outokumpu aims to distribute a stable and growing
dividend, to be paid annually. According to the parent company´s financial statements on
December 31, 2023, distributable funds totaled EUR 2,589 million, of which retained
earnings were EUR 369 million.
The Board of Directors proposes to the Annual General Meeting to be held on April 4, 2024,
that a dividend of EUR 0.26 per share, be paid for the year 2023.
Last year, the Board stated that the base dividend amount of EUR 0.25 was the basis for
future dividend distributions in accordance with the policy. The extra dividend of EUR 0.10
per share was a one-time extra dividend that was proposed to be distributed to the
shareholders for the exceptionally good result of the financial year 2022.
Outlook for Q1 2024
Group stainless steel deliveries in the first quarter are expected to increase by 5–15%
compared to the fourth quarter.
Market environment started to weaken at the end of the fourth quarter for business area
Americas, and in Europe, a slow recovery is expected to continue. Also, scrap market has
recently tightened.
Ferrochrome production is running at 80% of its full capacity as one of the three
ferrochrome furnaces and one of the two sintering plants were closed in January 2024 due
to weak ferrochrome market conditions.
Maintenance costs in the first quarter are expected to decrease by approximately EUR 20
million compared to the fourth quarter.
With current raw material prices, some raw material related inventory and metal derivative
losses are expected to be realized in the first quarter.
Guidance for Q1 2024
Adjusted EBITDA in the first quarter of 2024 is expected to be at a similar level compared
to the fourth quarter.
Events after the balance sheet date
After the reporting period, Outokumpu repurchased 6,297,563 shares under the share
buyback program, which ends no later than on March 21, 2024. By February 7, 2024,
Outokumpu had repurchased a total of 8,940,018 shares under the share buyback
program. After the disclosed transactions, the company held a total of 31,981,308 treasury
shares.
After the reporting period, on January 24, 2024, Outokumpu announced it has completed
the partnership agreement to accelerate circularity and becomes a minority shareholder in
CRONIMET North-East GmbH.
After the reporting period, on January 3, 2024, Outokumpu announced that it plans to
temporarily restrict its ferrochrome production due to weak ferrochrome market conditions.
Outokumpu Annual Report 2023
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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
Audit
Information for shareholders
Outokumpu Annual report 2023 Net result for the financial year
€ million
in relation to sales
Return on capital employed (ROCE) 3) 5) *
%
%
2023
-111
-1.6
2022
1,086
11.4
2021
20201)
20191)
526
7.3
-116
-2.1
-75
-1.2
-2.1
22.6
17.6
-1.4
0.8
Financing and financial position
Net financial expenses*
in relation to sales
Interest expenses*
in relation to sales
€ million
%
€ million
%
37
0.5
60
0.9
71
0.7
44
0.5
79
1.1
64
0.9
98
1.7
78
1.4
80
1.3
76
1.2
Alternative performance measures are marked with *. For more information, please see Alternative
Performance Measures section.
1) Including discontinued operations.
2) In 2022, including discontinued operations’ equity. In 2021, including discontinued operations.
3) Outokumpu has redefined its capital employed and ROCE definitions in 2022. Information for 2021 has
been restated accordingly.
4) In 2021, Outokumpu changed its main personnel amount measure from headcount to full-time equivalent
personnel.
5) Until the year-end 2022 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. At the
end of the year 2023 no discontinued operations impacts in the balance sheet.
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
Audit
Information for shareholders
Group key figures
Continuing operations
Scope of activity
Sales
change in sales
exports from and sales outside
Finland, of total sales*
2023
2022
2021
20201)
20191)
€ million
6,961
9,494
7,243
5,639
6,403
%
%
-26.7
96.5
31.1
95.9
28.4
96.4
-11.9
96.3
-6.8
95.9
Capital employed on Dec 31 2) 3) *
€ million
4,204
4,751
3,828
3,543
3,904
Capital expenditure *
in relation to sales
Depreciation and amortization
Impairments
€ million
%
€ million
€ million
Research and development costs
€ million
in relation to sales
Personnel on Dec 31 4)
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
%
FTE
FTE
headcount
€ million
%
€ million
€ million
%
€ million
%
170
2.4
242
274
14
0.2
158
1.7
245
11
15
0.2
171
2.4
249
45
14
0.2
180
3.2
243
3
21
0.4
193
3.0
230
3
17
0.3
8,469
8,624
8,750
8,357
8,683
8,591
8,439
9,602 10,078
8,714 10,000 10,329
8,727
9,915 10,390
517
7.4
416
-100
-1.4
-133
-1.9
1,256
13.2
1,248
992
10.5
933
9.8
980
13.5
968
674
9.3
610
8.4
250
4.4
191
-55
-1.0
-151
-2.7
263
4.1
266
33
0.5
-41
-0.6
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 Group key figures
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
Including discontinued operations
Financing and financial position
Net debt*
€ million
-60
-10
408
1,028
1,155
Scope of activity
Sales
€ million
6,961 10,287
7,709
5,639
6,403
Net financial expenses*
€ million
Capital employed on Dec 31 1) *
€ million
4,204
4,752
3,828
3,543
3,904
Interest expenses*
€ million
37
60
68
45
80
65
98
78
80
76
Capital expenditure*
€ million
170
160
175
180
193
Net debt adjusted EBITDA*
-0.1
0.0
0.4
4.1
4.4
FTE
FTE
headcount
8,469
8,624
8,750
9,029
9,362
9,269
9,096
9,602 10,078
9,372 10,000 10,329
9,395
9,915 10,390
Share capital
Total equity
€ million
311
311
311
311
311
€ million
3,762
4,119
3,120
2,360
2,562
Personnel on Dec 31 2)
average for the year
Personnel on Dec 31
Profitability
Adjusted EBITDA*
€ million
517
1,387
1,021
250
263
Net result for the financial year
€ million
-106
1,140
553
-116
-75
Return on equity (ROE)*
Return on capital employed (ROCE) 1) *
%
%
-2.6
-2.0
30.6
24.5
20.1
18.4
-4.7
-1.4
-2.8
0.8
Equity-to-assets ratio*
Debt-to-equity ratio (gearing)*
%
%
63.8
-1.6
59.2
-0.3
48.3
13.1
40.8
43.6
42.5
45.1
Net cash generated from operating
activities
€ million
325
778
597
322
371
Alternative performance measures are marked with *. For more information, please see Alternative
Performance Measures section.
1) Outokumpu has redefined its capital employed and ROCE definitions in 2022. Information for 2021 has
been restated accordingly.
2) In 2021, Outokumpu changed its main personnel amount measure from headcount to full-time equivalent
personnel.
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
Audit
Information for shareholders
Outokumpu Annual Report 2023
142
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Outokumpu Annual report 2023 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 management 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
2023
2022
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 Finland
Consolidated statement of income
Note 2.2
Sales - Sales by destination to Finland
exports from and sales outside Finland, of total sales
Comparison to sales
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
Cash and cash equivalents
Investments in associated companies
Defined in the below section incl. discontinued operations - debt of discontinued operations
Consolidated statement of financial position
Consolidated statement of financial position
Investments in equity at fair value through other comprehensive income
Consolidated statement of financial position
Investments at fair value through profit or loss
Net deferred tax assets
Net assets held for sale
Net employee benefit obligations
Operating capital on Dec 31
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
€ million
3,390
3,737
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
%
170
2.4
158
1.7
Outokumpu Annual Report 2023
143
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€ million
€ million
€ million
%
6,961
243
6,717
96.5
9,494
384
9,109
95.9
€ million
€ million
€ million
€ million
€ million
€ million
€ million
€ million
4,204
502
4,751
526
62
12
27
423
—
212
51
25
23
390
215
216
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
Audit
Information for shareholders
Outokumpu Annual report 2023 Key figure, continuing operations
Definition of the key figure or source in the
consolidated financial statements
2023
2022
Key figure, including discontinuing
operations
Definition of the key figure or source in the
consolidated financial statements
2023
2022
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
Consolidated statement of income
€ million
in relation to sales
Comparison to sales
Depreciation and amortization Note 2.3
Impairments
EBITDA
Note 2.4
EBIT before depreciation, amortization
and impairments
Adjustments to EBITDA
Note 2.1
Adjusted EBITDA
EBITDA - Adjustments to EBITDA
in relation to sales
Comparison to sales
%
€ million
€ million
€ million
€ million
€ million
%
-100
-1.4
242
274
416
-102
517
7.4
992
10.5
245
11
1,248
-7
1,256
13.2
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.
Including discontinued operations
Capital employed
Capital employed is a measure for the amount of capital invested in Group’s operations.
Capital employed is the sum of:
Total equity:
Non-current debt
Current debt
Consolidated statement of financial
position
Consolidated statement of financial
position + Note 6.1
Consolidated statement of financial
position + Note 6.1
€ million
3,762
4,119
€ million
359
492
€ million
82
141
Capital employed on Dec 31
Total equity + non-current debt + current
debt
€ million
4,204
4,752
Capital expenditure
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
Capital expenditure indicates the investment in assets to generate future cash flows for the Group.
Consolidated financial statements, IFRS
Capital expenditure
Purchase 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
Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
€ million
%
170
2.4
160
1.6
Capital employed (4-quarter
average), including
discontinued operations1)
Defined in the below section incl.
discontinued operations - debt of
discontinued operations
€ million
4,528
4,437
in relation to sales
Comparison to sales
EBIT
Consolidated statement of income
€ million
-100
992
Share of results in associated
companies
Return on capital employed
(ROCE)
Consolidated statement of income
€ million
4
11
(EBIT+Share of results in associated
companies)/ Capital employed (4-
quarter average)
%
-2.1
22.6
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.
Net financial expenses and interest expenses
EBIT
Consolidated statement of income +
Note 6.1
Net financial expenses and interest expenses are measures for the cost of Group’s financing.
in relation to sales
Comparison to sales
Net financial expenses
Total financial income and expenses in
the Consolidated statement of income
in relation to sales
Comparison to sales
€ million
%
Interest expenses
Consolidated statement of income
€ million
in relation to sales
Comparison to sales
%
37
0.5
60
0.9
71
0.7
44
0.5
1) Including discontinued operations except for capital employed on Sept 30 and Dec 31, 2022, where only
the equity component of discontinued operations is included.
Depreciation and amortization Note 2.3 + discontinued operations
Impairments
EBITDA
Note 2.4 + discontinued operations
EBIT before depreciation, amortization
and impairments
Adjustments to EBITDA
Note 2.1 + discontinued operations
Adjusted EBITDA
in relation to sales
EBITDA - Adjustments to EBITDA
Comparison to sales
Outokumpu Annual Report 2023
€ million
%
€ million
€ million
€ million
€ million
€ million
%
-95
-1.4
242
274
421
-97
517
7.4
1,078
10.5
253
44
1,375
-12
1,387
13.5
144
144/235
Outokumpu Annual report 2023 Key figure, including discontinued
operations
Definition of the key figure or source in the
consolidated financial statements
2023
2022
Key figure, including discontinued
operations
Definition of the key figure or source in the
consolidated financial statements
2023
2022
Return on equity (ROE)
Net debt
Return on equity is an indicator of the value the Group generates to the capital the shareholders have
invested in the Group.
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
Consolidated statement of financial
position
€ million
€ million
€ million
€ million
4,119
4,064
4,141
4,135
3,120
3,278
3,943
4,158
Non-current debt
Current debt
Cash and cash equivalents
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
€ million
€ million
€ million
€ million
359
492
82
141
502
644
-60
-10
Consolidated statement of financial
position
€ million
3,762
4,119
Net debt
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)
Average of the opening and 4 quarter-
end values
Net result for the financial year Consolidated statement of income
€ million
4,044
€ million
-106
3,723
1,140
Return on equity (ROE)
Net result for the financial year/ Total
equity (4-quarter average)
%
-2.6
30.6
in relation to sales
Comparison to sales
%
-0.9
-0.1
Net debt to Adjusted EBITDA
Net debt to Adjusted EBITDA is an indicator of the Group’s indebtedness.
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.
Net debt
Defined earlier in this section
Adjusted EBITDA
Defined earlier in this section
€ million
€ million
Net debt to Adjusted EBITDA
Net debt / Adjusted EBITDA
-60
517
-0.1
-10
1,387
0.0
Defined earlier in this section
Equity-to-assets ratio
Capital employed on Dec 31 of
previous year
Capital employed on March 31
Capital employed on June 30
Capital employed on Sept 30
Capital employed on Dec 31
Defined earlier in this section
Capital employed (4-quarter
average)
Average of the opening and 4-quarter-
end values
EBIT
Share of results in associated
companies
Return on capital employed
(ROCE)
Consolidated statement of income +
Note 6.1
Consolidated statement of income
(EBIT+ Share of results in associated
companies)/ Capital employed (4-
quarter average)
Outokumpu Annual Report 2023
€ million
€ million
€ million
€ million
€ million
4,752
4,612
4,541
4,531
4,204
3,828
4,097
4,705
4,805
4,752
€ million
4,528
4,438
€ million
-95
1,078
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
€ million
3,762
4,119
€ million
5,927
6,983
€ million
31
23
Total equity/ (Total assets - advances
received)
%
63.8
59.2
€ million
4
11
Debt-to-equity ratio (gearing)
%
-2.0
24.5
Debt-to-equity ratio or gearing is an indicator of the financial risk level and the indebtedness of the
Group.
Net debt
Total equity
Defined earlier in this section
€ million
-60
-10
Consolidated statement of financial
position
Debt-to-equity ratio (gearing)
Net debt / Total equity
€ million
3,762
4,119
%
-1.6
-0.3
145
145/235
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
Audit
Information for shareholders
Outokumpu Annual report 2023 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
Operating capital (segment reporting)
= 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
Capital expenditure
= 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
Return on capital employed (ROCE)
= EBIT + Share of results in associated companies
Capital employed (4-quarter rolling average)
Return on operating capital (ROOC)
= Adjusted EBIT
(segment reporting)
Return on equity (ROE)
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
= Total equity
Total assets – advances received
Debt-to-equity ratio (gearing)
Net debt to adjusted EBITDA
= Net debt
Total equity
= Net debt
Adjusted EBITDA
Personnel, full-time equivalent
= 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
Outokumpu Annual Report 2023
× 100
× 100
× 100
× 100
× 100
146
146/235
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
Audit
Information for shareholders
Outokumpu Annual report 2023 Share-related key figures1)
Earnings per share 2)
Earnings per share continuing operations2)
Diluted earnings per share 2)
Diluted earnings per share continuing operations2)
Cash flow per share 2)
Equity per share 3)
Dividend per share
Dividend payout ratio
Dividend yield
Price / earnings ratio
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
€
€
€
€
€
€
€
%
%
€
€
€
€
%
%
2023
-0.24
-0.26
-0.21
-0.22
0.75
8.73
0.26 4)
-105.97
5.80
neg.
4.77
3.60
5.90
4.48
-5.2
-6.6
2022
2.52
2.40
2.33
2.22
1.72
9.27
0.35
13.64
7.40
1.88
4.69
3.51
6.48
4.73
-14.0
-13.4
2021
1.26
1.21
1.17
1.13
1.36
6.89
0.15
12.30
2.70
4.37
4.96
3.36
6.01
5.50
70.8
18.3
2020
-0.28
0.00
-0.28
0.00
0.78
5.70
—
—
—
2019
-0.18
0.00
-0.18
0.00
0.90
6.19
—
—
—
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
neg.
neg.
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
2.66
2.08
4.44
3.22
14.8
10.1
3.01
2.23
4.04
2.81
-12.2
13.4
Market capitalization at the end of the period 5)
€ million
1,933
2,101
2,489
1,327
1,155
Development in trading volume
Trading volume 6)
In relation to adjusted weighted average number of shares 2)
Adjusted weighted average number of shares 2)5)
Adjusted diluted weighted average number of shares 2)5)
Number of shares at the end of the period 5)
1,000 shares
%
386,008
88.7
720,801
159.5
880,092
200.5
1,100,628
265.9
884,254
215.0
435,090,240
475,843,726
431,190,703
451,932,876
438,871,175
413,907,618
411,198,002
493,535,712
479,163,509
437,336,296
446,209,235
444,134,611
452,571,977
412,002,212
411,774,715
1) Including discontinued operations if not otherwise stated. In 2023 only impact of discontinued operations is the transactions related to the sale of Long Products business operations.
2) Reported based on share-issue-adjusted weighted average number of shares. Comparative information for 2020 is presented accordingly. Information for 2019 has not been restated.
