Outokumpu to divest of copper

Outokumpu (OUTOF-O) has put its copper businesses up for sale.

The company plans to divest itself of copper products and instead concentrate on the stainless steel business. Merrill Lynch will be Outokumpu’s financial advisor for the transactions.

Outokumpu is one of the four largest producers of stainless steel in the world and Europe’s third-largest producer of zinc.

Stainless steel accounts for 80% of Outokumpu’s operating capital and two-thirds of its net sales.

In January, Boliden (BLS-T) took over Outokumpu’s zinc and copper mining and smelting operations, whereas Outokumpu took over Boliden’s fabrication and technology sales operations (Outokumpu owns 49% of the new Boliden).

The new Boliden is Europe’s largest copper producer (eighth-largest in the world). In 2003, Outokumpu’s Harjavalta Metals division produced 161,000 tonnes of blister copper and 126,000 tonnes of cathode. The cathode copper production was up 11,000 tonnes from the previous year; however, operating profit was down 2 million euros, to 12 million euros.

In February, Outokumpu bought SMI’s Italian superconducting wire manufacturing business and its ACR tube manufacturing business in China. Outokumpu is currently a leader in the manufacture of superconductor wire.

Outokumpu Copper’s net sales weakened in 2003: almost 1.63 million euros, compared with 1.67 million euros in 2002. The operating profit was 7 million euros, down 46 million euros from the previous year. The Appliance, Heat Exchangers & Asia division posted a better year with increased net sales and an 8-million-euro increase in profits.

Outokumpu reports that the stainless steel market has grown by 5-6% over the past two decades and that the upward trend is expected to continue.

The Finnish government owns 40% of Outokumpu.

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