5493009YRUJJDCFF0R802021-01-012021-12-315493009YRUJJDCFF0R802019-12-31ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember5493009YRUJJDCFF0R802019-12-31ifrs-full:ReserveOfCashFlowHedgesMember5493009YRUJJDCFF0R802019-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493009YRUJJDCFF0R802019-12-31ifrs-full:ReserveOfRemeasurementsOfDefinedBenefitPlansMember5493009YRUJJDCFF0R802019-12-31ifrs-full:TreasurySharesMember5493009YRUJJDCFF0R802019-12-31ifrs-full:RetainedEarningsMember5493009YRUJJDCFF0R802020-01-012020-12-31ifrs-full:RetainedEarningsMember5493009YRUJJDCFF0R802020-01-012020-12-31ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember5493009YRUJJDCFF0R802020-01-012020-12-31ifrs-full:ReserveOfCashFlowHedgesMember5493009YRUJJDCFF0R802020-01-012020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493009YRUJJDCFF0R802020-01-012020-12-315493009YRUJJDCFF0R802020-01-012020-12-31ifrs-full:ReserveOfRemeasurementsOfDefinedBenefitPlansMember5493009YRUJJDCFF0R802020-01-012020-12-31ifrs-full:TreasurySharesMember5493009YRUJJDCFF0R802020-12-31ifrs-full:IssuedCapitalMember5493009YRUJJDCFF0R802020-12-31ifrs-full:SharePremiumMember5493009YRUJJDCFF0R802020-12-31ifrs-full:MiscellaneousOtherReservesMember5493009YRUJJDCFF0R802020-12-31outokumpu:InvestedUnrestrictedEquityReserveMember5493009YRUJJDCFF0R802020-12-31ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember5493009YRUJJDCFF0R802020-12-31ifrs-full:ReserveOfCashFlowHedgesMember5493009YRUJJDCFF0R802020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493009YRUJJDCFF0R802020-12-31ifrs-full:ReserveOfRemeasurementsOfDefinedBenefitPlansMember5493009YRUJJDCFF0R802021-12-315493009YRUJJDCFF0R802020-12-31ifrs-full:TreasurySharesMember5493009YRUJJDCFF0R802020-12-31ifrs-full:RetainedEarningsMember5493009YRUJJDCFF0R802021-01-012021-12-31ifrs-full:RetainedEarningsMember5493009YRUJJDCFF0R802021-01-012021-12-31ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember5493009YRUJJDCFF0R802021-01-012021-12-31ifrs-full:ReserveOfCashFlowHedgesMember5493009YRUJJDCFF0R802021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493009YRUJJDCFF0R802021-01-012021-12-31ifrs-full:ReserveOfRemeasurementsOfDefinedBenefitPlansMember5493009YRUJJDCFF0R802021-01-012021-12-31outokumpu:InvestedUnrestrictedEquityReserveMember5493009YRUJJDCFF0R802021-01-012021-12-31ifrs-full:TreasurySharesMember5493009YRUJJDCFF0R802021-12-31ifrs-full:IssuedCapitalMember5493009YRUJJDCFF0R802020-12-315493009YRUJJDCFF0R802021-12-31ifrs-full:SharePremiumMember5493009YRUJJDCFF0R802021-12-31ifrs-full:MiscellaneousOtherReservesMember5493009YRUJJDCFF0R802021-12-31outokumpu:InvestedUnrestrictedEquityReserveMember5493009YRUJJDCFF0R802021-12-31ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember5493009YRUJJDCFF0R802021-12-31ifrs-full:ReserveOfCashFlowHedgesMember5493009YRUJJDCFF0R802021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5493009YRUJJDCFF0R802021-12-31ifrs-full:ReserveOfRemeasurementsOfDefinedBenefitPlansMember5493009YRUJJDCFF0R802021-12-31ifrs-full:TreasurySharesMember5493009YRUJJDCFF0R802021-12-31ifrs-full:RetainedEarningsMember5493009YRUJJDCFF0R802019-12-315493009YRUJJDCFF0R802019-12-31ifrs-full:IssuedCapitalMember5493009YRUJJDCFF0R802019-12-31ifrs-full:SharePremiumMember5493009YRUJJDCFF0R802019-12-31ifrs-full:MiscellaneousOtherReservesMember5493009YRUJJDCFF0R802019-12-31outokumpu:InvestedUnrestrictedEquityReserveMemberiso4217:EURiso4217:EURxbrli:shares
Working towards a
world that lasts forever
Annual
report
2021
Annual review
We are Outokumpu ......................... 4
Year 2021 in figures ........................ 5
CEO’s review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Vision and strategy ......................... 8
Highlights ................................... 10
Value creation .............................. 11
Stainless steel market ..................... 12
Sustainability review
Sustainability at Outokumpu ............... 2
Sustainable performance in 2021 ......... 5
ENVIRONMENT ............................. 6
Working towards a 1.5 °C future ........... 6
Energy efficiency in focus .................. 11
Operating at the core of the
circulareconomy ........................... 13
Environmental impacts minimized ......... 15
PEOPLE & SOCIETY ........................ 18
Strengthening our sustainable
supplychain ................................ 18
Proactive focus on safety .................. 23
Building the best work environment ....... 25
Stakeholder engagement .................. 31
Research and development ............... 36
Ethics and compliance ..................... 37
Human rights at Outokumpu ............... 39
Scope of the report. . . . . . . . . . . . . . . . . . . . . . . . . 41
Independent assurance report ............. 43
Financial year
REVIEW BY THE BOARD OF DIRECTORS ... 2
Group key figures ........................... 14
Alternative performance measures ........ 15
Share-related key figures ................... 18
Non-financial indicators .................... 20
FINANCIAL STATEMENTS ................... 21
Consolidated statementof income ........ 22
Consolidated statement of
comprehensive income .................... 22
Consolidated statement of
financial position ........................... 23
Consolidated statement of cash flows ..... 24
Consolidated statement of
changes in equity .......................... 25
Notes to the
consolidated financial statements ......... 26
Parent company financial statements ..... 77
AUDITOR’S REPORT AND
ASSURANCE REPORT ....................... 81
Outokumpu Annual report 2021 | Annual review 2 / 15
Contents
Our Annual report
combines Outokumpu’s
sustainability and financial
reporting. Sustainability
review has been assured
and Financial statements
have been audited. Our
official Financial statements
published according to the
ESEF regulation are available
at www.outokumpu.com/
reports.