3) 2020 and 2019 calculated based on the share issue-adjusted number of shares.
4) The Board of Directors’ proposal to the Annual General Meeting.
5) Excluding treasury shares.
6) Includes only Nasdaq Helsinki trading.
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Outokumpu Annual report 2023 Definitions of share-related key figures
Key figure
Definition
Earnings per share
= Net result for the financial year attributable to the equity holders
Adjusted weighted average number of shares during the period
Diluted earnings per share
= 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
Cash flow per share
= Net cash generated from operating activities
Adjusted weighted average number of shares during the period
Equity per share
= Equity attributable to the equity holders
Adjusted number of shares at the end of the period
Dividend per share
= Dividend for the financial year
Adjusted number of shares at the end of the period
Dividend payout ratio
= Dividend for the financial year
Net result for the financial tear attributable to the equity holders
Dividend yield
= Dividend per share
Adjusted trading price at the end of the period
Price/ earnings ratio (P/E)
= Adjusted trading price at the end of the period
Earnings per share
Average trading price
= EUR amount traded during the period
Adjusted number of shares traded during the period
Market capitalization at end off the period
= Number of shares outstanding at the end of the period x Trading price at the end of the period
Trading volume
= Number of shares traded during the period, and in relation to the adjusted weighted average number of shares during the period
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
Audit
Information for shareholders
× 100
× 100
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Outokumpu Annual report 2023 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
male, %
female, %
Board of Directors
male, %
female, %
Safety
2023
1.5
10.4
87.8
0.647
94.6
2022
1.7
10.5
86.5
0.530
93.9
2021
1.8
10.2
78.1
0.561
89.6
20201)
1.6
11.0
77.1
0.590
92.5
20191)
1.6
10.9
90.8
0.500
89.6
2023
2022
2021
20201)
20191)
82
18
81
19
62
38
83
17
83
17
62
38
84
16
84
16
50
50
84
16
84
16
50
50
85
15
84
16
57
43
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
Audit
Information for shareholders
Total recordable injury frequency rate, per million working hours
1.5
1.8
2.1
2.4
3.2
1) Including discontinued operations.
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Outokumpu Annual report 2023 Taxonomy key performance indicators - Turnover
Financial year 2023
2023
Substantial Contribution criteria
DNSH criteria
(“Does Not Significantly Harm”)
Economic activities
Code
Turnover
Proportion
of
Turnover,
2023
e
g
n
a
h
C
e
t
a
m
i
l
C
n
o
i
t
a
g
i
t
i
M
e
g
n
a
h
C
e
t
a
m
i
l
C
n
o
i
t
a
t
p
a
d
A
r
e
t
a
W
n
o
i
t
u
l
l
o
P
y
m
o
n
o
c
E
l
r
a
u
c
r
i
C
y
t
i
s
r
e
v
i
d
o
B
i
e
g
n
a
h
C
e
t
a
m
i
l
C
n
o
i
t
a
g
i
t
i
M
e
g
n
a
h
C
e
t
a
m
i
l
C
n
o
i
t
a
t
p
a
d
A
r
e
t
a
W
n
o
i
t
u
l
l
o
P
y
m
o
n
o
c
E
l
r
a
u
c
r
i
C
y
t
i
s
r
e
v
i
d
o
B
i
Annual review
Sustainability review
Category
enabling
activity
Category
transitional
activity
Governance
s
d
r
a
u
g
e
f
a
s
Proportion
of Taxonomy-
aligned (A.1)
or
- eligible (A.2)
turnover,
2022
m
u
m
n
M
i
i
EUR
(millions)
%
Y;N;
N/EL
Y;N;
N/EL
Y;N;
N/EL
Y;N;
N/EL
Y;N;
N/EL
Y;N;
N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A . TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Manufacturing of iron and steel
3.9
6,246
90 %
Y N/EL N/EL N/EL N/EL N/EL
Turnover of environmentally sustainable
activities (Taxonomy-aligned) (A.1.)
Of which enabling
6,246
0
Of which transitional
6,246
90 %
0 %
90 %
0 %
90 % 90 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
A.2 Taxonomy-Eligible but not environmental sustainable activities (not Taxonomy-aligned activities)
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Manufacturing of iron and steel
3.9
Turnover of Taxonomy-Eligible but not
environmentally sustainable activities (not
Taxonomy-aligned activities) (A.2)
A. Turnover of Taxonomy-eligible
activities (A.1+A.2)
B. TAXONOMY-NON-ELIGIBLE
ACTIVITIES
Turnover of Taxonomy-non-eligible
activities
TOTAL
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
0 %
EL N/EL N/EL N/EL N/EL N/EL
0 %
0 %
90 %
90 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0
0
6,246
714
10 %
6,961
100 %
T
T
E
91 %
91 %
0 %
91 %
0 %
0 %
91 %
Taxonomy turnover total is presented in accordance with IFRS, in line with the sales in the Group’s consolidated statement of income in the financial statements. Outokumpu’s principles for defining turnover (sales) can be
found in note 2.2 in the Group’s financial statements. The manufacturing of iron and steel is listed as an eligible economic activity.
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
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Outokumpu Annual report 2023
Taxonomy key performance indicators - Capital expenditure (CapEx)
Financial year 2023
2023
Substantial Contribution criteria
DNSH criteria
(“Does Not Significantly Harm”)
Economic activities
Code
CapEx
Proportion
of CapEx,
2023
e
g
n
a
h
C
e
t
a
m
i
l
C
n
o
i
t
a
g
i
t
i
M
e
g
n
a
h
C
e
t
a
m
i
l
C
n
o
i
t
a
t
p
a
d
A
r
e
t
a
W
n
o
i
t
u
l
l
o
P
y
m
o
n
o
c
E
l
r
a
u
c
r
i
C
y
t
i
s
r
e
v
i
d
o
B
i
e
g
n
a
h
C
e
t
a
m
i
l
C
n
o
i
t
a
g
i
t
i
M
e
g
n
a
h
C
e
t
a
m
i
l
C
n
o
i
t
a
t
p
a
d
A
r
e
t
a
W
n
o
i
t
u
l
l
o
P
y
m
o
n
o
c
E
l
r
a
u
c
r
i
C
y
t
i
s
r
e
v
i
d
o
B
i
m
u
m
n
M
i
i
s
d
r
a
u
g
e
f
a
s
Proportion
of Taxonomy-
aligned (A.1)
or
- eligible (A.2)
CapEx, 2022
Category
enabling
activity
Category
transitional
activity
EUR
(millions)
%
Y;N;
N/EL
Y;N;
N/EL
Y;N;
N/EL
Y;N;
N/EL
Y;N;
N/EL
Y;N;
N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A . TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Manufacturing of iron and steel
3.9
109
75 %
Y N/EL N/EL N/EL N/EL N/EL
CapEx of environmentally sustainable activities
(Taxonomy-aligned) (A.1.)
Of which enabling
Of which transitional
109
0
109
75 %
75 %
0 %
0 %
75 %
75 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Manufacturing of iron and steel
3.9
CapEx of Taxonomy-Eligible but not
environmentally sustainable activities (not
Taxonomy-aligned activities) (A.2)
0
0
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
0 %
EL N/EL N/EL N/EL N/EL N/EL
0 %
0 %
0 %
0 %
0 %
0 %
0 %
A. CapEx of Taxonomy-eligible
activities (A.1+A.2)
B. TAXONOMY-NON-ELIGIBLE
ACTIVITIES
CapEx of Taxonomy-non-eligible
activities
TOTAL
109
75 %
75 %
0 %
0 %
0 %
0 %
0 %
37
146
25 %
100 %
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
T
T
E
42 %
42 %
0 %
42 %
0 %
0 %
42 %
Taxonomy capital expenditure is presented and measured as cash-based. Taxonomy capital expenditure consists of purchases of property, plant and equipment and purchases of intangible assets. Taxonomy capital
expenditure is presented in accordance with IFRS and in line with Outokumpu’s statement of cash flows. Equity investments at fair value through other comprehensive income and investments in associated companies 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. The increase in the eligible and aligned share of capital expenditure is driven by the substantial non-eligible Deep mine expansion investment in business
area Ferrochrome in 2022.
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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
Audit
Information for shareholders
Outokumpu Annual report 2023
Taxonomy key performance indicators - Restricted operating expenditure (OpEx)
Financial year 2023
2023
Substantial Contribution criteria
DNSH criteria
(“Does Not Significantly Harm”)
Economic activities
Code
OpEx
Proportion
of CapEx,
2023
e
g
n
a
h
C
e
t
a
m
i
l
C
n
o
i
t
a
g
i
t
i
M
e
g
n
a
h
C
e
t
a
m
i
l
C
n
o
i
t
a
t
p
a
d
A
r
e
t
a
W
n
o
i
t
u
l
l
o
P
y
m
o
n
o
c
E
l
r
a
u
c
r
i
C
y
t
i
s
r
e
v
i
d
o
B
i
e
g
n
a
h
C
e
t
a
m
i
l
C
n
o
i
t
a
g
i
t
i
M
e
g
n
a
h
C
e
t
a
m
i
l
C
n
o
i
t
a
t
p
a
d
A
r
e
t
a
W
n
o
i
t
u
l
l
o
P
y
m
o
n
o
c
E
l
r
a
u
c
r
i
C
y
t
i
s
r
e
v
i
d
o
B
i
m
u
m
n
M
i
i
s
d
r
a
u
g
e
f
a
s
Proportion
of Taxonomy-
aligned (A.1)
or
- eligible (A.2)
OpEx, 2022
Category
enabling
activity
Category
transitional
activity
EUR
(millions)
%
Y;N;
N/EL
Y;N;
N/EL
Y;N;
N/EL
Y;N;
N/EL
Y;N;
N/EL
Y;N;
N/EL
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A . TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Manufacturing of iron and steel
3.9
538
83 %
Y N/EL N/EL N/EL N/EL N/EL
OpEx of environmentally sustainable activities
(Taxonomy-aligned) (A.1.)
Of which enabling
Of which transitional
538
0
538
83 %
83 %
0 %
0 %
83 % 83 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Manufacturing of iron and steel
3.9
OpEx of Taxonomy-Eligible but not
environmentally sustainable activities (not
Taxonomy-aligned activities) (A.2)
0
0
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL N/EL N/EL N/EL N/EL N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
A. OpEx of Taxonomy-eligible
activities (A.1+A.2)
B. TAXONOMY-NON-ELIGIBLE
ACTIVITIES
538
83 %
83 %
0 %
0 %
0 %
0 %
0 %
OpEx of Taxonomy-non-eligible activities
TOTAL
114
652
17 %
100 %
T
T
E
82 %
82 %
0 %
82 %
0 %
0 %
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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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
Audit
Information for shareholders
Outokumpu Annual report 2023
Financial statements
In 2023, Outokumpu delivered a solid adjusted EBITDA and
progressed well with its strategy execution. Stainless steel
market was clearly weaker but the year ended with a net debt
free balance sheet and a strong liquidity position.
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
Audit
Information for shareholders
Outokumpu Annual Report 2023
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“I am proud that we kept
our balance sheet strong in
the midst of the changing
stainless steel market
conditions.”
– Pia Aaltonen-Forsell, CFO
Outokumpu Annual report 2023 Financial statements content
Consolidated financial statements, IFRS
Consolidated statement of income
155
Consolidated statement of comprehensive income 156
Consolidated statement of financial position
157
Consolidated statement of cash flows
158
Consolidated statement of changes in equity
159
Notes to the consolidated financial
statements
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
161
161
161
164
164
168
170
171
172
173
176
Employee benefits
3
3.1 Employee benefits expenses
3.2 Employee benefits for key management
3.3 Employee benefit obligations
3.4 Share-based payments
Operating assets and liabilities
4
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
177
177
178
179
183
185
185
190
193
194
195
196
198
199
203
205
209
211
214
215
Group structure and other notes
6
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
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
216
216
218
219
219
220
221
221
221
222
223
224
225
225
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
Audit
Information for shareholders
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Outokumpu Annual report 2023 Consolidated financial statements, IFRS
Consolidated statement of income
€ 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
Note
2023
2022
€ million
Note
2023
2022
Discontinued operations
2.2
6,961
9,494
Net result for the period from discontinued operations
6.1
5
54
2.3
-6,474
-8,147
Net result for the period
-106
1,140
486
1,346
Earnings per share for result from continuing operations
attributable to the equity holders of the parent company
Earnings per share, EUR
Diluted earnings per share, EUR
Earnings per share for result attributable to the equity holders of
the parent company
Earnings per share, EUR
Diluted earnings per share, EUR
2.7
2.7
-0.26
-0.22
-0.24
-0.21
2.40
2.22
2.52
2.33
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.
62
-73
-260
-14
-302
18
-72
-225
-15
-60
-100
992
4
11
2.4
2.3
2.3
2.3
2.4
6.6
2.5
21
-60
11
-9
-37
-133
2.6
22
4
-44
-12
-19
-71
933
154
Net result for the period from continuing operations
-111
1,086
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Audit
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Outokumpu Annual report 2023 Consolidated statement of comprehensive income
€ million
Net result for the period
Note
2023
-106
2022
1,140
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 on 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
-58
17
71
-15
-6
-15
5
-23
1
-41
-12
-53
-43
28
-1
65
-24
-4
0
38
8
46
Total comprehensive income for the financial year
-159
1,186
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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Audit
Information for shareholders
Outokumpu Annual report 2023 Note
2023
2022
€ million
Note
2023
2022
EQUITY AND LIABILITIES
Equity attributable to the equity holders of the parent company
Consolidated statement of financial position
€ million
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
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
Current tax receivables
Trade and other receivables
Cash and cash equivalents
Assets held for sale
TOTAL ASSETS
4.1, 4.3
4.1
4.2
6.6
5.6
2.6
4.5
4.4
5.5
5.4
2.6
4.5
5.1
556
1,905
147
62
12
454
12
547
2,250
156
51
25
390
6
Share capital
Premium fund and other restricted reserves
Invested unrestricted equity reserve
Treasury share
Fair value reserves
Retained earnings
3,148
3,425
Total equity
Non current liabilities
Non-current debt
Derivative financial instruments
Deferred tax liabilities
Employee benefit obligations
Provisions
Trade and other payables
1,581
1,783
27
34
27
609
502
23
40
21
746
526
2,779
3,139
6.1
—
419
Current liabilities
Current debt
5,927
6,983
Derivative financial instruments
Provisions
Current tax liabilities
Trade and other payables
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
311
714
2,307
-169
6
593
311
717
2,308
-129
-142
1,054
5.2
3,762
4,119
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
5.1
5.4
2.6
3.3
4.6
4.5
5.1
5.4
4.6
2.6
4.5
359
8
31
212
73
16
700
82
40
37
8
491
11
0
216
49
20
787
141
120
32
65
1,299
1,465
1,516
1,874
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Liabilities related to assets held for sale
6.1
—
204
TOTAL EQUITY AND LIABILITIES
5,927
6,983
The notes are an integral part of the financial statements.
During 2023 the process of netting of deferred tax assets and liabilities was redefined.
Outokumpu Annual report 2023 € million
Cash flow from operating activities1)
Note
2023
2022
€ million
Note
2023
2022
Consolidated statement of cash flows
Net result for the financial year
-106
1,140
Adjustments for
Depreciation, amortization and impairments
2.3, 2.4, 4.1
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
Interest and dividends received
Interest paid
Other financial items
Income taxes paid
516
-6
37
-22
-34
491
101
165
-212
54
6
19
-47
-9
-84
297
8
35
-119
80
302
-35
-129
-424
-587
-24
7
-39
—
-21
Net cash from operating activities
325
778
The notes are an integral pat of the financial statements.
1) During 2023, cash flow presentation within the net cash from operating activities was redefined. The impact is not material.
2) Year 2022 includes cash and cash equivalents of discontinued operations amounting to EUR 117 million.
