Global – In a development of massive significance to the stainless steel sector, including the scrap industry, Outokumpu and ThyssenKrupp AG have finally completed the Inoxum transaction.
The combined entity boasts approximately 16 900 employees, combined revenues of Euro 9.6 billion and an annual cold rolling capacity of approximately 2.8 million tons. The new set-up began operations on December 29. ThyssenKrupp becomes a major stakeholder in Outokumpu with 29.9% of the shares while Guido Kerkhoff, CFO of ThyssenKrupp, joins its board of directors.
‘With close to 40% market share in Europe and 12% globally, the broadest portfolio in the industry and unparalleled technical expertise and customer knowledge, Outokumpu starts as a clear global leader in stainless steel and high-performance alloys,’ the company states.
Its Chief Executive Officer Mika Seitovirta adds: ‘The rationale for building this new industry powerhouse remains as strong as ever; optimising our production structure, expanding both our product portfolio and market presence to growth markets in the Americas and Asia, and reaching annual synergy savings of approximately Euro 200 million.’
Savings of Euro 50 million are anticipated for 2013, rising to Euro 150 million by the end of 2014. These will be achieved through ‘planned mill closures, higher utilisation rates, economies of scale in raw material purchasing, and streamlining of sales, service centres, IT and other general costs’, says Mr Seitovirta. Such significant synergy savings could not have been achieved by either company on its own, he adds.
The combined entity plans to reduce its melting capacity by approximately 1.4 million tons. As previously announced, the Krefeld meltshop in Germany will be shut down by the end of 2013; furthermore, it is envisaged that the meltshop at Bochum, also in Germany, will be closed by the end of 2016 pending a final review of its financial performance in 2015. In addition, Outokumpu is considering a reduction of thin cold rolling capacity in Sweden from 2014 onwards.
The overall global restructuring efforts are expected to result in the loss of up to 2000 jobs during next four years.