In working towards
a world that lasts
forever, we fight against
corrosion every step of
the way. Lena Wegrelius
heads Outokumpu's
corrosion department,
employing a dozen
specialists.
Governance
Corporate Governance Statement ......... 2
Key risks .................................... 20
Information for shareholders ............... 25
Remuneration Report ...................... 26
Annual
review
We are the global leader in stainless
steel. We are proud to produce the most
sustainable stainless steel in the world – we
work for the good of the planet and help our
customers to reduce their carbon footprint.
Outokumpu Annual report 2021 | Annual review 4 / 15
What we do, the product that ships out of our facilities, is stainless steel. Our customers use it to
construct buildings, plants and bridges, manufacture cars, trucks and trains, produce kitchen
sinks and appliances.
Our stainless steel is produced by our experts at
our mills in Finland, Germany, Mexico, Sweden,
the UK, and the US. Our engineers research
and develop it further at our research centers
and mills, and our dedicated salespeople
and technical experts help and advice our
customers in choosing, using, and processing
stainless steel. Outokumpu’s headquarters is in
Helsinki, Finland and our shares are listed on
Nasdaq Helsinki.
Our vision is to be the customer’s first choice in
sustainable stainless steel. Today, our stainless
steel contains 90% of recycled material, the
most in the entire industry. We also have
the lowest carbon footprint, covering all the
emissions in our supply chain. By using our
stainless steel, our customers save our planet
from 10,000,000 tonnes of carbon dioxide –
every year. And we do not stop but strive to cut
our CO
2
emissions by further 30% by 2030. Our
ultimate goal is carbon neutrality by 2050.
We are Outokumpu
9,096
1)
employees
Adjusted
EBITDA, EUR
1,021
million
Operations in
over 30
countries
CO
2
emissions
–14.3%
2)
Recycled content
over 90%
Net debt reduced
to EUR
408
million
Sales EUR
7.7
billion
1)
Personnel as full-time equivalent
2)
Compared to the baseline of 2014–2016
This is a company of great people, and we can
trust our future to be in good hands because
those hands are our own.
In brief
Outokumpu Annual report 2021 | Annual review 5 / 15
20212020201920182017
0
200
400
600
800
1,000
1,200
Europe 59%
Americas 25%
Ferrochrome 2%
Long Products 8%
Other operations 6%
20212020201920182017
0
250
500
750
1,000
1,250
1,500
Year 2021 in figures
The year 2021 was a great success for Outokumpu. During the year, our focus
has been on our strategic aim of de-risking. We reduced our net debt significantly
and delivered our best annual financial results, with all business areas providing
solid results. Sustainability was another key focus: we had the strongest safety
performance on record and kept our recycled material content on a very high level.
2021 2020 2019 2018 2017
Financial key figures
Net sales, € million 7,709 5,639 6,403 6,872 6,356
Stainless steel deliveries, 1,000 tonnes 2,395 2,121 2,196 2,428 2,448
Adjusted EBITDA, € million 1,021 250 263 485 631
Net result for the period, € million 553 –116 –75 130 392
Operating cash flow 597 322 371 214 328
Net debt, € million 408 1,028 1,155 1,241 1,091
Debt-to-equity ratio at the year-end, % 13.1 43.6 45.1 45.1 40.1
Environmental key figures
Recycled content, % 90.1 92.5 85.0 84.3 84.1
C0
2
emission intensity, tonnes of CO
2
eq. per tonne steel 1.60 1.55 1.61 1.72 1.84
Energy intensity, use in GJ per tonne crude steel 9.9 11.0 10.9 10.1 9.3
Use rate of slag, % 78.6 77.1 90.8 89.9 91.1
Total landfill waste intensity, tonnes per tonne steel 0.517 0.590 0.500 0.472 0.391
Social key figures
Total recordable injury frequency rate
1)
2.0 2.4 3.2 4.1 4.4
Lost-time injuries rate
2)
1.3 1.4 1.4 1.7 1.8
Personnel, full-time equivalent 9,096 9,602 10,078 10,118 9,748
Personnel 9,395 9,915 10,390 10,449 10,141
1)
Total recordable injury frequency includes fatalities, lost-time injuries, restricted work injuries and medically treated injuries, per million working hours.
2)
Lost-time injuries including fatalities and lost time injuries, per million working hours.
Adjusted EBITDA, € million
Sales by business area, € 7,709 million
Net debt, € million
Key figures
Outokumpu Annual report 2021 | Annual review 6 / 15
In an exceptionally strong market environment,
we delivered our best annual financial results in
recent history. I am very pleased that Outokum-
pu’s adjusted EBITDA exceeded the remarkable
EUR 1.0 billion milestone and amounted to EUR
1,021 million, while net debt decreased to EUR
408 million. Our exceptionally high earnings per
share was also a highlight of the past year.