Outokumpu Annual Report 2023
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Financial year
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Notes to the consolidated financial statements
290
619
Parent company financial statements, FAS
Audit
Information for shareholders
-152
-70
-169
0
-39
-68
-42
-71
-58
-33
Cash flow from investing activities
Equity investments at fair value through other comprehensive
income
Purchase of property, plant and equipment
Purchases of intangible assets
Investments in associated companies
Proceeds from sale of property, plant and equipment and
intangible assets
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
Dividends paid
Repurchase of treasury share
Repayments of non-current debt
Change in current debt
Repayments of lease liabilities
5.6
4.1
4.1
6.6
4.1
6.2
5.2
5.2
5.1
5.1
4.2
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 2)
5.1
Net cash from financing activities
-430
-272
-14
-129
-17
-10
37
97
1
-35
-5
-148
-7
—
2
-1
—
-159
-140
644
-140
-2
502
346
300
346
-3
644
158
158/235
Outokumpu Annual report 2023 Consolidated statement of changes in equity
€ million
Equity on January 1, 2022
Net result for the period
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 December 31, 2022
Net result for the period
Other comprehensive income
Total comprehensive income for the financial year
Transactions with equity holders of the parent company
Contributions and distributions
Dividends
Convertible bond
Share-based payments
Repurchase of treasury shares 2)
Fair value transfer to inventory
Other3)
Equity on December 31, 2023
Note
Share
capital
311
Premium
fund
714
—
—
—
—
—
—
—
—
—
—
—
—
—
—
311
714
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
311
714
5.2
3.4
5.2
5.4
5.2
3.4
5.2
5.4
Other
restricted
reserves
3
—
—
—
—
—
—
—
3
—
—
—
—
—
—
—
—
-3
0
Invested
unrestricted
equity
reserve
2,308
—
—
—
—
—
—
—
2,308
—
—
—
—
0
—
—
—
—
Fair value
reserve from
equity
investments
Treasury
shares
Fair value
reserve from
derivatives
Cumulative
translation
differences
Remeasure-
ments of
defined
benefit
plans
-30
—
—
—
—
1
-100
—
-129
—
—
—
—
1
9
-50
—
—
-89
—
-4
-4
—
—
—
—
-93
—
-23
-23
—
—
—
—
—
117
1
-7
—
-15
-15
—
—
—
-26
-48
—
49
49
—
—
—
—
5
—
5
-22
—
24
24
—
—
—
—
3
—
-68
-68
—
—
—
—
—
28
-38
-169
—
41
41
—
—
—
—
-128
—
-11
-11
—
—
—
—
—
—
-139
Annual review
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Financial year
Review by the Board of Directors
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Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
Other
retained
earnings
101
1,140
0
Total equity
3,120
1,140
46
1,140
1,186
-68
6
—
—
1,179
-106
1
-105
-68
7
-100
-26
4,119
-106
-53
-159
-152
-152
—
-10
—
—
-142
770
0
-2
-50
5
—
3,762
2,307
-169
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) Outokumpu announced on November 3, 2022, a share buyback program and completed the program on March 24, 2023. Due to the nature of the contract with the third party, Outokumpu recognized a EUR 58 million
financial liability in December 2022 related to the share buyback program and the maximum amount of EUR 100 million already impacted Group equity in 2022. The outstanding EUR 58 million share purchases were
realized by the end of the program.
2) Treasury shares were acquired as part of the share buyback program announced on November 29, 2023. 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 38 million financial liability related to the share buyback program and the maximum amount of EUR 50 million is impacting Group equity already in 2023.
3) Other is related to reclassification of cumulative translation differences amounting to EUR 28 million and reclassification of investment to Voimaosakeyhtiö SF from equity investments at fair value through other
comprehensive income to associated company amounting to EUR 117 million. More information on the Voimaosakeyhtiö SF reclassification in note 6.6. These changes did not have an impact in total equity.
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Outokumpu Annual report 2023 Notes to the consolidated financial statements
Outokumpu presents the notes to the consolidated 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 judgements, 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.
Note
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
Outokumpu Annual Report 2023
Accounting
principles
Management
judgements
Risk
information
Note
Accounting
principles
Management
judgements
Risk
information
5 Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurance
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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Outokumpu Annual report 2023 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 Helsinki 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 8,800 professionals in close to
30 countries.
Outokumpu’s consolidated financial statements according to ESEF regulations 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 8, 2024, 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 statements 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 2023 covering the period from January 1 to December 31, 2023.
The consolidated financial statements have been prepared in accordance with IFRS Accounting
Standards as adopted by the European Union including SIC and IFRIC interpretations in force on
December 31, 2023. The consolidated financial statements also comply with the regulations of
Finnish accounting and company legislation complementing the IFRS.
The consolidated financial statements are presented in millions of euros and have been
prepared under the historical costs 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.
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. Long products activities that remained in Outokumpu until
completion of disposal on August 1, 2023 are included in Other operations.
During 2022 Outokumpu reclassified its Long Products businesses to be divested as assets
held for sale and reports the businesses as discontinued operations according to IFRS 5 Non
current assets held for sale and discontinued operations.
Net result from the discontinued operations is reported separately from income and expenses
from continuing operations in the consolidated statement of income. Assets and liabilities
related to the discontinued operations are presented as separate line items in the statement of
financial position. The statement of cash flows consists of total group figures including the
discontinued operations. In the comparative period Outokumpu had only Long product
businesses reported as discontinued operations.
The divestment was completed on January 3, 2023, and the transaction was carried out as a
share sale. The only impact in 2023 financial statements regarding the discontinued operations
is the sale transaction. See more information in note 6.1.
Corporate information
Company name
Legal form
Outokumpu Oyj
Public limited liability company
Country of incorporation
Finland
Domicile and principal place of business
Helsinki, Finland
Company address
P.O. Box 245, 00181 Helsinki, Finland
Ultimate parent company
Outokumpu Oyj
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Outokumpu Annual report 2023 Risk information
Accounting principles
Global economy and geopolitical conflicts
The adverse development of global economy, geopolitical conflicts including Israel-Hamas war,
the recent tension in the Red Sea and the continued war in Ukraine have increased the risks
and uncertainties to which Outokumpu is exposed. However, the company has taken prompt
measures to manage and control these risks. These developments have not had material
impact on 2023 financial statements.
For more information on risks and uncertainties see Review of Board of Directors and notes
to financial statements.
Climate matters
Outokumpu aims to reduce its carbon emission intensity 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 committed
to a low carbon roadmap and many carbon emission reduction projects have been initiated
already. According to the roadmap, Outokumpu plans to invest to the emission reduction
projects in total about EUR 350 million until 2030. The avoided direct emission from European
sites in that period corresponds to European emission 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 carbon emissions which corresponds to
EUR 2281) million.
See more information about climate related matters in the section Sustainability review.
1) The financial impact is evaluated with Company's shadow price of 90 Euro per ton of CO2.
Management judgements
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 management judgments.
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
statements from the date on which control commences 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 measured
using the currency that best reflects the economic substance of the underlying events and
circumstances relevant to that subsidiary (“the functional currency”). The functional currency is
mainly the subsidiary’s local currency except for subsidiary in 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 statement 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 differences 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 monthly average exchange rates. During 2023 Outokumpu
changed the translation method for the statements of income and comprehensive income and
the statement of cash flows from cumulative foreign exchange translation method to periodical
translation method. The impact was not significant and the comparative period has not been
restated. 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 liabilities arising on acquisitions of those foreign operations
are treated as assets and liabilities of those foreign operations. They are translated into euro
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Outokumpu Annual report 2023 using the exchange rates prevailing 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, 2023, Outokumpu has applied the following new and amended standards,
interpretations and decisions.
• 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: 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: The amendment clarifies the application of the recognition
exemption of deferred taxes on a single transaction.
• Amendments to IAS 12 - International Tax Reform, Pillar Two Model Rules: The amendments
to IAS 12 have been introduced in response to the OECD’s BEPS Pillar Two rules and
include: A mandatory temporary exception to the recognition and disclosure of deferred
taxes arising from the jurisdictional implementation of the Pillar Two model rules; and
disclosure requirements for affected entities to help users of the financial statements better
understand an entity’s exposure to Pillar Two income taxes arising from that legislation,
particularly before its effective date. See more information in note 2.6.
IFRS 17 Insurance contracts and amendments to IFRS 17 insurance contracts: Initial
Application of IFRS 17 and IFRS 9 - Comparative information: The standard requires a
current measurement model for insurance liability with re-measured estimates at each
reporting date. Outokumpu has a captive insurance company Visenta Försäkrings AB but in
the Group’s consolidated financial statements IFRS 17 is not applicable.
•
The new and amended standards, interpretations and decisions did not have material impact
on Outokumpu’s consolidated financial statements.
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
Audit
Information for shareholders
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 2. Business result
In 2023, Outokumpu generated a solid adjusted EBITDA in more challenging market conditions and kept its balance sheet strong.
Stainless steel deliveries decreased from the previous year and realized prices for stainless steel were substantially lower especially
in Europe, reflecting weaker market. Net result, however, turned negative mainly due the impairment booking related to the
renegotiated hot rolling agreement in business area Americas.
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 communications, Global business services, R&D, Technology,
Sustainability and Group IT.
10,000
7,500
5,000
2,500
0
Sales, € million
Sales EUR
7.0
billion
2019*
2020*
2021
2022
2023
Adjusted EBITDA EUR
Europe consists of both coil and plate operations 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.
Adjusted EBITDA, € million
1500
1200
900
600
300
0
2019*
2020*
2021
2022
2023
Ferrochrome produces charge grade of ferrochrome. The business area has a chrome mine in
Kemi, Finland and ferrochrome smelters in Tornio, Finland.
Earnings per share, €
Other operations consist of activities outside the three operating segments, as well as
industrial holdings, non-core businesses and strategic group level investments. 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.
2.50
2.00
1.50
1.00
0.50
0.00
-0.50
Outokumpu Annual Report 2023
2019*
2020*
2021
2022
2023
* Including discontinued operations
517
million
Net result EUR
-111
million
Earnings per
share EUR
-0.26
164
164/235
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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
Outokumpu Annual report 2023 2023
€ million
External sales
Inter-segment sales
Sales
Adjusted EBITDA
Adjustments to EBITDA
Loss on disposal of shares in Group companies and
businesses
Onerous contracts provisions
Restructuring costs
Inventory write-down
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
4,749
69
4,818
148
—
-7
-26
-20
96
-119
-8
-31
2,843
Americas
1,883
8
1,892
285
—
—
-16
—
270
-60
-264
-54
940
Ferrochrome
Operating segments
total
Other operations
Eliminations
207
260
467
96
—
—
-3
—
93
-50
-2
41
6,840
337
7,177
529
—
-7
-45
-20
458
-228
-274
-44
1,018
4,801
121
287
408
-18
-26
—
-5
—
-49
-14
—
-107
824
—
-624
-624
6
—
—
—
—
6
—
—
51
-754
993
346
125
1,463
224
-207
Operating capital
Return on operating capital (ROOC), %
1,850
1.5
594
25.8
894
5.0
3,338
600
-548
Reconciliation
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
Audit
Information for shareholders
Group
6,961
—
6,961
517
-26
-7
-50
-20
416
-242
-274
-100
4,871
602
454
5,927
1,480
653
31
2,165
3,390
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 In 2023, Outokumpu recognized adjustments relating to the sale of the remaining Long
Products business in Degerfors and Storfors, Sweden, with a loss of EUR 26 million, an onerous
contracts provision of EUR 7 million related to the metal powder plant in Germany, restructuring
costs total of EUR 50 million of which EUR 26 million is related to restructuring in Germany and
EUR 16 million to the renegotiated hot rolling agreement in business area Americas, regarding
these two items impairments of EUR 5 million and EUR 264 million were also booked
respectively. Adjustment item was also recognized for a propane-related inventory write-down of
EUR 20 million. For more information on impairments related to business area Americas in
2023, see note 4.1.
In 2022, Outokumpu recognized adjustments relating mainly to divestment in the Netherlands,
Italy, and Argentina, amounting to EUR 10 million loss and impairment related to Group's ERP
systems of EUR 10 million
Adjustments to EBITDA and EBIT
€ million
Loss on disposal of shares in Group companies and
businesses
Restructuring costs
Inventory write-down
Onerous contracts provisions
Litigation provisions
Adjustments to EBITDA
Impairments of Group’s ERP systems
Impairments on non-current assets
Adjustments to EBIT
2023
-26
-50
-20
-7
—
-102
—
-272
-374
2022
-10
—
—
—
2
-7
-10
—
-17
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
Audit
Information for shareholders
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 Reconciliation
Annual review
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
Operating capital
Return on operating capital (ROOC), %
Europe
6,225
42
—
6,266
680
—
—
680
-130
0
550
Americas
2,686
9
—
2,695
384
—
2
387
-67
0
320
3,203
1,274
Ferrochrome
Operating segments
total
Other operations
Eliminations
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
—
-924
104
-820
6
—
—
6
0
—
5
419
-301
1,339
285
87
1,711
385
-283
1,864
28.9
990
32.4
867
20.7
3,721
34
-18
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
3,737
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
Audit
Information for shareholders
Outokumpu Annual Report 2023
167
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Outokumpu Annual report 2023 Accounting principles
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 performance 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.
Operating capital and ROOC
Segment assets and liabilities resulting in the operating capital are allocated to the segments
based on the operations and the physical location of the assets and are measured the same
way as in the financial statements.
Return on operating capital (ROOC) is a key figure for the segment reporting and it is an
internal measure for the value the business areas generate to the capital invested in their
operations. The formula for calculating Return on operating capital (ROOC) is presented in
Definitions of financial key figures.
2.2 Revenue
External sales by geographical destination
Annual review
€ million
2023
Operating segment
Europe
Americas
Ferrochrome
Other operations
2022
Operating segment
Europe
Americas
Ferrochrome
Other operations
Finland
Other
Europe
North
America
APAC
region
Other
countries
Group
Sustainability review
222
4,035
105
318
—
13
8
0
1,856
130
98
21
13
5
44
2
243
4,263
1,995
368
70
22
0
—
91
4,749
1,883
207
121
6,961
366
5,014
149
565
134
—
16
2
0
2,603
163
278
40
51
2
28
1
80
—
—
6,229
2,686
247
331
384
5,455
2,843
597
214
9,494
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
Year 2022 figures by operating segment include intra-group sales to discontinued operations amounting to
EUR 104 million.
Audit
Information for shareholders
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 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 consequently
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 2023, the amount of revenue recognized under the bill and hold arrangements
for products not delivered yet was immaterial.
Stainless steel and ferrochrome sales prices are mainly fixed before delivery, and volume
discounts 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 ferrochrome. The payment terms vary from advance payment
to 90 days payment term, and do not include any significant financing component.
Outokumpu can sell 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 significant 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
Parent company financial statements, FAS
Audit
Information for shareholders
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 2.3 Cost of sales and selling, general and administrative expenses
Accounting principles
€ million
Cost of sales
Selling and marketing expenses
Administrative expenses
Research and development expenses
Total, continuing operations
2023
-6,474
-73
-260
-14
-6,821
Cost of sales and selling, general and administrative expenses by nature
2022
-8,147
-72
-225
-15
-8,460
2022
-5,263
-777
-462
-197
-284
-722
-245
-510
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.
€ 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
2023
-3,671
-737
-461
-226
-248
-712
-242
-524
-6,821
-8,460
2023
-233
0
-7
-1
-242
2023
-2.9
—
-0.1
-0.2
-3.2
2022
-236
-1
-7
-1
-245
2022
-2.5
—
0.0
-0.2
-2.7
PricewaterhouseCoopers Oy has provided non-audit services to Outokumpu in total of EUR 0.3 million during
2023 (2022: EUR 0.2 million). These services comprised of sustainability reporting, ESG consulting and
other agreed upon procedures.
Outokumpu Annual Report 2023
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170/235
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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
Parent company financial statements, FAS
Audit
Information for shareholders
Outokumpu Annual report 2023 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 derivative 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
Parent company financial statements, FAS
Audit
Information for shareholders
2.4 Other operating income and expenses
Other operating income
€ million
2023
2022
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
Insurance compensation
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
-2
10
8
7
33
6
8
62
—
—
—
5
3
0
10
18
2023
2022
—
—
—
-274
-26
0
-2
-302
-8
-21
-29
-11
-9
-2
-8
-60
Comparative information for exchange as well as market price gains and losses is reported as
other operating expenses.
In other operating income the gain on sale of non-current assets is mainly related to the sale of
emission allowances amounting to EUR 29 million. More information on emission allowances in
note 4.1.
In other operating expenses impairments in non-current assets are mainly related to impairment
in business area Americas EUR 264 million and impairments in Germany EUR 8 million related
to restructuring and metal powder plant. More information on the impairment of business area
Americas in note 4.1.
Loss on disposal of shares in Group companies and businesses is related to the sale of
Degerfors. More information on the disposal in note 6.2.
