Strategy unchanged despite the economic downturn

In 2007, Outokumpu launched a new strategic phase with the aim of building a more stable and profitable business model. Even though a number of investments were announced in late 2007 and early 2008, one consequence of the global economic downturn was that in December 2008, the Group decided to postpone almost its entire investment programme for a period of at least 12 months.

In 2009, a decision was made not to proceed with the melt shop expansion investment at Avesta in Sweden in the foreseeable future as no need for additional melting capacity exists in the medium term. While adverse financial conditions prevail, continuation of any investment project is subject to separate decision based on an updated feasibility study. Further decisions regarding postponed investments will be made by the end of 2010. Regrettably, delays in investments and cancellation of the melt shop expansion at Avesta mean that the positive financial effects through creation of new jobs both in Outokumpu units and indirectly in the local communities will not now occur in the areas where the investments were planned to take place.

Outokumpu's fundamental strategy, however, remains unchanged. The Group is committed to balancing its product mix by increasing the proportion of end-user and project sales, and stabilising the volumes of product purchased by key distributors and growth outside Europe. In accordance with this strategy, expansion of stock and processing capacity at the Group's Service Centre in Willich in Germany was completed in 2009. Outokumpu is also establishing a new service centre at Kunshan in China. These expansions support the strengthening of the Group's network of service centres to increase sales to end-users and project customers. Specialty Stainless production capabilities at Nyby in Sweden and in New Castle in the US have also been expanded. All of these investments will have a positive financial effect on local communities through increased salary payments and the indirect creation of jobs. The Group's Production and Supply Chain Management Excellence programmes are important tools in further improving Outokumpu's operations and profitability in a challenging market environment and in implementing Group strategy. Financial benefits totalling EUR 150 million were achieved through the Group's Excellence programmes in 2009 compared to 2005.