Outokumpu’s CBAM Tailwind Finally Shows Up, But the Rest Is Still Quiet
A 27% jump in deliveries and a better EBITDA number mask a market that is still waiting for real end-user demand.
OUT1V.HE · Earnings Call · 2026-05-12
A Better Quarter, But Not a Breakout
Outokumpu’s first-quarter results are a welcome rebound from a difficult stretch. Group adjusted EBITDA climbed to EUR 65 million from a deeply depressed Q4, with deliveries up 27% quarter-on-quarter. The standout was Business Area Europe, where volumes surged 46% on the back of seasonality and the initial impact of the EU Carbon Border Adjustment Mechanism (CBAM). CEO Kati ter Horst was blunt about the driver:
The carbon price is already reshaping the market: imports into Europe have been cut in half, giving scrap-based producers like Outokumpu a real competitive edge. But the underlying demand picture remains muted. Management attributes the volume pick-up to "favorable market dynamics" rather than a structural recovery, and end-user demand is "largely unchanged." On the cost side, the benefit is being partly offset by rising scrap prices. CFO Marc-Simon Schaar explained: “the increase is limited because at the same time, when you see sales prices improving, we also need to see that scrap prices have increased as well.” — Marc-Simon Schaar, Chief Financial Officer · 2026-05-12 Order intake and order books strengthened notably in both Europe and the Americas, and the company is working through the low-margin backlog that weighed on Q4 and Q1. CEO Kati ter Horst noted that the last of the backlog will be processed in Q2, removing a drag on profitability. As she said: “The last backlog that we have that we said we will be working through in Q2.” — Kati Horst, Chief Executive Officer · 2026-05-12 This echoes the February expectation of a gradual improvement in Europe. Ferrochrome and the Long Game Beyond stainless steel, the more strategically interesting story is the transformation of the ferrochrome business. Outokumpu is the largest Western-world ferrochrome producer, with a mine in Finland that has resources well into the 2050s. Management is increasingly turning that scale into a growth engine by expanding into higher-margin products and new customer segments, including specialty steel producers and foundries. As the CEO said, “robust demand for our ferrochrome continues.” — Kati Horst, Chief Executive Officer · 2026-05-12 That demand is supported by ongoing supply curtailments in South Africa and the structural shift toward low-carbon material. This is part of the broader EVOLVE growth strategy, which also includes a pilot plant in the U.S. for a proprietary technology. Kati ter Horst laid out the ambition on the call:So we now have a clear carbon price on European border, and that has half the share of imports coming to Europe.
The earlier commentary from the February call already signaled this direction: “we have capacity to increase also external deliveries” — Kati Horst, CEO · 2026-02-12 – that is now materializing. Financial Discipline and Cost Headwinds The balance sheet is in solid shape. Operating cash flow improved to EUR 85 million, free cash flow was positive at EUR 34 million, and net debt declined to EUR 241 million, a leverage of 1.3x. That gives the company room to execute its strategy even in a volatile geopolitical environment. Management stressed that the Middle East conflict has not yet materially impacted results, though rising transportation and energy costs are starting to eat into margins. “Outokumpu has not been very much impacted by the conflict in Middle East so far in our results.” — Kati Horst, Chief Executive Officer · 2026-05-12 The scrap market is another area to watch. While the company sees no availability issues, prices are climbing as demand for scrap picks up. Partnerships with suppliers like CRONIMET are helping secure supply, but the cost pressure is real. The biggest headwind, however, is domestic: the Finnish government’s mining tax increase and the discontinuation of the electrification aid will cost roughly EUR 30 million annually. As CFO Marc-Simon Schaar said, earnings were negatively affected by both. That is a significant drag on the group’s ability to fully capture the benefits of the stronger market. Looking ahead, management expects Q2 adjusted EBITDA to be higher than Q1, supported by further volume gains and positive timing/hedging effects. If CBAM continues to bite and the Middle East situation stabilizes, Europe could finally be on a path to better margins.We are progressing now with the ferrochrome product portfolio expansion and our pilot plant for our proprietary technology in U.S. is progressing on budget and on time plan.