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 2.5 Financial income and expenses
Exchange gains and losses in the consolidated statement of income
€ 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
2023
16
5
21
-19
-19
-10
-7
-5
-60
2
-6
-4
-9
-5
16
5
-4
11
-37
2022
4
1
4
-21
-10
-10
-3
-1
-44
3
-12
-10
-19
40
-39
-10
-3
-12
-71
€ million
In sales
In purchases
In other operating income and expenses
In financial income and expenses
Total, continuing operations
2023
2022
7
9
-2
11
24
10
-31
-8
1
-29
Exchange gains and losses include EUR 7 million of net exchange loss on derivative financial
instruments (2022: EUR 32 million net exchange gain) of which a loss of EUR 2 million (2022:
EUR 8 million loss) has been recognized in other operating income and expenses and a loss of
EUR 5 million (2022: EUR 40 million gain) in financial income and expenses.
Accounting principles
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 commitment credit facilities, other
financial fees and capitalized interests.
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
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.
Audit
Exchange and other market price gains and losses on operative items and related derivative
Information for shareholders
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.
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 2.6 Income taxes
Income taxes in the consolidated statement of income
€ million
Current taxes
Deferred taxes
Total, continuing operations
2023
-23
45
22
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 recognition
Group company disposals
Taxes for prior years
Tax rate changes and other changes in tax laws
Associated companies
Total, continuing operations
2023
-133
27
-1
0
—
10
-5
-6
-3
1
22
2022
-61
215
154
2022
933
-187
-46
-1
84
303
-2
1
-1
2
154
Accumulated deferred taxes recognized in equity
€ million
2023
2022
Deferred tax on convertible bond equity component
Net investment hedging
Remeasurements of the net defined benefit liability
Derivatives
Total, continuing operations
-1
-4
69
-2
63
-1
-4
64
6
64
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
Audit
Information for shareholders
Outokumpu Annual Report 2023
173
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Outokumpu Annual report 2023 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, 2023
Movements
Dec 31, 2023
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 (-)
8
-215
3
2
31
16
43
1
500
390
390
0
0
9
1
0
-2
-16
0
16
-9
0
0
85
-14
3
-24
21
0
-3
-23
45
—
—
—
-8
—
5
—
—
—
-2
0
0
0
0
0
0
0
0
-8
-9
8
-121
-11
-3
6
26
42
14
461
423
454
-31
During 2023 the process of netting of deferred tax assets and liabilities was redefined.
€ 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
Reclassifications include transfers to assets classified as held for sale.
Outokumpu Annual Report 2023
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
174
174/235
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
Parent company financial statements, FAS
Audit
Information for shareholders
Outokumpu Annual report 2023 Tax losses and related deferred tax assets
Tax losses carried
forward
Recognized deferred
tax assets
Unrecognized
deferred tax assets
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.
Annual review
2023
2022
2023
2022
2023
2022
Accounting principles
€ million
Expire in 2-5 years
Expire later than in 5 year
Never expire
Total, continuing operations
Tax losses by country
€ million
Finland
Germany
Sweden
The US
The UK
Other countries
Total, continuing operations
0
0
1,090
1,267
967
924
2,056
2,190
0
238
222
461
0
302
199
500
0
25
0
25
—
—
7
7
2023
94
169
198
1,358
179
58
2,056
2022
0
145
190
1,640
168
47
2,190
As of December 31, 2023, Outokumpu Group has recognized a deferred tax asset on all
material tax losses. The tax attributes of the Outokumpu Group for which no deferred tax asset
has been recognized relate to a portion of the US state tax losses which are estimated to expire
before utilization. A deferred tax asset of EUR 297 million relating to US losses was recorded in
the balance sheet in 2022. 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 was fulfilled. Business
area Americas has continued its strong performance in year 2023.
No deferred tax liabilities were recorded on undistributed profits of foreign subsidiaries, as such
profits are not to be distributed in the foreseeable future.
Management judgements
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 positive and negative factors. The recorded amount of deferred tax
Current and deferred income taxes are determined 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 companies 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.
The group is within the scope of the OECD pillar Two model rules. Pillar Two legislation was
implemented in Finland, the jurisdiction in which Outokumpu Oyj is incorporated, based on the
EU directive, and will come into effect from January 1, 2024. Since the Pillar Two legislation
was not effective at the reporting date, the group has no related current tax exposure. The
group applies the exception to recognizing and disclosing information about deferred tax assets
and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12
issued in May 2023.
Regarding the OECD Pillar 2 model rules, the management does not expect any material
impact. The analysis is based on rules, regulations and information available at the time when
the financial statements are prepared.
Outokumpu Annual Report 2023
175
175/235
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Audit
Information for shareholders
Outokumpu Annual report 2023 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 attributable to the equity holders of the parent
company, continuing operations, € million
Interest expenses on convertible bond, net tax, continuing
operations, € million
Adjusted net result attributable to the equity holders of the
parent company, continuing operations, € million
2023
-106
8
-98
-111
8
-103
2022
1,140
8
1,148
1,086
8
1,094
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.
Adjusted weighted average number of shares, in thousands
Adjusted diluted weighted average number of shares, in
thousands
435,090
475,844
451,933
493,536
Earnings per share, €
Diluted earnings per share, €
Earnings per share, continuing operations, €
Diluted earnings per share, continuing operations, €
-0.24
-0.21
-0.26
-0.22
2.52
2.33
2.40
2.22
In 2023, Outokumpu repurchased 13,903,534 treasury shares as part of two different share
buyback programs of which one started in 2022 and the other in 2023. More information on
the programs are presented in note 5.2.
In 2022, Outokumpu repurchased 8,575,126 treasury shares as part of a share buyback
program started in 2022.
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Outokumpu Annual Report 2023
176
176/235
Outokumpu Annual report 2023 3. Employee benefits
Outokumpu somewhat increased its number of personnel during 2023 and at the end of December full-time equivalent number of
personnel was 8,469. Employee benefit expenses slightly decreased in 2023 however, reflecting the cost reduction measures taken
to adapt to the weaker market environment.
3.1 Employee benefit expenses
Employee benefit expenses, € million
€ million
Wages and salaries
Termination benefits
Social security costs
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
2023
-531
-18
-98
-3
-50
-7
-1
-4
-712
2022
-544
-9
-108
-5
-41
-1
-8
-7
-722
800
600
400
200
0
Total employee benefit expenses EUR
Personnel on December 31
2019*
2020*
2021
2022
2023
-712 million
Number of personnel at the end of period (FTE)
8,469
12,000
10,000
8,000
6,000
4,000
2,000
0
2019*
2020*
2021
2022
2023
Personnel reported as full time equivalent number.
*Including discontinued operations
Outokumpu Annual Report 2023
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Audit
Information for shareholders
Outokumpu Annual report 2023 3.2 Employee benefits for key management
€ thousands
Short-term employee benefits
Post-employment benefits 1)
Share-based payments
Remuneration to the Board of Directors
1) Contains only supplementary pensions
2023
6,438
240
447
918
8,043
2022
6,404
233
2,331
898
9,866
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 Procurement Officer, Chief Technology
Officer and Chief Human Resources Officer are part of the Outokumpu Leadership Team. In June
2023, the Chief Procurement Officer was added to the Leadership Team, bringing the number
of its members from 8 to 9.
Employee benefits for the CEO
Recognized in profit or loss
Remuneration paid
€ thousands
Salaries and short-term benefits
Short-term incentives
Post-employment benefits
Share-based payments
2023
1,003
516
259
111
2022
900
871
241
633
2023
1,003
871
259
729
2022
900
1,065
241
—
1,888
2,645
2,863
2,206
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
€ thousands
Chairman Kari Jordan
Vice Chairman Eeva Sipilä, until March 31, 2022
Vice Chairman Kati ter Horst, Vice Chairman as of March 31, 2022
Member Heinz Jörg Fuhrmann
Member Päivi Luostarinen
Member Jyrki Mäki-Kala, as of March 30, 2023
Member Karl-Petter Söderström, as of March 31, 2022
Member Vesa-Pekka Takala, until March 30, 2023
Member Pierre Vareille
Member Julia Woodhouse
Total
2023
193
—
120
94
93
106
92
8
98
113
918
2022
190
4
114
95
92
—
87
113
100
105
898
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.
In 2023, the CEO’s short-term incentive earning opportunity stayed unchanged at 50% of the
annual gross base salary on a target level and 100% on a maximum level. The outcome was
54%or EUR 515,755. It will be paid in March 2024.
In 2023, the long-term incentive target and maximum levels remained at 50% and respectively
75% of the annual base salary at time of grant. The Performance Share Plan (PSP) 2021-2023
partly met its performance criteria and the executives participating in the plan, including the
CEO, will receive 73.3% of the shares granted at target level. The rewards will be paid in 2024.
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 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 12 months, and the notice period is 6 months for both parties. Heikki Malinen’s
retirement age is 65 years. He participates in the Finnish statutory pension system, and in
2023 there was no supplementary pension plan at place.
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
remuneration and choose 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.
Outokumpu Annual Report 2023
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Audit
Information for shareholders
Outokumpu Annual report 2023 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 45% and 52%
of the Group’s total defined benefit obligation, respectively.
Discontinued operations
At the end of year 2023, there were no assets held for sale nor costs related to defined
benefits. All the year 2022 figures in this note are including discontinued operations as their
impact is considered immaterial.
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
2023
-3
-7
-11
-15
-25
2023
522
1
-330
193
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
2023
193
19
212
2022
-5
-3
-7
65
57
2022
502
2
-301
202
2022
202
14
216
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.
There was a net defined benefit liability of EUR 1 million in statement of financial position in discontinued
operations in 2022.
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 management 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 requirements 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 operation
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.
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 2023, the escrow balance was GBP 13 million (2022: GBP 13 million). The
actuarial losses in 2023 amounted to EUR 0.5 million.
Due to the buy-in solutions, no further contributions are expected to be required as a result of
the triennial valuations. The latest valuation for this purpose was completed in 2021.
Outokumpu Annual Report 2023
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Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
Outokumpu Annual report 2023 Movement in net defined benefit liability
€ 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
Business combinations
Total on Dec 31
Germany on Dec 31
The UK on Dec 31
Present
value of
obligation
Fair value
of plan
assets
2023
Net
defined
benefit
liability
Present
value of
obligation
Fair value
of plan
assets
2022
Net
defined
benefit
liability
504
-301
202
781
-487
294
3
—
21
—
-5
20
9
6
0
-33
0
-1
—
—
-14
-9
—
—
—
-5
-34
33
—
—
3
—
7
-9
-5
20
9
1
-34
0
0
-1
4
1
10
—
4
-264
16
-16
—
-31
-1
—
—
—
-8
178
—
—
—
17
-34
31
2
—
4
1
3
178
4
-264
16
1
-34
—
0
—
524
-330
193
504
-301
202
233
273
-58
-267
175
6
221
266
-34
-262
187
4
Allocation of plan assets
€ million
Cash and cash equivalents
Insurance policies
Other assets
Total plan assets
2023
1
271
59
330
2022
2
264
34
301
On December 31, 2023, 0.2% of the plan assets were invested in quoted instruments (Dec 31, 2022:
0.8%).
Significant actuarial assumptions
Discount rate, %
Future salary
increase, %
Inflation rate, %
Future benefit
increase, %
Medical cost trend
rate, %
Life expectancy
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
Germany
3.18
3.74
—
—
2.30
2.30
2.30
2.30
—
—
RT 2018 G
mortality tables
The UK
4.50
4.75
—
—
3.10
3.25
2.95
3.10
—
—
Other countries
8.15
7.14
5.28
4.11
3.48
3.40
2.06
2.01
4.70
5.20
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Audit
96% SAPS All
Pensioner Amounts
tables with CMI Core
Projection Model -
2022
96% SAPS All Pensioner
Amounts tables with
CMI Core Projection
Model - 2021
Standard mortality
tables
Information for shareholders
Standard mortality
tables
The weighted average duration of the overall defined benefit obligation is 13.2 years. In
Germany and in the UK, the weighted average durations are 11.2 and 15.0 years, respectively.
2022
RT 2018 G
mortality tables
Discount rates, rising inflation and increasing retirement age have material impact on financial
assumptions and remeasurement amounts.
The expected contributions to be paid to the defined benefit plans in 2024 are EUR 35 million
and relate mainly to the German plans.
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Outokumpu Annual report 2023 Sensitivity analysis of significant actuarial assumptions
Risk information
2023
Discount rate
Future benefit increase
Medical cost trend rate
Future salary increase
Life expectancy
2022
Discount rate
Future benefit increase
Medical cost trend rate
Future salary increase
Life expectancy
Change in
assumption
Germany, %
The UK, % 1)
Other
countries, %
Through its defined benefit plans, Outokumpu is exposed to a number of risks, the most
significant of which are detailed below.
+/-0.5%
-5 / +6
-7 / +7
-7 / +7
+/-0.5%
+3 / -2
+/-0.5% — / —
+/-0.5% — / —
+6 / -5
— / —
— / —
+2 / -2
+8 / -7
+6 / -3
+ 1 year — / +3 — / +3
— / +7
+/-0.5%
-5 / +6
-7 / +8
-3 / +4
+/-0.5%
+3 / -2
+5 / -5
+/-0.5% — / —
— / —
+/-0.5% — / —
— / —
+2 / -2
+5 / -4
+3 / -3
+ 1 year — / +2
— / +3
— / +7
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 benefits
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
Annual review
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Sensitivity is presented for reasonably possible change at the reporting date in one of the principal
assumptions, while holding all other assumptions constant.
earlier-mentioned risks for the Scheme, which is mostly covered by insurance.
Notes to the consolidated financial statements
1) The buy-in removed risks of investment, longevity, interest rate changes and inflation for the scheme.
Management judgements
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 regulations, employees are able to retire a certain number
of years prior to their earliest pensionable age (passive phase). During a period equal in length
to the passive phase they will be working full-time with their net salary cut to 50% of their
former regular salary (active phase). During both phases the employer supplements the net
salary to match a defined percentage of the employee‘s former regular net salary. Under the
long-service remunerations 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 therefore these
plans have been accounted for as defined contribution plans in the consolidated financial
statements.
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 compensation 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 contribution 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
arrangements 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 statement 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.
Outokumpu Annual Report 2023
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Audit
Information for shareholders
Outokumpu Annual report 2023 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 which
the plan can receive payments from the insurer corresponding to the benefits due to the
participants, but ultimately the primary obligation to pay benefits has not been transferred.
For other long-term employee benefits, all service costs and remeasurements are recognized
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.
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182
182/235
Outokumpu Annual report 2023 Share-based payment opportunity
Maximum number of shares Dec 31, 2023
2024
2025
2026
Total
PSP 2021-2023
RSP 2021-2023
PSP 2022-2024
RSP 2022-2024
PSP 2023-2025
RSP 2023-2025
2,724,375
65,370
2,789,745
—
—
—
— 1,305,353
57,034
237,332
57,034 1,542,685
— 2,724,375
—
65,370
— 2,789,745
— 1,305,353
—
294,366
— 1,599,719
—
60,064
60,064
— 2,465,400 2,465,400
60,064
60,072
180,200
60,064 2,525,472 2,645,600
Total
2,906,843 1,602,749 2,525,472 7,035,064
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Information for shareholders
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 200. The Restricted Share Pool (RSP) does not have any specific
earning criterion 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 2023, the share-based payment expenses included in the employee
benefit expenses were EUR 1 million (2022: EUR 8 million). The total estimated value of the
share-based payment plans is EUR 13 million on December 31, 2023 (2022: EUR 18 million).
This value is recognized as an expense in the statement of income during the vesting periods.
Outstanding programs
During 2023, Outokumpu's share-based payment programs include Performance Share Plan
(periods 2021–2023, 2022–2024 and 2023–2025) and Restricted Share Pool (periods 2021–
2023, 2022–2024 and 2023–2025).
In December 2023, the Board of Directors has approved the commencement of Outokumpu’s
share-based programs, Performance Share Plan and Restricted Share Pool, for the period
2024–2026. The plans commence at the beginning of 2024.
Vested programs
In 2023, the Performance Share Plan 2020–2022 ended with the targets met in full, and after
deduction for the applicable taxes, a total of 732,495 shares were delivered to the
participants. Regarding the Restricted Share Pool period 2020–2022, after deductions for the
applicable taxes, a total of 90,545 shares were delivered to 33 participants based on the
conditions of the plan. From the Restricted Share Pool 2021–2023, after deductions for
applicable taxes as second installment of three, in total 41,577 shares were delivered to the
56 participants. From the Restricted Share Pool 2022–2024, after deductions for applicable
taxes as first installment of three, in total 27,093 shares were delivered to the 56 participants.
