Outokumpu improved both earnings and cash flow in the second quarter, but the recovery was not strong enough for a market that had expected more. The share price fell sharply after the report. At the same time, the stainless steel producer announced the first stage of a major investment in high-nickel alloys at its Avesta mill in Sweden.
The Finnish stainless steel producer reported adjusted earnings before interest, taxes, depreciation and amortisation, EBITDA, of EUR100 million for the April–June period.
This represented a clear improvement from EUR75 million in the corresponding quarter of 2025 and EUR65 million in the first quarter of 2026. Net income also turned positive, rising from a loss of EUR19 million a year earlier to a profit of EUR25 million.
Despite the improvement, the result disappointed the market. According to Kauppalehti, the 11 analysts included in a consensus compiled by Modular Finance had expected adjusted EBITDA of EUR114 million.
Revenue increased from EUR1.49 billion to EUR1.58 billion, but remained well below the analysts’ forecast of EUR1.70 billion. Stainless steel deliveries totalled 488,000 tonnes, up 5 per cent from the previous quarter but only around 1 per cent higher than a year earlier.
Recovery failed to match expectations
The market reaction was particularly severe because Outokumpu shares had gained close to 60 per cent over the previous 12 months. The rally had already priced in a significant recovery in the European stainless steel market.
After the Helsinki stock exchange opened on Thursday, the shares initially fell by around 10 per cent. During the morning, they traded at approximately EUR5.20, compared with Wednesday’s closing price of EUR5.68. At their lowest point, the shares fell to just below EUR4.91.
The report nevertheless showed that the underlying business had recovered from the particularly weak levels recorded in 2025.
Operating profit amounted to EUR38 million, compared with an operating loss of EUR21 million a year earlier. Operating cash flow increased from EUR52 million to EUR85 million.
Net debt declined from EUR241 million at the end of the first quarter to EUR224 million, despite the company paying the first instalment of its annual dividend.
The improvement was driven primarily by the European business, while operations in North America continued to perform steadily. According to Outokumpu, demand in the United States was supported by investment in areas including data centres and energy infrastructure.
Demand for stainless steel in Europe, however, remained broadly unchanged. The company expects some support from the European Union’s Carbon Border Adjustment Mechanism, CBAM, and from new steel import safeguards that entered into force on 1 July.
Avesta moves towards more advanced alloys
For Sweden, the report contained a significant industrial announcement. Outokumpu is launching the first stage of an investment programme for high-nickel alloys at its Avesta stainless steel mill.
The company will initially invest EUR30 million in a new electroslag remelting facility. The programme also includes optimisation of the existing production process and detailed engineering for a possible second investment stage.
The total project could eventually be worth around EUR150 million.
The second stage would include new melting and casting capacity, allowing Outokumpu to expand its production of advanced high-nickel alloys.
These materials are used in demanding environments involving high temperatures, pressure and corrosion. Potential applications include the energy sector, chemical production and other advanced process industries.
Through the investment, Outokumpu aims to increase the share of higher-margin products in its portfolio and reduce its dependence on the more cyclical market for standard stainless steel.
The Avesta initiative therefore represents more than a capacity expansion. It is part of a broader effort to shift production towards specialised materials that face fewer direct competitors and can command higher prices.
No rapid summer growth expected
Outokumpu’s outlook for the third quarter gave investors little reason to make a rapid positive reassessment of the report.
Stainless steel deliveries are expected to decline by between 0 and 10 per cent compared with the second quarter, mainly because of the usual summer slowdown in Europe.
Adjusted EBITDA is nevertheless expected to remain at approximately the same level as in the second quarter.
The company also warned of continued uncertainty surrounding trade policy, energy prices and conflicts in the Middle East. Higher freight costs had only a limited effect during the second quarter, but further escalation could weaken global economic growth and reduce demand for stainless steel.
The quarterly report was therefore not weak in absolute terms. Earnings, cash flow and profitability all improved clearly compared with the previous year.
The problem was that the share price and analysts’ forecasts had risen faster than Outokumpu’s underlying business. The company delivered a recovery, but not the acceleration that investors had already priced into the stock.
Facts: Outokumpu’s second quarter
Revenue: EUR1.582 billion
Analyst forecast: EUR1.704 billion
Adjusted EBITDA: EUR100 million
Analyst forecast: EUR114 million
Net income: EUR25 million
Stainless steel deliveries: 488,000 tonnes
Operating cash flow: EUR85 million
Net debt: EUR224 million
Initial Avesta investment: EUR30 million
Potential total Avesta investment: EUR150 million
Sources: Outokumpu’s half-year report, Kauppalehti and market data from the Helsinki stock exchange.