I am proud to say that in 2021 we had the
strongest safety performance on record. Our
annual total recordable injury frequency
rate improved to 2.0. I want to thank all our
employees for their continued efforts. Safety is
always our first priority, as it has been during
these pandemic times.
2021 marked the first year of executing our new
strategy. We have executed it determinedly, yet
in the strong market, its progress has exceeded
our estimations. During the year, our focus
has been on our strategic aim of de-risking
the company and strengthening the balance
sheet by reducing net debt. As a result of the
various actions taken throughout the year,
we have reduced our net debt by more than
EUR 600 million and pushed our net debt to
EBITDA ratio to 0.4. Also, credit rating agency
Moody’s recognized our good development
and upgraded Outokumpu’s credit rating twice
last year. De-risking continues through the
first phase of the strategy by the end of 2022:
we will continue to reduce the net debt to
strengthen the company for the future.
We nearly reached our original EBITDA run-rate
improvement target during 2021, as we have
now achieved a cumulative impact of EUR
198 million. Therefore, we have increased our
The year 2021 was a great
success for Outokumpu.
We made the best result
in recent years, reduced
our net debt significantly
and made even more
stringent commitments in
sustainability.
CEO’s
review
CEO’s review
Outokumpu Annual report 2021 | Annual review 7 / 15
“We have all the
confidence for 2022 to
reach our targets.”
EBITDA run-rate improvement target to EUR 250
million.
All business areas provided solid results in 2021.
Our Europe business area reached an adjusted
EBITDA of EUR 485 million, and its deliveries
increased by 7% compared to the previous
year. In the exceptionally strong market, the
Americas business area’s adjusted EBITDA rose
to its highest level ever, EUR 297 million and
deliveries increased by 26%. Also, the Ferro-
chrome business area increased its adjusted
EBITDA to EUR 246 million.
Sustainability has been our key focus area in
2021. In sustainability, we kept our recycled
content at a high level at 90% and improved
our energy efficiency. We have the smallest
carbon footprint in the industry, and customers
save the world some 10,000,000 tonnes of CO
2
emissions by using our stainless steel – every
year. Outokumpu signed a new deal on three
cargo vessels with Langh Ship to reduce CO
2
emissions in transports. Furthermore, we
signed a deal with Gasum to increase the share
of wind power in our electricity procurement
and to meet our emission reduction targets.
Outokumpu’s updated and more ambitious
climate targets have been approved by the
Science Based Targets initiative (SBTi). Our
targets are now aligned with keeping global
warming below 1.5 degrees. Outokumpu is
currently the only stainless steel producer to
have its ambitious climate targets approved by
the SBTi. We are firmly progressing on our path
towards our vision of being the customer’s first
choice in sustainable stainless steel.
We have also strengthened the monitoring
of our supply chain’s sustainability. We are
committed to the United Nations’ Guiding
Principles on Business and Human Rights. In
particular, we have invested time and resources
to better control our supply chain, especially in
the high-risk countries.
As the producer of sustainable stainless steel
whose carbon footprint is less than 30% of the
global industry average, and in terms of global
overcapacity in stainless steel especially in Asia,
it is important that the global playing field is
as level as possible, and that competition is fair.
In terms of trade regulation, we were pleased
to see that during the year the EU extended
safeguard measures for another three years
until June 2024. In addition, the EU imposed
provisional anti-dumping duties on cold-rolled
stainless steel from Indonesia and India. These
regulatory measures are important steps
to ensure a level playing field in Europe for
sustainable stainless steel.
In July, the European Commission provided a
proposal for the Carbon Border Adjustment
Mechanism (CBAM). The proposal currently
includes only scope 1 or direct emissions
and, therefore, it does not create sufficient
protection for carbon leakage. For stainless
steel, it would be crucial that CBAM is applied
to the whole carbon footprint – all scopes, that
is, scope 1, scope 2 and scope 3.
Throughout the year, our mills have been
running at full capacity, we increased our
annual deliveries by 13% from the previous year,
and the strong market environment brought
along logistical challenges. Our team members
have done a truly excellent job, and I want to
thank them for their commitment this year. I
also want to thank our customers for all the
great cooperation and shareholders for their
continued trust in Outokumpu. We have all the
confidence for 2022 to reach our targets.
Heikki Malinen
President and CEO
CEO’s review
Outokumpu Annual report 2021 | Annual review 8 / 15
Our vision is to be the
customer’s first choice in
sustainable stainless steel.
Our Ways
of Working
We operate safely. Always.
We leverage the power of
oneOutokumpu.
We deliver.
We grow people and value diversity.
We act sustainably.
We are a trusted partner.
2021–2022
Margin improvement and
de-leveraging the balance sheet
2023–2025
Targeted productivity
investments to improve margins.
Additional investment to
improve sustainability
2026–
Investing in growth
and sustainability
PHASE
1
PHASE
2
PHASE
3
Must-win
battles
Lean & agile
organization
Cost &
capital
discipline
Commercial
excellence
We have a strong foundation to build on
Megatrends drive
stainless steel
demand growth
Leader in
sustainability
High customer
satisfaction
Stable operations
and continuous
improvement culture
Turnaround in the
Americas
Great people and
strong safety
performance
Our progress
in strategy
We took determined actions throughout the year 2021 to execute our strategy
and delivered great achievements. We benefited from the favorable market
environment and exceeded the financial targets we had set for ourselves for the
year. Going forward, this determination and strong focus will continue in 2022
to ensure we will reach our targets set by the year end.