Shares were delivered in February 2023, and Outokumpu used its treasury shares for the
reward payments.
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Outokumpu Annual report 2023 Annual review
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Financial year
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Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
Parent company financial statements, FAS
The general terms and conditions of the outstanding share-based incentive programs
Grant date
Vesting period
Number of participants
Share price at grant date, €
Exercised
Vesting conditions
Non-market
Performance Share plan
PSP 2021-2023
March 15, 2021
PSP 2022-2024
March 15, 2022
PSP 2023-2025
March 10, 2023
Jan 1, 2021-Mar 31, 2024
Jan 1, 2022-Mar 31, 2025
Jan 1, 2023-Mar 31, 2026
94
4.35
99
4.50
183
5.68
In shares and cash in 2024
In shares and cash in 2025
In shares and cash in 2026
Return on capital employed
Return on capital employed (80%), CO2, emissions
per ton of crude steel produced (20%)
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
Number of participants
Share price at grant date, €
Exercised
Restricted Share Pool Program
RSP 2021-2023
March 15, 2021
RSP 2022-2024
March 15, 2022
RSP 2023-2025
March 10, 2023
Jan 1, 2021-Mar 31, 2024
Jan 1, 2022-Mar 31, 2025
Jan 1, 2023-Mar 31, 2026
54
4.35
68
4.50
57
5.68
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
In shares and cash in 3 installments in 2024, 2025
and 2026
Audit
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
Information for shareholders
Management judgements
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
The share-based payments are settled net of tax withholding, 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.
mainly external financial forecasts but also internal forecasts are used. The number of
participants 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.
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 performance 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.
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Outokumpu Annual report 2023 4. Operating assets and liabilities
Outokumpu remained capital disciplined also in 2023, and the
annual capital expenditure amounted to EUR 170 million. The
group’s main capital expenditure project during the past years
has been the Kemi mine expansion, which was finalized during
the year. Outokumpu’s net working capital slightly decreased in
2023. Inventory volumes remained relatively stable while metal
prices were lower. Return on capital employed was negatively
affected by significant adjustment items on result.
4.1 Intangible assets and property, plant and equipment
Intangible assets
2023
€ million
Historical cost on Jan 1, 2023
Translation differences
Additions
Disposals
Reclassifications
Other
Other
intangible
assets
352
-3
24
-7
-35
0
Goodwill
471
—
—
—
1
—
Total
823
-3
24
-7
-33
0
Capital expenditure, € million
250
200
150
100
50
0
2019*
2020*
2021
2022
2023
Inventories, € million
2,000
1,500
1,000
500
0
2019*
2020*
2021
2022
2023
Historical cost on Dec 31, 2023
472
332
804
Return on capital employed, %,
Accumulated amortization and impairment on Jan 1, 2023
-15
-262
-276
Translation differences
Amortization
Disposals
Reclassifications
Other
—
—
—
0
—
3
-13
0
38
0
3
-13
0
37
0
Accumulated amortization and impairment on Dec, 31, 2023
-15
-234
-249
25
20
15
10
5
0
-5
Carrying value on Dec 31, 2023
Carrying value on Jan 1, 2023
457
456
98
91
556
547
*Including discontinued operations.
Reclassifications include transfers between historical cost and accumulated depreciation and impairment.
2019
2020
2021
2022
2023
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Outokumpu Annual report 2023
2022
€ million
Historical cost on Jan 1, 2022
Translation differences
Additions
Disposals
Reclassifications
Historical cost on Dec 31, 2022
Other
intangible
assets
367
-4
7
-2
-15
352
Goodwill
482
-2
—
-2
-8
471
Total
849
-5
7
-4
-23
823
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.
Accumulated amortization and impairment on Jan 1, 2022
-17
-255
-272
Translation differences
Amortization
Impairments
Disposals
Reclassifications
1
—
—
1
—
4
-16
-10
1
15
5
-16
-10
2
15
Accumulated amortization and impairment on Dec, 31, 2022
-15
-262
-276
Carrying value on Dec 31, 2022
Carrying value on Jan 1, 2022
456
465
91
112
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.
Emission allowances
Outokumpu's continuing operations had the following active sites operating under EU’s
Emissions Trading Scheme (EU ETS) in 2023: 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 requirements on time in 2023.
The pre-verified carbon dioxide emissions under EU ETS were approximately 0.9 million tonnes
in 2023 (2022: 0.9 million tonnes). For its 2023 emission allowance delivery, Outokumpu will
use allowances received for free, but also allowances acquired from the market in prior years.
The cost of usage has been recognized as other operating expenses. During 2023, Outokumpu
Oyj sold externally 450,000 tons of emission allowances and recognized a gain on sale of non-
current assets of EUR 29 million.
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Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 Property, plant and equipment
2023
€ million
Historical cost on Jan 1, 2023
Translation differences
Additions
Disposals
Reclassifications
Other
Historical cost on Dec 31, 2023
Accumulated depreciation and impairment on Jan 1, 2023
Translation differences
Disposals
Depreciation
Impairments
Reclassifications
Other
Accumulated depreciation and impairment on Dec 31, 2023
Carrying value on Dec 31, 2023
Carrying value on Jan 1, 2023
Land
76
0
—
0
-6
—
70
-13
0
—
—
—
6
—
-7
63
63
Mine properties
131
—
1
—
175
—
307
-81
—
—
-15
—
40
—
-56
251
50
Machinery and
Buildings
1,174
equipment Other tangible assets
4,161
132
-7
3
-1
59
-1
1,228
-768
3
0
-37
-58
11
1
-847
381
406
-31
9
-17
119
0
4,240
-2,916
19
12
-135
-210
-15
0
-3,246
994
1,244
0
1
-1
-2
0
131
-89
0
1
-5
—
6
0
-88
43
43
Advances paid and
construction work in
progress
443
-1
129
-1
-396
0
174
—
—
—
—
—
—
—
—
174
443
Group
6,116
-40
143
-19
-50
-1
6,150
-3,866
22
13
-192
-269
48
1
-4,244
1,905
2,250
Reclassifications include transfers from advances paid and construction work in progress to other asset classes and also transfers between historical cost and accumulated depreciation and impairment.
Impairment in business area Americas
At the end of the year 2023, Outokumpu conducted an impairment test of business area Americas’ fixed assets as the new extended hot rolling agreement is expected to decrease business area
Americas’ normalized annual EBITDA run-rate from USD 200 million to USD 170 million. The Value-in-use method was used in the calculations with a growth rate of 0.5% and a post-tax weighted
average cost of capital (WACC) of 10.58%. As the result of the impairment test calculation, Outokumpu recognized an impairment loss of EUR 264 million related to property, plant and equipment of
business area Americas.
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Notes to the consolidated financial statements
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Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 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
Carrying value on Dec 31, 2022
Carrying value on Jan 1, 2022
Land
81
1
—
-2
-4
—
76
-14
0
—
—
—
—
0
-13
63
68
Mine properties
130
—
0
—
0
—
131
-70
—
—
-10
—
—
—
-81
50
59
Buildings
1,212
0
1
-10
-29
—
1,174
-760
7
4
-39
0
20
0
-768
406
452
Machinery and
equipment Other tangible assets
Advances paid and
construction work in
progress
4,391
-26
8
-28
-185
1
4,161
-3,004
47
27
-143
0
156
-2
-2,916
1,244
1,387
148
-1
0
-8
-8
—
132
-91
1
8
-5
—
-2
—
-89
43
57
384
0
96
0
-36
-1
443
—
—
—
—
—
—
—
0
443
384
Group
6,347
-27
106
-48
-262
1
6,116
-3,940
56
40
-196
0
175
-2
-3,866
2,250
2,407
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.
All the comparative information regarding property, plant and equipment has been restated as the Group has separated the property, plant and equipment from the right-of-use assets in the 2023 consolidated statement of
financial position.
Intangible assets and property, plant and equipment by geographical region
Management judgements
€ million
Finland
Other Europe
North America
APAC region
Other countries
2023
1,552
495
406
8
0
2022
1,565
525
698
9
0
2,461
2,797
Capitalized interest expenses
During 2023, borrowing costs amounting to EUR 2 million (2022: EUR 3 million) were
capitalized on investment projects under property, plant and equipment and intangible assets.
Total capitalized interests on December 31, 2023 were EUR 25 million (Dec 31, 2022: EUR 32
million). The average capitalization rate used in 2023 was 1.0% (2022: 1,0%).
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 regularly
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.
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Outokumpu Annual report 2023 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, depreciation 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:
Software
Capitalized development costs
Intangible rights
up to 10 years
up to 10 years
up to 20 years
Depreciation of property, plant and equipment items is based on the following estimated useful
lives:
Buildings
Heavy machinery
Light machinery and equipment
25–40 years
15–30 years
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 improvements, 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
Outokumpu Annual Report 2023
have been if no prior impairment loss had been recognized. Impairment 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 impairment losses. Impairment losses on goodwill cannot
be subsequently reversed.
See note 4.3 for goodwill impairment testing.
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 purchased
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 emission allowances are recognized as other operating
income.
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189
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Outokumpu Annual report 2023
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. 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. Most of the right-of-use assets are in Finland, totaling EUR 104 million.
Right-of-use assets
2023
€ million
Historical cost on Jan 1, 2023
Additions
Reclassifications
Other changes
Historical cost on Dec 31, 2023
Accumulated depreciation and impairment on Jan 1,2023
Depreciation and impairments
Reclassifications
Other changes
Accumulated depreciation and impairment on Dec 31, 2023
Carrying value on Dec 31, 2023
Carrying value on Jan 1, 2023
Land
36
—
—
—
36
-5
-1
—
—
-5
30
31
Buildings
Machinery and
equipment
Advances paid and
other tangible assets
41
2
1
-3
41
-22
-10
-1
3
-30
11
20
175
19
0
-15
179
-71
-32
0
27
-75
104
104
2
1
0
-1
1
-1
0
0
1
-1
1
1
Total
254
22
1
-19
257
-97
-42
-1
30
-110
147
156
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Outokumpu Annual report 2023 2022
€ million
Historical cost on Jan 1, 2022
Additions
Reclassifications
Other changes
Historical cost on Dec 31, 2022
Accumulated depreciation and impairment 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.
Land
36
—
—
—
36
-4
-1
—
—
-5
31
31
Buildings
Machinery and
equipment
Advances paid and
other tangible assets
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
—
Total
266
6
-6
-13
254
-101
-33
3
33
-97
156
166
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
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Notes to the consolidated financial statements
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Outokumpu Annual report 2023 fixed and index/rate-based lease payments are discounted with the interest rate implicit to the
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.
Right-of-use assets recognized 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 in the 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 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.
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
Audit
Information for shareholders
Lease liabilities
€ million
Non-current
Current
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
Lease cash flows
€ million
Repayments
Interest paid
Total, Group
2023
146
29
175
2023
-37
-5
-10
-20
-72
2023
-39
-10
-49
2022
143
37
179
2022
-32
-1
-10
-16
-60
2022
-33
-10
-43
Management judgements
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.
The incremental borrowing rates are 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
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Outokumpu Annual report 2023 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
Assumptions by operating segment
2023
Weighted average cost of capital (WACC), pre-tax, %
Weighted average cost of capital (WACC), after-tax, %
Terminal growth rate, %
2022
Weighted average cost of capital (WACC), pre-tax, %
Weighted average cost of capital (WACC), after-tax, %
Terminal growth rate, %
Goodwill
Operating capital
2022
342
—
114
—
456
2023
1,850
594
894
52
2022
1,864
990
867
16
3,390
3,737
2023
343
—
114
—
457
Europe
Ferrochrome
11.6
9.0
0.5
11.5
9.0
0.5
11.7
9.3
0.5
11.2
9.1
0.5
Test results and sensitivities by operating segment
2023
Headroom, € million
After-tax WACC increase leading to impairment, %-points
EBITDA decrease leading to impairment, %
Terminal growth rate of zero leading to impairment
Europe
Ferrochrome
1,189
6.2
37
No
217
2.4
19
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 as at the impairment testing date.
Goodwill impairment testing
In 2023 and 2022, as a result of the impairment testing performed to Group’s cash-generating
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 2024–2029
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 judgements
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. Assumptions also include estimates on delivery volume and capital expenditure
development, and cost savings related to on-going strategy-implementation 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 recoverable amounts are based on value in use
determined by discounted future net cash flows expected to be generated by the cash-
generating 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.
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
Audit
Information for shareholders
Outokumpu Annual Report 2023
193
193/235
Outokumpu Annual report 2023 4.4 Inventories
€ million
Raw materials and consumables
Work in progress
Finished goods and merchandise
Advanced payments
Total
2023
690
553
321
16
1,581
2022
635
689
447
12
1,783
Net realizable value write-downs of EUR 19 million were recognized in the profit or loss during
2023 (2022: write-downs of EUR 24 million).
In 2023, 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 judgements
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.
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Inventory obsolescence for stainless steel products is estimated based on internal guidelines
Review by the Board of Directors
of slow-moving inventory.
Accounting principles
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.
Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
Outokumpu Annual Report 2023
194
194/235
Outokumpu Annual report 2023 4.5 Trade and other receivables and payables
Trade and other receivables
€ million
Non-current
Non-current receivables and accruals
Current
Trade receivables
VAT 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
In 2022, 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
2023
12
508
51
18
7
21
4
609
5
0
0
5
474
28
2
4
508
94
14
10
24
11
746
5
0
0
5
553
28
7
5
593
Trade and other payables
2022
€ million
Non-current
Accruals
6
Total
Current
593
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
2023
2022
16
16
1,086
72
7
23
18
31
53
9
20
20
1,210
100
6
96
23
23
51
9
Annual review
Sustainability review
Governance
Remuneration report
Financial year
Review by the Board of Directors
Financial statements
1,299
1,516
Consolidated financial statements, IFRS
Liabilities related to customer contracts
On December 31, 2023, accrued volume discounts related to customer contracts amounted to
EUR 24 million (Dec 31, 2022: EUR 38 million). These are reported as other current accruals.
The liabilities related to the unperformed transportation service were not material on December
31, 2023, and these liabilities as well as advance payments received are expected to be
recognized as revenue over the following three months.
Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
Factored trade receivables
Outokumpu uses factoring to finance its working capital. Under these arrangements,
Outokumpu has on December 31, 2023 derecognized trade receivables totaling EUR 376
million (2022: EUR 423 million), which represents fair value of the assets. Net proceeds
received amounted to EUR 376 million (2022: EUR 423 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 14 million
(2022: EUR 16 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 continuing operations.
Outokumpu Annual Report 2023
195
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Outokumpu Annual report 2023 Risk information
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, 2023, the maximum exposure to credit risk of trade receivables was EUR
508 million (2022: EUR 593 million). The portion of unsecured receivables during 2023 has
been approximately 6-11% of all trade receivables. During 2023, 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 2023, 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.
4.6 Provisions
2023
€ million
Provisions on Jan 1, 2023
Translation differences
Increase in provisions
Utilized during the financial year
Unused amounts reversed
Reclassifications
Provisions on Dec 31, 2023
2022
€ million
Provisions on Jan 1, 2022
Translation differences
Increase in provisions
Utilized during the financial year
Unused amounts reserved
Reclassifications
Provisions on Dec 31, 2022
Environmental
provisions
Restructuring
provisions
Other
provisions
45
0
4
0
-1
—
48
8
0
30
0
-1
-13
24
28
-1
11
-1
-1
1
38
Environmental
provisions
Restructuring
provisions
Other
provisions
57
-1
3
-1
—
-14
45
8
0
14
-10
-2
-2
8
26
1
7
-1
-4
—
28
Accounting principles
Reclassifications include transfers to assets classified as held for sale.
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.
€ million
Non current provisions
Current provisions
Total
2023
73
37
110
Total
81
-1
46
-2
-2
-12
110
Total
91
0
24
-12
-6
-16
81
2022
49
32
81
Factored trade receivables
Factored trade receivables have been derecognized from the statement of financial position
when the related risks and rewards of ownership 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.
Environmental provisions
The majority of the environmental provisions 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
In 2023 increases in restructuring provisions are mainly due to planned restructuring measures
in Germany. Outokumpu plans to transfer it’s precision strip operations from Dahlerbrück to
Dillenburg and to close its coil service center in Hockenheim. These plans are expected to
impact close to 200 people in Germany. Reclassifications are mainly related to transfers from
provisions to employee benefit obligations in Germany. In 2022 increases in restructuring
provisions were mainly due to revaluations related to the provisions from earlier redundancies
as a result of employee negations in 2020.
