Making responsibility an integral part of all our activities

Even though our main focus was on cost reduction and cash flow generation during the historically difficult year of 2009, we kept our vision in corporate responsibility – to be the most responsible company within our industry – firmly in mind. We continued our step-by-step development approach, and I believe that awareness of corporate responsibility issues has improved among our employees.

Difficult times test a company's attitude to its responsibilities

The year 2009 was very difficult for all stainless steel producers and an exceptional year for Outokumpu with heavy losses but fortunately strong cash flow. Our financial result is discussed in detail in the first part of this online report, here we take the corporate responsibility viewpoint. I believe that acting responsibly in difficult times is of particular importance, as is maintaining a balance between the environmental, economic and social aspects of corporate responsibility.

The economic value distributed to our key stakeholders decreased due to the dramatic drop in demand for stainless steel and the resulting impact on our sales. We continued our efforts to reach the targets set for 2009: reducing energy consumption, waste, and injuries, and improving our employees' well-being. Unfortunately, as part of our cost saving efforts, personnel reductions could not be avoided, and some 900 jobs were lost permanently.

Our levels of production were clearly lower than in the previous year, and our energy consumption therefore also decreased, by 25%. We did not however reach the target of a 2% decrease per processed tonne. We did achieve our target of further 10% reduction in landfill waste per processed tonne – an impressive achievement. The injury rate fell from 9.0 to 5.9 injuries per million working hours, our target was below five. We will continue our efforts – the target figure for 2010 is a challenging four, a good level by global standards. The year 2010 has been named Safety Theme Year, meaning we will be placing additional emphasis on our safety performance. Our long-term target for both injuries and waste is zero. No serious injuries occurred in 2009. In these difficult times the well-being of our personnel remained unchanged; the improvement target was not reached.

We take climate change seriously

Climate change, carbon dioxide emissions and energy consumption continue to be areas of concern for both us and our stakeholders. We take these issues seriously and are doing our share in the shift towards a low-carbon society. Published at the beginning of 2010, our Energy and low-carbon programme includes a commitment to reduce our direct and indirect carbon dioxide emissions by 20% per produced tonne by 2020. In 2009, our direct carbon dioxide emissions totalled 540 000 tonnes, 35% less than in the previous year, primarily because of lower production volumes. Most of our emissions in 2009 remained within permitted limits but some incidents did occur.

I am proud to say that according to a study made by PE International, our stainless products have the smallest carbon footprint in our industry in the EU. Key drivers in our business are that our products have a higher percentage of recycled material than the global industry average, and that our ferrochrome production is a world leader in both energy efficiency and curbing carbon dioxide emissions.

Internal improvement initiatives such as our Operational Excellence programmes are important tools in further improving our operations and our profits. Production excellence focuses on safety and operational efficiency and also concerns eliminating waste and losses. It has an impact on both the economic and the environmental performance of the supply chain. The sustainability of our supply chain is an important issue, especially in challenging new markets. Our goal is that our suppliers apply ethical standards which are as high as ours. Supplier audit processes will be finalised and gradually adopted in 2010, first in our raw material purchases then in general purchases.

Investigations of our export practices to Russia that were initiated by the Finnish Customs authorities in 2007 have been completed. The prosecuting authorities' process of considering possible charges is to be completed in the spring of 2010.

Awards for our sustainability performance and reporting

I am really pleased that the efforts we are making to improve our corporate responsibility performance and our reporting have been recognised once again. We maintain our position in the sustainability indices in which we already featured and were included in one new one. For achieving the largest improvement in sustainability performance among the top eight sustainable steel companies, we won the SAM Sector Mover 2010 award. In addition, Outokumpu was again selected as Finland's best reporter on corporate responsibility issues.

And the work continues. The valuable feedback we receive from stakeholders is very useful in working towards our vision. There is still much to do and to improve.

Juha Rantanen
CEO