Vision and strategy
Outokumpu Annual report 2021 | Annual review 9 / 15
We launched our new three-phase strategy at
the end of 2020. During the first phase, which is
set to complete by the end of 2022, we wanted
to strengthen our balance sheet and de-risk the
company before entering the next phases of
the strategy. The strategy is built on our strong
foundation, starting with megatrends driving
stainless steel demand, our people as our asset,
and our stable operations as well as continuous
improvement culture.
Three clear improvement areas in
the first phase of the strategy
When building the strategy, Outokumpu
found three focus areas in which to improve
performance in the first phase of the strategy:
lean and agile organization, cost and capital
discipline, and commercial excellence.
In the lean and agile organization stream,
the target has been to create cost savings by
restructuring and reducing total employee
headcount by approximately 1,000. The total
targeted employee reductions of 1,000 was
to be completed in full mostly by the end
of 2021 and now the company has moved
towards agility. Outokumpu’s aim is a full-time
equivalent number of personnel below 9,000
during 2022.
In the cost and capital discipline stream, the
focus has been on increasing our raw material
efficiency, maintenance optimization, and
strict asset management as well as keeping
our annual capital expenditure within EUR 180
million.
In the commercial excellence stream, our
target has been to improve product mix in all
business areas, grow in the selected segments
and leverage the leadership that we have in
specialty grades.
Excellent progress in reaching
our financial targets
With diligent execution in the three focus areas,
we aim to reach the financial targets we set for
the first phase of the strategy, both by the end
of 2022.
The first target was to improve the EBITDA
run-rate by EUR 200 million. During 2021, we
were able to improve our EBITDA run-rate
more than we had estimated one year ago and
reached an improvement of EUR 198 million,
which is 79% of our total target: as we have
recognized new improvement areas, we are
now aiming at EUR 250 million EBITDA run-rate
improvement.
The second financial target we set for ourselves
was to push the leverage ratio, or net debt to
EBITDA ratio, to below 3, meaning that our
net debt could only be three times as much as
our EBITDA. We were able to reach this target
already during the first half of 2021 and pushed
this ratio further down to 0.4 by the end of
the year. The directed share issue which we
completed in May contributed positively as
with the proceeds we paid some of the more
expensive loans. We also redeemed our senior
secured fixed rate notes due in 2024 already at
the end of 2021. Although our leverage ratio
target has been reached ahead of time, we will
continue to deleverage throughout the first
phase of the strategy.
Much of the EBITDA run-rate improvement in
2021 came from delayering the organization.
We have reduced the organizational levels
at Outokumpu. At the same time, we had to
make a tough decision to reduce the number
of employees by approximately 1,000 people
to decrease our cost base and increase our
competitiveness. These measures have now
been nearly completed. At the end of the year,
we had 9,096 employees as full-time equivalent
on our payroll.
Our continuous improvement culture is
demonstrated in the many good examples and
success stories from cost and capital discipline
and commercial excellence. For instance, in
Europe, we signed a deal with Langh Ship for
new cargo vessels traveling between Finland
and Terneuzen, being able to both reduce our
shipping costs and CO
2
emissions at the same
time. Across Outokumpu, a melt shop bench-
marking activity resulted in an operating model
allowing the company to optimize the use of
raw material alloys in the melting process. In
the Tornio melt shop, our operators solved an
over-alloying issue, finding saving potential in
alloying elements.
In Mexico, we found, for example, new
applications and customers for our stainless
steel grades in the solar power industry which
was looking for a local, reliable source. We
capitalized on our technical expertise, for
instance helping a customer to reduce their
down time by supplying coils that had already
been welded together. Going forward, most of
the impact on our financial targets will come
from the measures within cost and capital
discipline and commercial excellence.
Next phases
We are now strengthening the foundations of
the company, and once we have deleveraged
our balance sheet further, we will move onto
the next phases of strategy. Deleveraging
continues by the end of 2022 and in 2023–2025,
we will strengthen the core of our business:
making targeted investments in productivity
so that we can further improve our profitability.
At the same time, we will make additional
investments to improve our sustainability
performance. Beyond 2025, our strategy is to
invest in growth and sustainability, which will
bring us towards our vision to be the custom-
er’s first choice in sustainable stainless steel.
We were able to improve our
EBITDA run-rate more than
estimated and reached our leverage
ratio target ahead of time.
Vision and strategy
Outokumpu Annual report 2021 | Annual review 10 / 15
Highlights
How do our people feel?
2021 we once again asked our personnel for
their opinions in the Organizational Health
Index (OHI) survey. After two exceptional years,
our overall result in this global employee survey
remained on a high level at 68, although it was
slightly weaker than in 2019.
After the tough decisions made when
launching our new strategy to delayer the
organization, we are pleased to see that our
company and employees have managed
through these recent exceptional times this
well. Since we started the survey, we can see
remarkable improvement, as our score started
at 50 in 2016.
As the situation varies from country to country,
development actions will also vary by location.
Special care will be given to the sites where the
figures are lowest.
Read more on our people
A good year led to increased targets
Outokumpu was able to improve its adjusted
EBITDA more than expected during 2021. We
also reached our debt reduction target in just
one year, pushing our net debt to adjusted
EBITDA ratio to 0.4.
This excellent progress led to us raising the
bar: we increased of our financial targets from
the original run-rate improvement of EUR 200
million to EUR 250 million by the end of 2022.
Reducing net debt will continue during the first
phase of our strategy.