Outokumpu Annual Report 2023
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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
Outokumpu Annual report 2023 Other provisions
Other provisions comprise for example provisions for litigations, product and other claims and
are mainly current in nature. In 2023 the increase in other provisions is mainly related to
onerous contracts provision of EUR 7 million related to the metal powder plant in Germany. In
2022, the increases in other provisions were mainly related to litigation provisions.
Management judgements
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 conditions, 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 equipment, 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
communicated 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 provision
but recognized as a separate asset when it is virtually certain that the compensation will be
received.
Outokumpu Annual Report 2023
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197/235
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
Audit
Information for shareholders
Outokumpu Annual report 2023 5. Capital structure and financial risk management
Due to prudent capital discipline Outokumpu remained net debt free despite lower profitability and capital distributions. In 2023,
credit rating agency Moody’s upgraded Outokumpu from Ba3 positive to Ba2 stable. Prepayment of loans mitigated the impact of
higher interest expenses.
The capital structure is regularly monitored by management with focus on the company’s
leverage ratio (net debt to adjusted EBITDA) . The target is to have a leverage ratio less than
1.0 in normal market conditions and it remained within the target during 2023.
Tools to manage debt include raising new debt in various forms, establishing financing facilities,
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.
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.
Capital structure
€ million
Total equity
2023
3,762
2022
4,119
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
Equity is managed through dividend policy, share buybacks and issuances of equity or equity-
linked securities. In March 2023 Outokumpu finalized its share buyback program for a
maximum amount of EUR 100 million. A new share buyback program for a maximum amount of
EUR 50 million was launched in November and will be finalized in March, 2024.
Total non-current and current debt, incl. discontinued
operations
441
633
Parent company financial statements, FAS
Total capitalization
4,204
4,752
Audit
Net debt, incl. discontinued operations
-60
-10
Information for shareholders
Net debt, € million*
Net debt to adjusted EBITDA*
Debt-to-equity, %*
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0
-100
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
-10.0
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
*Including discontinued operations until 2022. In 2023 no
discontinued operations impact in the balance sheet.
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 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
Audit
Information for shareholders
2023
325
-35
290
-152
-70
68
-10
-68
38
-20
-60
2022
778
-159
619
-68
-42
509
408
-509
58
33
-10
5.1 Net debt and capital management
The main focus in 2023 on debt management was to ensure sufficient liquidity and at the same time monitor financing costs following the sharp increase in interest rates. Net Debt decreased to
EUR -60 million at the year end 2023. In addition to extending the maturity of the EUR 700 million revolving credit facility with 12 month to mature in 2027, all outstanding pension loans EUR 141
million were prepaid in June. In 2023 remaining outstanding real estate mortgage securities were released and returned to Outokumpu.
Outokumpu has evaluated options to manage its EUR 125 million convertible bond due in 2025. In order to mitigate and manage the dilutive impact of the conversion, Outokumpu completed a
share buyback program of EUR 100 million in March 2023 and launched a new program of EUR 50 million in November 2023. The number of shares in the new program corresponds to
approximately half of the remaining shares needed in the conversion. Outokumpu has recognized EUR 38 million financial liability related to the share buyback program and the maximum amount of
EUR 50 million is impacting the equity and net debt at the end of December 2023. 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
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
2023
2022
€ million
Net debt development
Net cash flow from operating activities
Net cash flow from investing activities
Cash flow before financing activities
Dividends paid
Treasury share purchase
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
119
85
—
146
9
359
14
—
29
40
82
497
5
502
-60
—
-60
115
99
123
143
11
491
14
31
37
60
141
452
74
526
105
-116
-10
Average effective interest rate of cash and cash equivalents at the end of 2023 was 3.8% (Dec 31, 2022:
2.3%).
1) Including share buyback program related financial liability EUR 38 million (Dec 31, 2022: EUR 58 million),
2) Including mainly cash and cash equivalents.
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Outokumpu Annual report 2023 Changes in non-current and current debt
2023
€ million
On Jan 1
Financing cash flows
Transfer to current debt
Other non-cash movements
On Dec 31
2022
€ million
On Jan 1
Financing cash flows
Transfer to current debt
Other non-cash movements
Reclassifications 2)
On Dec 31
Non-current debt
Current portion of non-
current debt
Non-current lease
liabilities
Current portion of
lease liabilities
Current debt 1)
348
-123
-15
4
213
46
-46
15
—
15
143
—
-31
34
146
37
-39
31
—
29
58
-58
—
38
38
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
Total
632
-266
0
76
441
Total
709
-163
0
87
-2
632
1) Including share buyback program related financial liability EUR 38 million (Dec 31, 2022 EUR 58 million).
2) Reclassifications include liabilities related to assets held for sale.
Other non-cash movements in debt consist mainly of effective interest including accrued arrangement 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 movements in cash and cash equivalents is presented in the consolidated statement of cash flows.
Convertible bonds
€ million
Interest rate, %
2020 fixed rate bond maturing on July 9, 2025
5.0
Outstanding amount
2023
125
2022
125
The convertible bonds maturing in July 2025 can be converted into maximum of 42.379.788
ordinary shares in Outokumpu representing 9.8% 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 2.9448 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, 2023 remaining part of
the equity component of the convertible bond amounted to EUR 6 million (Dec 31, 2022: EUR
10 million).
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
Audit
Information for shareholders
Outokumpu Annual Report 2023
200
200/235
Outokumpu Annual report 2023 Contractual cash flows
€ million
Convertible bonds
Loans from financial institutions
Pension loans
Other loans 1)
Interest payments on debt and facility charges
Lease liabilities
Interest payments on lease liabilities
Trade and other payables
2024
—
14
—
40
17
29
10
1,103
1,212
2025
125
14
—
1
13
25
9
—
187
2026
2027
2028
—
14
—
1
9
18
7
—
49
—
14
—
1
4
17
6
—
43
—
14
—
0
2
16
5
—
38
2023
2029
—
28
—
5
3
70
127
—
234
2023
2024
—
14
31
60
21
37
9
1,220
1,392
—
14
29
1
20
17
8
—
90
2025
125
14
23
1
15
16
7
—
201
2026
2027
—
14
19
1
6
15
6
—
62
—
14
15
1
5
14
5
—
55
2022
2028
—
42
38
6
6
81
132
—
305
Contractual cash flows related to derivative instruments are presented in note 5.4.
1) Including share buyback program related financial liability EUR 38 million (Dec 31, 2022 EUR 58 million).
Credit facilities
€ million
Committed revolving credit facility
Committed Finnvera facility
Committed facilities total
Uncommitted Finnish Commercial paper program
Maturity
Feb 2027
Dec 2025
N/A
Total
700
100
800
800
2023
Utilized
Available
—
—
—
—
700
100
800
800
Total
700
100
800
800
2022
Utilized
Available
—
—
—
—
700
100
800
800
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Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 Risk information
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 agreements and as
such on its interest and other financial expenses. In addition, some of the Group´s loan
agreements include a financial covenant, but a breach is unlikely as there is ample headroom
in the financial covenant.
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.
Subsequently they are carried at amortized cost using the effective interest rate method.
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 determined based on quoted prices for listed
instruments. 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 difference 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 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.
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Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 5.2 Equity
Shares and related movements in equity
€ million
On Jan 1, 2022
Shares delivered from the share-based payment programs
Repurchase of treasury shares
Shares outstanding on Dec 31, 2022
Shares delivered from the share-based payment programs
Repurchase of treasury shares
Surrendered shares related to convertible bond
Shares outstanding on Dec 31, 2023
Treasury shares
Total number of shares on Dec 31, 2023
Number of shares, 1,000
Share capital
Premium fund
Invested unrestricted
equity reserve
Treasury shares
452,572
138
-8,575
444,135
892
-13,904
68
431,191
25,684
456,874
311
—
—
311
—
—
—
311
714
—
—
714
—
—
—
714
2,308
—
—
2,308
—
—
0
2,307
-30
1
-100
-129
9
-50
1
-169
Total
3,303
1
-100
3,204
9
-50
0
3,163
Share buyback program
Through the share buyback programs, 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. During the year 2023 Outokumpu had two different programs: the
2022 program that started in November 2022 and ended on March 24, 2023 and 2023
program that still continues.
During the year 2023, Outokumpu had purchased a total of 13,903,534 of its own shares of
which 2,642,455 shares were under the new 2023 share buyback program and 11,261,079
were under the 2022 program that ended on March 24, 2023. On December 31, 2023,
Outokumpu held 25,683,745 treasury shares, which represents 5.6% of the company’s total
number of shares.
2023 program
On November 29, 2023, Outokumpu launched a share buyback program of up to EUR 50 million
under the authorization of the Annual General Meeting. The maximum number of shares to be
repurchased under the program is 11 million, representing approximately 2.4% of the
company’s total number of shares. The program commenced on December 1, 2023, and ends
no later than on March 21, 2024. By the end of December, Outokumpu has purchased
2,642,455 shares and used a total of EUR 12 million. The program continues.
Outokumpu has appointed a third-party broker to execute the share buyback program that,
based on irrevocable instructions, 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 have a maximum EUR 50 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 38 million
financial liability related to the share buyback program and the maximum amount of EUR 50
million is impacting the equity and net debt already in 2023.
The Annual General Meeting, held on March 30, 2023, authorized the Board of Directors to
resolve to repurchase a maximum of 45,000,000 of Outokumpu’s own shares, representing
approximately 9.8% of Outokumpu’s total number of shares.
2022 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
was 20 million, representing approximately 4.4% of the company’s total number of shares. The
program commenced on November 7, 2022, and ended on March 24, 2023.
During the program, Outokumpu repurchased a total of 19,836,205 of its own shares and used
a total of EUR 100 million for the share repurchases. The average price per share was
approximately EUR 5.04. After the completion of the program, Outokumpu held a total of
23,109,206 treasury shares, representing 5.06% of the company’s total number of shares.
Outokumpu Annual Report 2023
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Audit
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Outokumpu Annual report 2023 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 Directors 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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Dividend policy and distributable funds
According to the dividend policy, Outokumpu aims to distribute a stable and growing dividend,
to be paid annually. On December 31, 2023, the distributable funds of the parent company
totaled EUR 2,589 million of which retained earnings were EUR 369 million.
The Board of Directors proposes to the Annual General Meeting to be held on April 4, 2024
that a dividend of EUR 0.26 per share will be paid for the year 2023, corresponding to EUR 112
million based on the number of shares outstanding on December 31, 2023.
In 2023, Outokumpu paid for a financial year 2022 a total dividend of EUR 0.35 per share
comprising of base dividend of EUR 0.25 per share plus an extra dividend of EUR 0.10 per
share, a total of EUR 152 million. The extra dividend of EUR 0.10 per share was a one-time
extra dividend that was distributed to the shareholders for the exceptionally good result of the
financial year.
Accounting principles
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
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
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 5.3 Financial risk management and insurances
The main objectives of financial risk management are to reduce volatility of net result 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 variation of net result.
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 procurement is responsible for managing the electricity and fuel price risks.
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
and the Financial Risk Steering Group for financial risk management. The Energy Steering Group
for energy risk management is led by Chief Procurement Officer (CPO).
Financial risks consist of market, country, credit, liquidity and refinancing risks. Outokumpu
subsidiaries hedge their currency and commodity price risk with parent company Outokumpu
Sensitivity of financial instruments to market risk
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 Försäkringsaktiebolag 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.
€ 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
In other comprehensive income
In profit or loss
In other comprehensive income
Dec 31, 2023
Dec 31, 2022
+2/-3
-5/+6
-2/+2
-1/+1
—
—
-6/+6
—
+1/-2
-5/+7
+2/-2
-2/+2
—
—
-18/+18
—
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 26–55%. With +/–30% change in dollar denominated price, the effect in
profit or loss is about EUR -6/+6 million and in other comprehensive income EUR -19/+19 million for nickel derivatives.
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Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 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 net result,
cash flow and capital structure. Due to the cyclical stainless steel business, Outokumpu’s
exposure to market risks may change significantly from one period to another. Consequently,
derivative positions to mitigate 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 table of previous page.
The strategy for market risk management is based on identifying, evaluating and mitigating
relevant risks in committed business transactions 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 in the impact of net
result of the underlying exposure. In order to reduce such timing differences in net result, 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 net result, cash flow and
balance sheet. 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
competitiveness 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 denominated 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.
The foreign exchange and fair value risks are, with a few exceptions, 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 2023 there were no hedge accounting applied in foreign exchange hedging activities.
Foreign exchange positions of EUR based companies
€ million
Trade receivables and payables
Loans and bank accounts 1)
Derivatives
Net position
SEK
-25
90
-64
0
USD
-157
-772
908
-21
Dec 31, 2023
GBP
Other
6
-43
32
-5
9
4
-22
-8
SEK
5
243
-229
19
USD
-267
-305
566
-6
Foreign exchange positions of SEK based companies
€ million
Trade receivables and payables
Loans and bank accounts 1)
Derivatives
Net position
Dec 31, 2023
USD
GBP
Other
7
2
-20
-11
2
1
-19
-17
3
1
-7
-4
EUR
-6
14
-81
-72
EUR
32
27
-83
-24
USD
13
9
-30
-8
1) Includes cash and cash equivalents, loan receivables and debt.
Currency distribution and re-pricing of outstanding net debt
Dec 31, 2022
GBP
Other
11
58
-79
-10
17
15
-39
-7
Dec 31, 2022
GBP
Other
3
5
-18
-11
6
2
-28
-20
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€ million
Currency
EUR
SEK
USD
Others
€ million
Currency
EUR
SEK
USD
Others
Net debt 1) Derivatives 2) Rate sensitivity 3)
Average rate, % 4)
Duration, year 5)
Dec 31, 2023
Parent company financial statements, FAS
Audit
Information for shareholders
117
-61
-75
-41
-60
771
84
-791
-47
17
7.4
0.2
-8.7
-0.9
-1.9
6.3
—
—
—
2.8
—
—
—
Dec 31, 2022
Net debt 1) Derivatives 2) Rate sensitivity 3)
Average rate, % 4)
Duration, year 5)
315
-31
-165
-130
-10
17
250
-321
63
9
0.6
2.2
-4.9
-0.7
-2.7
4.8
—
—
—
3.0
—
—
—
1) Includes cash and cash equivalents, debt and financial liability related to share buyback program.
2) Net derivative liabilities include nominal value of interest rate and currency forwards earmarked to debt.
3) The effect of one percentage point increase in interest rates to financial expenses over the following year.
4) Includes debt and financial liability related to share buy back program. The interest rate of share buy
back program financial liability is zero. Currency forwards are not included in average rate calculation. Year
2022 figures have been restated accordingly.
5) Duration calculation includes both debt and interest rate derivatives. Year 2022 figures have been
restated accordingly.
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 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 has
decreased 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 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 financing denominated in Swedish krona and US
dollar cause significant fair value foreign exchange rate risk, which is hedged with forward
contracts and, if possible, with matching of external debt or investment. The Group’s fair value
foreign exchange position is presented in a more detailed level in the table on the previous
page.
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 and Swedish krona. The equity translation risk is not
typically hedged, although according to the Treasury policy this risk can be hedged selectively.
In 2023, there were no hedges of net result or net investment exposures. However, the
effective portion of gains (EUR 17 million, net of tax) on earlier financial years’ net investment
hedges is recognized in equity.
Economic risk relates to foreign exchange rates, commodity and energy prices, or any other
market price risks, which impact the long-term competitive position. Hedging of economic risk in
the Group is seen as a strategic decision approved by CFO. In 2023, there were no hedges
related to economic risk.
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). 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 may help to reduce
the average interest rate of debt. Approximately 38% (2022: 38%) of the Group’s debt has an
interest period of less than one year and the average interest rate of non-current debt on
December 31, 2023 was 7.0% (Dec 31, 2022: 5.4%).
The interest rate risk exposure is composed of the Group’s net debt including all interest-
bearing assets and liabilities as well as derivatives 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 exposure 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
The Metal price risk arises from changes in metal market prices and may have effects on net
result, cash flow and balance sheet.
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 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 capability to pass
on price changes in raw materials to end-product prices.
Outokumpu’s underlying metal net position (in the following alloy metals: nickel, iron and
molybdenum) consists of fixed price purchase orders, inventories of alloy metal containing
materials and fixed price sales orders. The metal net positions (in tons of metal) are
continuously calculated in order to manage the underlying positions.