Read more on our strategy progress
We work to keep the climate
change within 1.5 degrees
We updated our sustainability strategy during
the year and set even more stringent climate
targets than before. We are the only steel
company that has a climate target in line with
keeping global temperature warming within
1.5 degrees, approved by the Science Based
Targets initiative.
Outokumpu was previously committed to the
2.0 degrees level and we are on track to reach
this target set for 2023, as we have cut our CO
2
emissions by 14.3% in the past five years. Going
forward, we intend to cut our CO
2
emissions by
further 30% by 2030 compared to the baseline
of 2020.
Read more of our climate targets
Managing the COVID-19 pandemic
Safety is a key priority at Outokumpu and
protecting the health and safety of the
employees in the global COVID-19 pandemic
continued in 2021.
The effects of the pandemic were twofold.
Outokumpu had various safety measures in
its sites and offices, while the rebound from
the 2020 slowdown showed as increased
deliveries and improved performance. The
financial impacts of COVID-19 related mainly to
the market rebound, and its impact on prices,
order books and utilization rates were stronger
than estimated. On the other hand, various
restrictions have been in place, as the company
has continued to do its utmost to safeguard
the employees – working remotely, following
social distancing as well as limiting traveling,
face-to-face meetings, and visitor access to only
the absolutely business critical instances.
Towards the end of 2021, the COVID-19
pandemic moved on to a point where the crisis
was no longer steered centrally at the Group
level. Instead, the situation is now managed at
the local level within the company guidelines
and local country rules. Nevertheless, the
COVID-19 pandemic still remains a risk going
forward.
Year 2021
Outokumpu Annual report 2021 | Annual review 11 / 15
Inputs Outokumpu Outputs and impacts
Sustainable development
goals we impact
649,681 tonnes alloys
519,186 tonnes slag formers
274,286 tonnes coke
7,709 million euros of sales 2,395,000 tonnes of stainless steel delivered
515,000 tonnes of ferrochrome produced
1,574,244 tonnes of slag
Responsible production
Decent work and economic growth
2,561,238 tonnes of recycled steel 90.1% of recycled material content in our products
111,242 tonnes of recycled metals
10 million tonnes of estimated avoided CO
2
emissions by
using our stainless steel
2 million tonnes of estimated avoided CO
2
emissions by
using our ferrochrome
Climate action
Responsible production
4,794 million euros of materials and
supplies
879 million euros of services
120 million euros in environmental costs and investments 6,084 million euros of operating costs
7 million euros paid taxes
180,000 euros of sponsoring
Climate action
Responsible production
Partnership for goals
Decent work and economic growth
180 raw material suppliers 9,096 employees
(full-time equivalent)
6,700 other suppliers (50% local) Partnership for goals
Decent work and economic growth
4,641 GWh of electricity used
(80% low carbon, of which
15% renewable)
700 GWh of process gas
2,804 GWh of primary fuel used
2.6% improvement in energy efficiency
123,027 tonnes of recycled and reused waste
99% of dust captured
1,256,219 tonnes of direct CO
2
emissions
603,554 tonnes of indirect CO
2
emissions of electricity
3,397,148 tonnes of other indirect, mainly
upstream CO
2
emissions
465,000 tonnes of waste landfilled
230 tonnes of dust
Affordable and clean energy
Responsible production
Total recordable injury frequency rate 2.0
98,411 training hours and 12 million euros of training costs
Development discussion % of 98
OHI participation rate 86% and overall score 68
711 million euros of total employee
benefit expenses
Annual average salary 59,448 euros
Decent work and economic growth
Value creation
Our operations impact society and environment in many ways. We contribute to several United Nations’ sustainable development
goals either through the way we operate or through our products.
Value creation
Outokumpu Annual report 2021 | Annual review 12 / 15
Distributors 44%
Appliances 10%
Automotive 13%
Heavy Industry 10%
Architecture & Building 4%
Metal Processing & Tubes 14%
Chemical & Energy 1%
Heating & Cooling 5%
Stainless steel
market
Megatrends drive the demand
for sustainable solutions
Global megatrends – such as urbanization,
mobility, economic and population growth,
and climate change – are the main growth
drivers for the stainless steel industry. The
need to develop sustainable solutions that
are durable and can be reused at the end of
their lifecycle is apparent, as the megatrends
drive the demand for economic, social, and
environmental sustainability.
Our commitment and contribution to
sustainability are embedded throughout our
value chain from procurement and production
to customer deliveries. We have the lowest
carbon footprint in our industry, and we are the
leader in the circular economy as the recycled
content in our stainless steel is the highest in
the industry – at over 90%. Mitigating climate
change by reducing our carbon footprint is a
clear focus area, and we aim to reduce our
environmental impact through, for example,
energy efficient production and by using
low-carbon electricity. We are continuously
The long-term outlook for stainless steel consumption remains
positive due to the increasing need for long-lasting and
sustainable solutions to the world’s most critical challenges.
Outokumpu is the undisputed market leader in Europe and
strong number two in the Americas.
Industry segments in Europe 2021
Source: Stainless steel flat products by volume of the Europe business area, January 2022.
Oculus, the new WTC
Transportation Hub in
New York City, suggests
a bird taking flight. This
structure is created
by Outokumpu's lean
duplex stainless steel.
Market environment
Outokumpu Annual report 2021 | Annual review 13 / 15
looking for ways to improve the sustainability of
our products and processes even further.
Stainless steel is sold either directly to end
users or to stainless steel distributors, tube
makers, and processors, such as steel service
centers, who resell the products to end users.
In 2021, 56% of our business area Europe’s
stainless steel flat product quantities was sold
directly to end-user customers. The remaining
approximately 44% were delivered to distribu-
tors that stock and process stainless steel to
serve end users. In the Americas business area,
distributors have a higher share of two-thirds of
the total quantities.
Global market with a
few big players
Outokumpu operates in the global stainless
steel market. Our world-class assets,
comprehensive product portfolio and proven
expertise form a sound foundation for our
strategy execution and future success. In
2021, the market for cold-rolled flat products
totaled approximately 30.3 million tonnes.
(Source: CRU) Outokumpu’s global market
share was approximately 5.5%. (Source: CRU
and Outokumpu estimates) Outokumpu is the
market leader in Europe, given our cold-rolled
market share of approximately 29%. (Source:
EUROFER) In the USMCA region, our market
share stands at 24%, making Outokumpu the
clear number two in the Americas. (Sources:
American Iron & Steel Institute, StatsCan,
Canacero) Focusing on the US market,
Outokumpu’s share amounts to around 22%.
(Sources: American Iron & Steel Institute)
The stainless steel industry has been burdened
by overcapacity in recent years, especially in
Asia. In addition to Outokumpu, the largest
stainless steel producers worldwide include
Asian companies Tsingshan, Delong, Baosteel*,
TISCO* and POSCO as well as European-based
Acerinox and Aperam. The global stainless
steel production capacity of slabs increased
in 2021 by roughly 3% to 59.6 million tonnes.
To adjust to changing trade restrictions within
Asia and Europe, both Tsingshan and Delong
have shown flexibility in switching from slab
to billet production and vice versa. The global
utilization rate was assessed to have increased
Major stainless steel producers
Million tonnes 2022 2021
Tsingshan 13.8 9.8
Delong 5.9 2.9
Baosteel* 5.2 2.0
TISCO* 4.5 4.5
POSCO 3.3 3.3
Acerinox 3.3 3.3
Outokumpu 3.2 3.2
Guanxi Chengde 3.0 3.0
Aperam 3.0 3.0
Source: Stainless steel production capacity of slabs,
CRU November 2021.
* Subsidiaries of Baowu Steel.
Business area Europe Americas Ferrochrome Long Products
Market share
29%
1)
(EU30 ) 24%
2)
(USMCA) 3%
3)
Production facilities
Tornio, Finland
Avesta, Degerfors and Nyby,
Sweden
Terneuzen, the Netherlands
Dahlerbrück, Dillenburg and
Krefeld, Germany
Calvert, Alabama, the US
San Luis Potosí, Mexico
Kemi and Tornio, Finland Sheffield, the UK
Degerfors and Fagersta, Sweden
Richburg, South Carolina, the US
Largest customer segments
Distributors
Automotive
Appliances
Heavy industries
Distributors
Appliances
Automotive
Pipes and tubes
Stainless steel producers Distributors
Metal processors
Heavy industries
Tubes
Main competitors
Aperam, Acerinox, Acciai
Speciali Terni
NAS, Cleveland Cliffs (AK), ATI Glencore, Samancor, ERG NAS, Cogne, Valbruna
1)
EUROFER.
2)
American Iron & Steel Institute, StatsCan, Canacero.
3)
ICDA.
Market environment
Outokumpu Annual report 2021 | Annual review 14 / 15
EMEA 16%
APAC 76%
Americas 8%
The secret to Tokyo’s
low water leakage rate
Water losses are a big issue faced by utilities
across the globe. One such utility, the Tokyo
Water Board was losing about 15–20% of
its potable water to leakage. However, the
city managed to cut leakage dramatically
after it developed a long-term strategy that
included using stainless steel service pipes.
By 2013 the utility had slashed leakage from
15.4% to 2.2%, despite a larger population.
The new pipes also helped reduce the
maintenance budget substantially.
Peder Claesson, Head of Project sales,
says: “The water board found stainless steel
to be the most cost-effective option for over
100 years, despite a higher initial investment
cost. Its lifecycle cost is only 25% of the
lifetime cost of alternative materials,
considering the latter’s need for regular
maintenance and replacement about every
20 years. And while the projected life is 100
years, stainless steel pipes may last much
longer.”
Regional distribution of stainless steel
apparent consumption in 2021
Source: CRU, November 2021
to around 80% in 2021, up from 72% in 2020
induced by the recovery from the COVID-19
lows. As the production of stainless steel is
capital intensive, producers generally aim for
continuously high capacity utilization in order
to maintain and improve profitability. (Source:
CRU.) Several Asian producers also manufac-
ture carbon steel, which can be a substitute
product for stainless in some cases, while
European stainless steel manufacturers focus
on the production of sustainable material.
(Source: CRU)
Strong market environment in 2021
Global consumption of stainless steel has
recovered strongly throughout 2021, supported
by successful vaccination programs and
supportive fiscal and monetary policy. Due to
robust private consumption and high demand
for durable goods, segments like Appliances
and Automotive have benefited from high
underlying demand. Further end-use segments
like Construction & Architecture or Heavy
Industry, which suffered from a sharp decline
in demand during COVID-19, have performed
well this year. The production of stainless
steel producers has increased year-on-year to
meet the high demand, but extremely strong
order books have anyhow still caused lead
times to increase to multi-year highs. Moreover,
reported distributor inventories were also below
historical averages. Long lead times from Asian
producers, logistical bottlenecks and high
freight costs have added to the constrained
supply situation and caused customers to
prefer regionalized sourcing.