Metal 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 financial derivatives
market and consequently is not included in the scope of the Treasury policy. Financial
derivatives mainly in nickel are used to manage impacts of metal price changes on net result,
whereas efficient working capital management helps to reduce cash flow variations 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 net
result impact of the underlying exposure. The hedge accounting covers a material part of the
Group’s nickel derivatives hedges. The Group’s financial derivatives fair values and nominal
amounts are presented in a more detailed in the table 5.4 Derivative instruments.
In addition to hedging with financial derivatives, 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 decreased in
2023 compared to the previous year.
After nickel market trading disruption in March 2022, LME has implemented new measures
to prevent similar market behavior from occurring again, including permanent daily price limits
and enhanced reporting of open positions in the market. During 2023 market has started to
gain more confidence towards functioning of the LME nickel market. Market volumes and
inventories of LME grade nickel have grown steadily especially in the second half of the year.
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 European business entity.
All in all, Outokumpu’s energy spend decreased around 20% - 25% compared to last year.
For 2024, Outokumpu’s energy portfolio has been hedged with roughly two thirds of the
estimated consumption.
Outokumpu Annual Report 2023
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Audit
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Outokumpu Annual report 2023 Outokumpu has captive insurance company, Visenta Försäkringsaktiebolag (Visenta), for
optimizing insurance arrangements as part of Group’s risk management. The captive insurance
company 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 well capitalized to meet other externally imposed requirements,
which are based on e.g. the Solvency II framework. There were no significant changes in
Visenta’s assets during the year.
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Outokumpu has initiated and executed multiple actions to prevent further risks from realizing
and to cope with the escalated energy prices. Improved energy efficiency is prioritized and
several initiatives are ongoing. In August, 2023 Outokumpu established a new reporting unit
within Outokumpu Europe Oy, Outokumpu EvoEnergy. Outokumpu EvoEnergy will focus on long
term development of increasing Outokumpu’s own energy production and will also support
Outokumpu’s sustainability targets by focusing on new decarbonization initiatives. In December
Outokumpu increased its ownership in Rajakiiri wind farm in Tornio. See more information on
energy in Sustainability review’s section Low-carbon energy and energy efficiency.
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). All
Outokumpu sites met the compliance requirements on time in 2023 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. General economic outlook, the prices of fuels and power
as well as decisions on the EU 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, the future decisions on EU ETS may have an significant impact on this
forecast.
Security price risk
Outokumpu has equity investments and fixed income securities. On December 31, 2023, the
largest investments were in OSTP Holding Oy (investment in associated company of EUR 32
million) and Voimaosakeyhtiö SF. For more information on the investment in Voimaosakeyhtiö
SF refer to note 6.6.
The captive insurance company Visenta Försäkringsaktiebolag has investments totaling EUR
27 million 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 insurance was unavailable, like limited exposure in
Argentina.
Insurances
As part of risk mitigation activities, Outokumpu aims to secure its assets and business
continuity by arranging insurances against financial losses arisen from unexpected risk events.
Risks related to property, business interruption, liabilities and credit risk are covered by
insurances as per policy terms and conditions. Outokumpu continued its systematic property
loss prevention program, focusing on execution of the mitigating and preventive actions.
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Outokumpu Annual report 2023 5.4 Derivative instruments
Contractual cash flows
2023
2022
2023
2022
Positive
fair value
Negative
fair value
Net fair
value
Net fair
value
Nominal
amounts
Nominal
amounts
-27
-7
-17
-7
-15
-11
1,972
125
1,982
125
2023
€ million
Currency derivatives
Outflows
Inflows
Interest derivatives
€ million
Currency and interest rate
derivatives
Currency forwards
Interest rate swaps
Metal derivatives
Forward nickel contracts,
hedge accounted
Forward nickel contracts
Total derivatives
Less long-term derivatives
Forward nickel contracts,
hedge accounted
Interest rate swaps
Short-term derivatives
11
—
15
8
34
—
—
34
-8
-5
7
3
-47
-14
-1
-7
-40
-1
-7
-6
-53
-12
-91
—
-11
-80
Tonnes
Tonnes
2022
€ million
22,823
21,612
10,720
13,289
Currency derivatives
Outflows
Inflows
Interest derivatives
2024
2025
2026
2027
1,964
-1,980
-6
-21
—
—
-6
-6
—
—
—
—
—
—
—
—
2023
2024
2025
2026
1,975
-1,990
-2
-17
—
—
-4
-4
—
—
-4
-4
—
—
—
—
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
Audit
Information for shareholders
Hedge accounted cash flow hedges (nickel derivatives)
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
2023
7
22,823
1:1
7
16
2
4
2022
-53
21,612
1:1
-54
-28
32
-5
The nickel hedge accounting programs implemented 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 relates to credit risk or timing of transactions, but these are
estimated to be immaterial.
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 the hedged risk and the changes in the fair value or cash flows of the hedging instrument to
ensure that these impacts offset 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.
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
Audit
Information for shareholders
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
2023
2022
34
21
12
47
21
26
40
40
0
131
40
91
Outokumpu enters into derivative transactions with most counterparties under ISDA
agreements. 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 transactions 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 table above sets out the carrying amounts of recognized financial
instruments that are subject to the agreements described above.
Accounting principles
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 contracts 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 calculated and
assessed between the changes in the fair value or cash flows of the hedged item attributable to
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 5.5 Financial assets and liabilities
Carrying values and fair values of financial assets and liabilities by measurement category
2023
€ 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
Hedge accounted derivatives
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
—
12
—
515
—
—
502
1,029
359
—
—
82
1,103
—
—
1,544
12
—
—
—
—
—
—
12
—
—
—
—
—
—
—
—
—
0
27
—
15
19
—
60
—
1
7
—
—
7
32
47
12
12
27
515
15
19
502
1,101
359
1
7
82
1,103
7
32
1,591
12
0
27
15
19
443
1
7
82
7
32
1,3
3
1
2
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. Current debt includes EUR 38 million (Dec 31, 2022 EUR 58 million) of share buyback program related financial liability.
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
Audit
Information for shareholders
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 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 and other payables
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
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
Audit
Information for shareholders
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 Reconciliation of changes on level 3
€ million
Carrying value on Jan 1, 2023
Additions
Disposals
Fair value changes
Carrying value at the end of the period
€ million
Carrying value on Jan 1, 2022
Additions
Disposals
Fair value changes
Carrying value at the end of the period
Investments at fair value
through profit or loss
Equity investments at
fair value through other
comprehensive income
—
5
—
-5
0
25
3
0
-20
7
Investments at fair value
through profit or loss
Equity investments at fair
value through other
comprehensive income
—
—
—
—
—
24
5
0
-4
25
In 2023 Outokumpu Oyj agreed to participate in a convertible loan offered by Voimaosakeyhtiö
SF to its shareholders. Outokumpu’s share is EUR 14 million. The first call of the loan was in
August 2023 and amounted to EUR 5 million. The loan has been valuated at EUR 0 million at
the end of the period. Change in value has been presented in the other market price gains and
losses in the consolidated statement of income, for more information see note 2.5. For more
information on Voimaosakeyhtiö SF, see note 6.6 and 5.7.
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 comprehensive 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 transaction
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 transaction costs and derecognition 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.
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
Audit
Information for shareholders
Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 During the year 2023 Outokumpu’s investment in Voimaosakeyhtiö SF (22%) which is the
majority shareholder of Fennovoima was reclassified from equity investments at fair value
through other comprehensive income to associated company, consequently EUR 117 million
was reclassified from fair value reserve in equity to other retained earnings within equity. More
information in note 6.6 Associated companies.
Management judgements
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.
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.
The premium paid over the FPX Nickel Corp. share's market price at the acquisition date has
been treated as part of the inventory and will be released at the time of the nickel purchase.
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
Audit
Information for shareholders
5.6 Equity investments at fair value through other comprehensive income
€ million
Carrying value on Jan 1
Additions
Disposals
Fair value changes
Carrying value on Dec 31
Fair value reserve in equity
€ million
Fair value on Dec 31
Reclassification
Fair value at acquisition
Fair value reserve
2023
25
11
0
-23
12
2023
12
-117
129
1
2022
24
5
—
-4
25
2022
25
—
118
-93
Equity investments at fair value through other comprehensive income include unlisted and
listed 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 shareholder is severally responsible for its respective share of the costs of
the energy company as set out in the articles of association.
The additions during the year EUR 11 million are related to two investments. In May 2023,
Outokumpu signed an agreement to become a shareholder in the Canadian company, FPX
Nickel Corp. with an ownership share of 9.9%. The amount of the investment is EUR 11 million.
The premium paid over the share's market price at the acquisition date EUR 3 million has been
treated as part of the inventory and will be released at the time of the nickel purchase. In
December 2023, Outokumpu invested in a further stake in the Rajakiiri wind farm in Tornio,
Finland. With this latest investment, Outokumpu’s ownership in the 45MW wind farm in Tornio
rised to a level of close to 9MW and 19.9% of the shares.
Outokumpu is an owner in nuclear utility through Pohjolan Voima Oy (PVO), with an ownership
share of 0.1%. PVO is a shareholder in Teollisuuden 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 is through EPV Energia Oy, with on
ownership share of 0.3%. In addition, Outokumpu has a direct ownership in Rajakiiri Oy with a
share of 19.9%. Rajakiiri Oy is a wind power mill in Tornio. The total estimated fair value of the
aforementioned three utility assets was EUR 6 million at the year end (Dec 31, 2022: EUR 24
million). The remaining EUR 6 million (Dec 31, 2022: EUR 1 million) are other share holdings.
Outokumpu Annual Report 2023
214
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Outokumpu Annual report 2023 the convertible loan is EUR 14 million. The first call of the loan was in August 2023 and
amounted to EUR 5 million.
Annual review
The Group’s other off-balance sheet investment commitments totaled EUR 46 million on
December 31, 2023 (Dec 31, 2022: EUR 27 million).
Sustainability review
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.
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
Audit
Information for shareholders
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
2023
156
13
51
—
—
2
2022
546
13
51
1
5
4
Outokumpu has issued business mortgages over movable assets in Kemi to secure an
outstanding project loan. In June 2023, Outokumpu prepaid all outstanding pension loans and
the mortgages in real property provided as security for the loans were returned.
Outokumpu Oyj is, in relation to its shareholding 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 commitments for financing.
Outokumpu has a long-term energy supply contract that includes a minimum purchase quantity.
There is uncertainty as to 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 costs to the company
from this contract.
Investment commitments and commitments related to shares in associated companies
Outokumpu is liable for its associated company Manga LNG Oy’s certain liabilities amounting to
EUR 12 million at the end of 2023 (Dec 31, 2022: EUR 16 million). In the above table, this
commitment is reported as other pledges (Outokumpu’s shares in Manga LNG Oy).
Outokumpu is a minority shareholder in its associated company Voimaosakeyhtiö SF, which is
the majority shareholder of Fennovoima Oy. The role of Fennovoima Oy has changed from a
nuclear power plant project company into an asset and litigation management company after it
terminated the EPC (Engineering, Procurement and Construction) contract with RAOS Project Oy
for supplier-related reasons in May 2022.
Originally, Outokumpu’s commitment to Voimaosakeyhtiö SF for participation in the planned
nuclear power plant project amounted to approximately EUR 250 million, of which EUR 117
million has been paid. Further payments related to the original commitment, if any, are not
expected to occur in the foreseeable future. In June 2023 Outokumpu Oyj agreed to participate
in a convertible loan offered by Voimaosakeyhtiö SF to its shareholders. Outokumpu’s share of
Outokumpu Annual Report 2023
215
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Outokumpu Annual report 2023 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 had 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. Long products activities that remained in
Outokumpu until completion of disposal on August 1, 2023, are included in Other operations.
€ million
Cash flow
Provisional cash consideration
Cash and cash equivalents
Escrow account receivable
Consideration received
During 2022, Outokumpu reclassified its Long Products businesses to be divested assets held
for sale and discontinued operations. Outokumpu booked an impairment loss of EUR 33 million.
The impairment was allocated to goodwill, other intangible assets and property, plant and
equipment.
The divestment was completed on January 3, 2023, and the transaction was carried out as a
share sale. The total consideration for the transaction on a debt and cash-free basis was EUR
228 million. Provisional cash proceeds for the equity and net debt item were EUR 214 million,
with EUR 5 million paid into an escrow account. The transaction costs in total are EUR 8 million
and are presented in the net result for the period from discontinued operations.
The received proceeds, net of cash disposed, were EUR 94 million. The gain on divestment
reported in the net result from discontinued operations was EUR 5 million, mainly as the
accumulated translation differences were reclassified into net result at the time of the
divestment. The consideration is still subject to the release of the escrow account.
Provisional gain on sale
€ million
Total net assets sold as of Jan 3, 2023
Provisional sale consideration
Other
Gain on sale of discontinued operations before reclassification of accumulated
translation differences
Reclassification of accumulated translation differences
Gain on sale
2023
-215
214
-4
-5
10
5
Condensed statement of income, discontinued operations1)
€ million
Sales
Cost of sales
Gross margin
Other operating income
Sales, general and administrative costs
Other operating expenses2)
EBIT
Total financial income and expenses
Result before taxes
Income taxes3)
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
1) As the Long Product businesses were sold on January 3, 2023, the net result for the period from
discontinued operations in 2023 EUR 5 million is related to the gain on sale presented in line other
operating income. Other comprehensive income for the same period was EUR -12 million.
2) Including EUR 33 million of impairment loss
3) Due to the disposal of the Long Products businesses in the UK a related deferred tax asset was reduced,
increasing the tax expense with EUR 13 million.
Outokumpu Annual Report 2023
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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
Audit
Information for shareholders
2023
214
-117
-3
94
2022
794
-656
138
1
-17
-36
86
2
88
-35
54
8
62
Outokumpu Annual report 2023 Condensed statement of financial position, discontinued operations
Accounting principles
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 presented
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.
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 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
Condensed statement of cash flows, discontinued operations
€ million
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
Net change in cash and cash equivalents from discontinued operations
2022
60
60
193
49
117
359
419
2022
1
2
1
14
18
1
186
186
204
2022
91
-2
-2
87
As the Long Product businesses were sold on January 3, 2023, cash flows in 2023 are related to received
proceeds, net of cash disposed of amounting to EUR 94 million.
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Financial statements
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Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
Outokumpu Annual report 2023
6.2 Business acquisitions and disposals
2023
Disposals
During the year 2023 Outokumpu divested its remaining Long Products operations in Degerfors
and Storfors, Sweden to Cogne Acciai Speciali, a world leader in the production of long stainless
steels and nickel alloys based in Italy. The enterprise value of the transaction was EUR 12
million and it had a positive cash impact for Outokumpu amounting to EUR 2 million.
Outokumpu booked a loss of EUR 26 million on the disposal.
€ million
Total net assets sold
Sale consideration
Loss on sale
2023
-32
5
-26
During the year 2023 Outokumpu has completed disposals of 2022 with no material impact on
financial statements. Relating to the sale of Outokumpu Fortinox S.A. EUR 1 million was
received as cash proceeds.
2022
Disposals
During the year 2022, Outokumpu divested its plate service center in Aalten, the Netherlands,
plated services business in Castelleone, Italy, and Outokumpu Fortinox S.A. in Argentina.
The 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. A receivable of EUR 2 million related to the sale consideration of the
subsidiary Fortinox S.A. is recognized in the trade and other receivables. Related transaction
costs amounted to EUR 1 million.
These transactions did not have a significant impact on the Group.
€ million
Total net assets sold
Sale consideration
Provisional loss on sale
Cash flow
Cash consideration, net of cash acquired
Receivable related to sale consideration
Consideration received
Outokumpu Annual Report 2023
2022
-22
13
-9
1
-2
-1
Accounting principles
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 recognized in the consolidated
statement of income at the date control is lost.
Annual review
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Financial year
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Financial statements
Consolidated financial statements, IFRS
Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
218
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Outokumpu Annual report 2023 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 favour of the claimant and has been appealed by Outokumpu. On June 15, 2023
the court of appeal cancelled the ruling of May 4, 2022 and referred the dispute back to the
court. Outokumpu is of the view that the claims asserted against it are without merit and and
continues to defend against them. Appropriate provisions are in place.