Especially in Europe, imports from third
countries were limited particularly in the first
half of 2021 by the above-mentioned external
factors, like surging freight costs, container
shortages and high domestic demand in third
countries. However, in 2021, there were still
no signs of easing market distortions in some
stainless steel producing countries outside
the EU. As a result, and to mitigate from these
distortions like dumping, state subsidies or
weaker sustainability performance, the EU has
taken some important steps in the process
of creating a fair competitive environment
between the European and third country
producers.
First, in May, the EU found Indonesia and
India had been selling cold-rolled stainless
steel products to the EU market at dumped
prices and consequently imposed provisional
anti-dumping duties on these countries, which
were made definitive for five years later in
November. The decision by the EU in June
to renew the steel safeguard measures for
another three years was also very well justified,
as the abundant overcapacities in Asia and the
US Section 232 tariffs remain unchanged after
three years when the safeguards were originally
imposed. Also, in September the EU published
the decision to renew the current anti-dumping
duties on cold rolled from China and Taiwan
at the existing levels for another five years,
until September 2026. Outokumpu welcomes
these actions as steps in the right direction
but still insists for more assertive application
of the EU’s trade defense measures at their
full potential to level the playing field in order
to achieve a fair competitive environment
between the European and third country
producers.
In February 2021, the EU also initiated an
investigation into the alleged subsidies by the
governments of Indonesia and India, when
exporting stainless steel cold-rolled products to
the EU market. In this proceeding the EU will
have a chance to impose definitive anti-subsidy
duties on these countries by March 2022.
Among the ongoing trade proceedings,
Outokumpu is also following closely the WTO
dispute settlement between the EU and Indo-
nesia regarding various measures by Indonesia
concerning nickel, in which the final report is
expected in the fourth quarter of 2022.
On top of trade-related developments, the
European Commission provided a proposal
for the Carbon Border Adjustment Mechanism
(CBAM) in July. The proposal currently includes
only scope 1 emissions and, therefore, it does
not create sufficient protection for carbon
leakage. For stainless steel, it would be crucial
that CBAM is applied to the whole carbon
footprint (scope 1, scope 2 and scope 3).
Market environment
Outokumpu Annual report 2021 | Annual review 15 / 15
95 00 05 10 15 21
0
1,000
2,000
3,000
4,000
5,000
21201918171615141312
0.0
0.5
1.0
1.5
2.0
21201918171615141312
5,000
10,000
15,000
20,000
25,000
Global apparent consumption for stainless
steel flat products amounted to 39.3 million
tonnes in 2021, an increase of 10.1% from
35.7 million tonnes in 2020. The demand in
Americas and APAC increased by 25.5% and
10.8%, respectively, while EMEA only increased
by 8.5%. (Source: CRU)
In 2021, global stainless steel production
amounted to 58.9 million tonnes and
increased by around 14% from the previous
year 2020, which was heavily hit by the
COVID-19 pandemic. The drop in output was
pronounced in most regions, while output only
grew in Indonesia and remained on the same
levels compared to 2019 in China. On the one
hand, this demonstrates the continuation of
the rapid capacity build-up in Indonesia and
on the other, China’s prompt recovery from
the crisis caused by the COVID-19 pandemic.
(Source: CRU)
Market recovery throughout
2021 and long-term market
outlook remains positive
Following the sharp recovery in 2021, the
long-term outlook for stainless steel demand
remains positive, but is expected to normalize
in the upcoming years. Global megatrends,
such as urbanization, climate change, and
increased mobility, combined with the growing
global demand for energy, food, and water,
are expected to support the future growth of
stainless steel demand. In 2021, global steel
production amounted to 1,912 million tonnes
of which approximately 3% was stainless steel
(Source: CRU, Worldsteel).
The demand for stainless steel products is
impacted by global, regional, and national
economic conditions, levels of industrial
investment activity and industrial production.
In 2021, the strong COVID-19 rebound and
augmented raw material prices have led to
increased stainless steel spot prices.
Stainless steel price
*
, EUR/t
Source: CRU January 2022
* Stainless steel reference spot price for cold-rolled 304 2mm sheet in
Europe.
Ferrochrome price, USD/lb
Source: LME settlement, monthly average prices.
Nickel price, USD/t
Source: LME settlement, monthly average prices.
Stainless steel and raw material prices in 2021
Market environment
Sustainability
review
Outokumpu is a company of good people, working towards a
world that last forever. Our people and their expertise is what
separates us from other companies. Also, our stainless steel
has the lowest carbon footprint on the market. Last year, we
processed 2.6 million tonnes of recycled steel and 111,000
tonnes of other recycled metals into stainless steel, and our
customers saved the world from some 10 million tonnes of
carbon dioxide emissions by using our stainless steel.
Outokumpu Annual report 2021 | Sustainability review 2 / 44
Outokumpu’s sustainable stainless steel
contributes to a world that lasts forever.
Sustainable solutions that last forever are
needed to solve the challenges created by
population growth, urbanization and climate
change.
Our product is at the very core of our sustain-
ability approach. Stainless steel is a superb
material for sustainable solutions as it is
100% recyclable, efficient and long-lasting. The
cornerstone of our business is enabling growth
and innovation through sustainable stainless
steel solutions, and our vision is to become our
customer’s first choice in sustainable stainless
steel.
However, it is not only what we do, but
also how we do it. As the industry leader in
sustainability, we provide a full picture of the
total carbon footprint of our products taking
into account all indirect emissions including
raw materials. We also lead the industry in
terms the circular economy. The recycled mate-
rial content of our stainless steel is more than
90% and we are continuously looking for ways
to minimize our environmental impact. Our
carbon footprint is the lowest in the industry
when all scopes of emissions are considered.