Joinder to arbitration dispute between Fennovoima and Rosatom entities
Outokumpu Oyj has been joined into arbitration proceedings over a dispute between
Fennovoima and Rosatom entities related to the termination of the EPC (Engineering,
Procurement and Construction) contract. Outokumpu disputes the existence of any contractual
relationship, obligation, or arbitration agreement between Outokumpu and any Rosatom entity.
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. Commitments related to associated companies are
presented in note 5.7. The principal subsidiaries and associated companies 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, 2023. 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.
In 2023 Outokumpu Oyj agreed to participate in a convertible loan offered by Voimaosakeyhtiö
SF to its shareholders. Outokumpu’s share of the convertible loan is EUR 14 million. The first
call of the loan was in August 2023 and amounted to EUR 5 million. The loan is valued at EUR
0 million at the end of December 2023.
Transactions with related partied are carried out at arms-length principles.
Transactions and balances with related companies
€ million
Sales and other operating income
Purchases
Dividend income
Trade and other receivables
Trade and other payables
2023
99
-51
3
35
5
2022
115
-66
11
26
7
Annual review
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Review by the Board of Directors
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Audit
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Outokumpu Annual Report 2023
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Outokumpu Annual report 2023 6.5 Subsidiaries
December 31, 2023
Europe
Outokumpu AS
Outokumpu Distribution France S.A.S.
Outokumpu Distribution Hungary Kft.
Outokumpu Distribution Polska Sp. z o.o.
Outokumpu Europe Oy 1)
Outokumpu India Private Limited
Outokumpu Management (Shanghai) Co., Ltd 1)
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
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
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
Group
holding, %
December 31, 2023
Americas
Outokumpu Brasil Comércio de Metais Ltda
Outokumpu Mexinox S.A. de C.V.
Outokumpu Stainless USA, LLC
ThyssenKrupp Mexinox CreateIT, S.A. de C.V.
Ferrochrome
Outokumpu Chrome Oy 1)
Other operations
Outokumpu Americas, Inc.
Outokumpu Distribution Benelux B.V.
Outokumpu Holding Germany GmbH 1)
Outokumpu Holding Nederland B.V. 1)
Outokumpu Mining Oy
Outokumpu Stainless Holding GmbH
Outokumpu Stainless UAB
Québec Inc.
Viscaria AB 1)
Visenta Försäkrings AB
Country
Brazil
Mexico
The US
Mexico
Finland
The US
The Netherlands
Germany
The Netherlands
Finland
Germany
Lithuania
Canada
Sweden
Sweden
Group
holding, %
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Annual review
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Review by the Board of Directors
Financial statements
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Notes to the consolidated financial statements
Parent company financial statements, FAS
Audit
Information for shareholders
This list does not include all dormant companies. In addition, Outokumpu has branch offices in Portugal,
South Korea, Taiwan, Thailand, The UK and Vietnam.
1) Shares and stock held by the parent company
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Outokumpu Annual report 2023 recognized in the associated company’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.
6.7 New IFRS standards
Adoption of new and amended IFRS standards
Certain new accounting standard amendments and interpretations have been published that
came into effect only after the reporting period started on January 1, 2023. These standards
and amendments are not expected to have a material impact on Outokumpu’s current or future
reporting periods nor foreseeable future transactions and have not been early adopted.
6.8 Events after the balance sheet date
After the reporting period, Outokumpu repurchased 6,297,563 shares under the share buyback
program, which ends no later than on March 21, 2024. By February 7, 2024, Outokumpu had
repurchased a total of 8,940,018 shares under the share buyback program. After the disclosed
transactions, the company held a total of 31,981,308 treasury shares.
After the reporting period, on January 24, 2024, Outokumpu announced it has completed the
partnership agreement to accelerate circularity and becomes a minority shareholder in
CRONIMET North-East GmbH.
After the reporting period, on January 3, 2024, Outokumpu announced that it plans to
temporarily restrict its ferrochrome production due to weak ferrochrome market conditions.
Annual review
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Governance
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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
6.6 Associated companies
Envigas AB
Manga LNG Oy
OSTP Holding Oy
Voimaosakeyhtiö SF
Industry
Energy
Energy
Metals processing
Energy
Domicile
Sweden
Finland
Finland
Finland
Summarized financial information on associated companies
€ million
Carrying value of investments in associated companies
Group’s share of total comprehensive income
2023
62
5
Ownership, %
21
45
49
22
2022
51
11
The carrying amounts of individual associated companies are immaterial in the Group's
consolidated financial statements.
In 2023 Outokumpu acquired 21% of Envigas AB amounting to EUR 10 million. Envigas is a
leading European producer of biocarbon. With the investment, Outokumpu secures a right to
50% of Envigas’ production. As Outokumpu holds 21% of voting rights and has a place in the
Board of Directors, Outokumpu has significant influence in Envigas.
During 2023 Rapid Power was liquidated.
In previous financial statements investment to Voimaosakeyhtiö SF for participation in the
planned nuclear power plant project (previously referred as Fennovoima investment) was
treated as equity investment at fair value through other comprehensive income due to Mankala
principle. It has been concluded recently that the role of Fennovoima Oy has turned from a
nuclear power plant project company into an asset and litigation management company, and it
will never operate according to Mankala principle. Consequently, Voimaosakeyhtiö SF Group
(including Fennovoima Oy subsidiary) where Outokumpu has a significant influence due to 22%
of voting rights was reclassified as an associated company in accordance with IAS 28.
Outokumpu has invested in total EUR 117 million in Voimaosakeyhtiö SF and the value of the
investment in Voimaosakeyhtiö SF is EUR 0 million at the end of December 2023 (Dec 31,
2022: EUR 0 million).
See the commitments related to the associated companies in note 5.7.
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 separately
disclosed below EBIT in the consolidated statement of income. Outokumpu’s share of changes
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Outokumpu Annual report 2023 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
Change in depreciation difference
Income taxes
Result for the financial year
2023
423
-313
111
133
—
-156
-20
67
-7
60
17
1
-3
75
2022
496
-409
87
232
-3
-131
-10
175
-6
169
117
—
0
286
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 statements 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.
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Parent company financial statements, FAS
Audit
Information for shareholders
Outokumpu Annual report 2023 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
Outokumpu Annual Report 2023
2023
2022
€ million
2023
2022
91
3
3,952
532
13
1
3
4,500
4,594
80
80
25
75
260
470
730
5,324
EQUITY AND LIABILITIES
Shareholders’ equity
Share capital
Premium fund
Invested unrestricted equity reserve
Retained earnings
Result for the financial year
Untaxed reserves
311
720
2,220
294
75
3,621
311
720
2,290
160
286
3,768
85
2
3,877
127
13
1
3
4,021
Liabilities
Non-current liabilities
4,108
Convertible bonds
Pension loans
Other non-current loans
694
75
22
275
1,066
Current liabilities
Group bank account liabilities
Other current loans
Pension loans
Trade payables
Accrued expenses and prepaid income
500
Other current liabilities
1,566
5,674
Total liabilities
TOTAL EQUITY AND LIABILITIES
125
—
8
133
978
398
—
88
17
89
1,570
1,703
5,324
125
123
11
260
1,263
27
31
139
13
173
1,646
1,906
5,674
223
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Financial year
Review by the Board of Directors
Financial statements
Consolidated financial statements, IFRS
Parent company financial statements, FAS
Audit
Information for shareholders
Accumulated depreciation difference
0
1
Notes to the consolidated financial statements
Outokumpu Annual report 2023 Cash flow statement of the parent company
€ million
2023
2022
€ million
2023
2022
Cash flow from operating activities
Result for the financial year
Adjustments for
Taxes
Depreciation and amortization
Impairments
Reversal of impairments
Gain/loss on sale of intangible assets, and property, plant
and equipment
Interest income
Interest expense
Change in provisions
Exchange gains/losses
Group contributions
Other non-cash adjustments
Change in working capital
Change in trade and other receivables
Change in trade and other payables
Interest received
Interest paid
Income taxes paid
Net cash from operating activities
Cash flow from investing activities
Investments in subsidiaries and other shares and holdings
286
Purchases of intangible assets
Proceeds from disposal of subsidiaries
Proceeds from disposal of other shares and holdings
Purchases 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
Dividends paid
Treasury shares purchase
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
—
15
15
-220
0
-43
27
0
3
-117
-12
-332
21
-28
-7
41
-27
—
13
-41
75
3
11
27
-130
-30
-65
76
-1
-2
-17
19
-108
-6
-64
-70
66
-73
-5
-13
-115
—
-17
28
0
-1
37
216
263
148
-152
-70
-154
86
117
-7
-179
-31
-31
-5
-6
28
—
-1
0
—
16
-24
-68
-42
-63
171
164
106
268
244
244
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
Audit
Information for shareholders
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Outokumpu Annual report 2023 Statement of changes in equity of the
parent company
Commitments and contingent liabilities of
the parent company
€ million
Share capital
Premium
fund
Invested
unrestricted
equity
reserve
Retained
earnings
Equity on Jan 1, 2022
311
720
2,332
—
—
—
—
—
—
—
—
-42
311
720
2,290
—
—
—
—
—
—
—
—
-70
311
720
2,220
Result for the financial year
Dividends paid
Treasury share purchase
Equity on Dec 31, 2022
Result for the financial year
Dividends paid
Treasury share purchase
Equity on Dec 31, 2023
Distributable funds on Dec 31
€ million
Retained earnings
Result for the financial year
Invested unrestricted equity reserve
Distributable funds on Dec 31
228
286
-68
—
446
75
-152
—
369
2023
294
75
2,220
2,589
Total equity
3,592
286
-68
-42
3,768
75
-152
-70
3,621
2022
160
286
2,290
2,736
€ million
Other pledges on Dec 31
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
2023
13
256
0
50
—
2
2022
13
307
1
55
1
4
Outokumpu is liable for its associated company Manga LNG Oy’s certain liabilities amounting to
EUR 12 million at the end of 2023 (Dec 31, 2022: EUR 16 million). In the above table, this
commitment is reported as other pledges (Outokumpu’s shares in Manga LNG Oy).
Outokumpu Oyj is, in relation to its shareholding 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 commitments for financing.
Outokumpu is a minority shareholder in its associated company Voimaosakeyhtiö SF, which is
the majority shareholder of Fennovoima Oy. The role of Fennovoima Oy has changed from a
nuclear power plant project company into an asset and litigation management company after it
terminated the EPC (Engineering, Procurement and Construction) contract with RAOS Project Oy
for supplier-related reasons in May 2022.
Originally, Outokumpu’s commitment to Voimaosakeyhtiö SF for participation in the planned
nuclear power plant project amounted to approximately EUR 250 million, of which EUR 117
million has been paid. Further payments related to the original commitment, if any, are not
expected to occur in the foreseeable future. In June 2023 Outokumpu Oyj agreed to participate
in a convertible loan offered by Voimaosakeyhtiö SF to its shareholders. Outokumpu’s share of
the convertible loan is EUR 14 million. The first call of the loan was in August 2023 and
amounted to EUR 5 million.
See more information in note 5.7 of the consolidated financial statements.
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Audit
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Outokumpu Annual report 2023 Audit
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
Audit
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Outokumpu Annual report 2023 Auditor’s Report
(Translation of the Finnish Original)
Report on the Audit of the Financial Statements
To the Annual General Meeting of Outokumpu Oyj
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 IFRS Accounting
Standards 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.
Our opinion is consistent with the additional report to the Audit Committee.
What we have audited
We have audited the financial statements of Outokumpu Oyj (business identity code
0215254-2) for the year ended 31 December 2023. 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, which include material accounting policy information and other
explanatory information
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.
Independence
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 Audit Approach
Overview
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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Audit
Information for shareholders
Outokumpu Annual report 2023 Overall group materiality
€ 35 million (2022: € 35 million)
Key audit matter in the audit of the group
How our audit addressed the key audit matter
How we determined it
Rationale for the
materiality benchmark
applied
0.5% of sales 2023
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 0.5% 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, combined 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.
Valuation of goodwill
Refer to notes 4.1 and 4.3 in the consolidated
financial statements.
As at 31 December 2023 the group’s
goodwill balance amounted to € 457
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, base price development,
delivery volume and capital expenditure
development.
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.
Our audit of goodwill valuation focused on
management’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.
• 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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Audit
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Outokumpu Annual report 2023 Key audit matter in the audit of the group
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.
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
circumstances as well as future
projections.
We also considered the appropriateness of
the related disclosures provided in note 2.6
in the group financial statements
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Audit
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Key audit matter in the audit of the group
How our audit addressed the key audit matter
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.
We performed substantive audit procedures
including e.g. testing of assets acquired,
disposals and scrapings in the year and
depreciation of the fixed assets mainly
through analytical audit procedures.
Our audit work also included testing the
operating effectiveness of controls in place
to ensure the appropriate valuation of
Property, Plant and Equipment.
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.
Valuation of Property, Plant and Equipment
Refer to note 4.1 in the consolidated financial
statements.
As at 31 December 2023 the group’s
Property, Plant and Equipment (PPE)
amounted to € 1,905 million.
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.
Valuation of Deferred Tax Assets in the US
Refer to note 2.6 in the consolidated financial
statements.
As at 31 December 2023 the group’s
deferred tax assets amounted to € 454
million, of which € 293 million related to
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.
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Outokumpu Annual report 2023 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 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.
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 transformation,
upgrading and implementing new systems.
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, new system
implementation and system upgrade. 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.
As at 31 December 2023 the group’s
inventories amounted to € 1,581 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 significant 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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Notes to the consolidated financial statements
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Audit
Information for shareholders
Outokumpu Annual report 2023 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 2023 the value of
Outokumpu Oyj’s subsidiary shares
amounted to € 3,952 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 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.
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
consolidated financial statements that give a true and fair view in accordance with IFRS
Accounting Standards 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 statements 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
responsible 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 considered 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
procedures 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.
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Information for shareholders
Outokumpu Annual report 2023 • 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 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 disclosures 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 statements. 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
appointment represents a total period of uninterrupted engagement of 7 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 responsibility 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 8 February 2024
PricewaterhouseCoopers Oy
Authorised Public Accountants
Janne Rajalahti
Authorised Public Accountant (KHT)
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Audit
Information for shareholders
Outokumpu Annual report 2023 Information for shareholders
Annual General Meeting 2024
Outokumpu’s Annual General Meeting will be held on Thursday, April 4, 2024 at 1.00 pm
EEST in Clarion Hotel Helsinki’s meeting venue Bysa 1-3, at the address Tyynenmerenkatu
2, Helsinki. The reception of persons who have registered for the meeting and the
distribution of voting tickets will commence at 10.30 am EEST. Shareholders 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
simultaneous translation in English at the meeting.
Notice of the meeting and more information at www.outokumpu.com/en/agm2024.
CEO and CFO available before the meeting
Before the Annual General Meeting, from 11.15 am to 12.15 pm EEST, the CEO and CFO of
the company will be available at Clarion Hotel Helsinki at a discussion event organized by
the company. The event is not part of the Annual General Meeting, and its presentation
language is Finnish. Simultaneous translation into English is also available. 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 at the event are thus not questions
referred to in Chapter 5, Section 25 of the Finnish Companies Act.
Important dates
February 8, 2024: Notice to the Annual General Meeting published.
February 9, 2024: Registration for the AGM started at 12.00 pm EET.
March 4, 2024: Advance voting starts at 12.00 pm EET.
March 21, 2024: Record date of the AGM.
March 26, 2024: Registration and advance voting end at 4.00 pm EET.
April 4, 2024: Annual General Meeting at 1.00 pm EEST.
April 8, 2024: Proposed dividend record date.
April 15, 2024: Proposed dividend payment date.
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Audit
Information for shareholders
Outokumpu Annual report 2023 Signatures of the Review by the Board of Directors and Financial statements
Helsinki, February 8, 2024
[Signatures to be included in the official Finnish language version only.]
Kari Jordan
Chairman
Heinz Jörg Fuhrmann
Member
Jyrki Mäki-Kala
Member
Pierre Vareille
Member
Heikki Malinen
CEO
Auditor signature
Kati ter Horst
Vice Chairman
Päivi Luostarinen
Member
Karl-Petter Söderström
Member
Julia Woodhouse
Member
[Signature to be included in the official Finnish language version only.]
Helsinki, February 8, 2024
PricewaterhouseCoopers Oy
Authorised Public Accountants
Janne Rajalahti
Authorised Public Accountant (KHT)
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
Audit
Information for shareholders
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Outokumpu Annual report 2023
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.fi
@Outokumpu
Outokumpu Group
Outokumpu
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