Updated sustainability strategy
During 2021, we took steps to further
strengthen our sustainability agenda, and our
sustainability strategy was updated to reflect
the growing importance of sustainability and
the possibilities it offers to our business. Our
sustainability strategy is based on three
factors: environmental, social and economic,
which all need to be in balance.
As part of the new sustainability strategy, we
launched more ambitious goals for our sustain-
ability. Our greenhouse gas emission reduction
target was increased, and we committed to the
Science-Based Targets initiative’s (SBTi) 1.5 °C
climate ambition. The commitment translates
into greenhouse gas emission reduction of
42% in per tonne stainless steel by 2030 from
a 2016 base year covering direct and indirect
emissions as well as those of our supply chain.
Our long-term target is to achieve carbon
neutrality in our own operations by 2050.
Our reporting is based
on material topics
Outokumpu conducts regularly a materiality
analysis to map our stakeholders’ expectations
and to assess our business impact on sustain-
ability. We updated our materiality analysis
in 2021 to further improve our focus on the
sustainability topics that are most important
Sustainability at
Outokumpu
Sustainability is at the heart of our business and
integrated in our strategy.
Stainless steel is used
in many sustainable
applications, like solar
power production,
because of its
superb properties
e.g. in durability and
recyclability.
Sustainability at Outokumpu
Outokumpu Annual report 2021 | Sustainability review 3 / 44
for our stakeholders and operations. The analysis
also guides our reporting on the relevant topics.
The analysis is applying double materiality,
meaning both the impact of and on Outokumpu’s
business were assessed. As a basis for the
materiality analysis, an external advisor conducted
an extensive data study of the emerging trends
in the steel industry and compared these trends
with the material topics of Outokumpu’s main
peers, customers and suppliers. This analysis was
complemented with an overview of material issues
found in global sustainability frameworks. Addition-
ally, interviews with customers, suppliers and other
stakeholders such as investors, employees and
non-governmental organizations were conducted to
gain a deeper insight into the relevant stakeholder
groups.
Based on the research and internal workshops, a
list of 15 most material topics was compiled. The
topics were ranked and prioritized based on the
stakeholder rankings and the business impact of
Outokumpu on these issues.
Four topics were defined as focus areas for accel-
eration based on alignment with business model
and high potential for differentiation. Sustainability
enablers have been defined to have lower level
of potential for differentiation. Topics defined for
management at local level have value creation
potential from execution on local operating level.
The selection of material topics covers both
inside-out topics that related to corporate strategy
as well as outside-in topics that reflect stakeholder
concerns. Topics are material when they have the
ability to affect Outokumpu’s operational results
and the company has the ability to control and
influence the topic.
Importance to stakeholders
Business impact of Outokumpu
High
High
Medium
Medium
Materiality matrix
Circular economy &
waste management
Emissions and
footprint reduction
Innovative
technologies
Talent
attraction
& develop-
ment
Product safety
Human
rights
Data security
and
privacy
Occupational
health, safety and
well-being
Diversity and
inclusive
employment
Business ethics &
governance
Climate change
adaptation
Local community
and citizenship
Biodiversity and ecosystems
Sustainable supply chain management
Water management
Focus areas for acceleration
Sustainability enablers
Management at local level
Sustainability at Outokumpu
Outokumpu Annual report 2021 | Sustainability review 4 / 44
Commitment to global
frameworks and standards
Sustainability is integrated into all our
operations, activities, and decision making. The
most important policies guiding Outokumpu’s
sustainability management are the Group’s
Code of Conduct, Corporate Responsibility
Policy and the Policy on Environment, Health,
Safety and Quality (EHSQ). We expect our
business partners and suppliers to follow
similar standards. All of our policies are
available at outokumpu.com.
All of Outokumpu’s sites are certified according
to quality ISO 9001 and environment
ISO14001 management systems, including
energy efficiency targets. The functioning of
the systems is monitored by both internal and
external audits. These management systems
are used to implement sustainability issues on
the local level.
Outokumpu complies with international,
national, and local laws and regulations, and
respects international agreements concerning
human and labor rights, such as the Interna-
tional Bill of Human Rights, UN Global Compact
and ILO Declaration on Fundamental Principles
and Rights at Work. In 2021, Outokumpu
began to implement the UN Guiding Principles
on Business and Human Rights in its corporate
policies.
Management of sustainability
Outokumpu’s Board of Directors approves Outo-
kumpu’s sustainability agenda and targets. On
the Group level, sustainability is managed by
the Group Sustainability Team headed by Vice
President – Sustainability who reports to Chief
Technology Officer & Group Sustainability. The
Outokumpu Leadership Team regularly follows
the progress of Outokumpu’s sustainability
agenda. The business areas and functions are
responsible for ensuring that operations within
their own organizations are conducted in a
responsible manner and that monitoring, data
collection and reporting are duly carried out.
In 2021, Outokumpu established a new
ESG Advisory Council to support continuous
improvement in sustainability. The council
consist of four external advisors:
• Olli Dahl, PhD (Technology), Professor,
Environmental Technology, Aalto University
• Lucas Joppa, PhD (Ecology), Chief
Environmental Officer, Microsoft
• Sirpa Juutinen, Independent Sustainability
Advisor
• Julia Woodhouse, Board member, member of
the Audit Committee, Outokumpu
The council’s role is to challenge and comment
the company’s ESG strategy and actions as
well as facilitate dialogue between Outokumpu
and its stakeholders.
During 2021 an internal, cross-functional ESG
core team was also established. The team
supports the implementation of the sustain-
ability strategy giving executive proposals and
draft decisions to the Outokumpu’s manage-
ment who will then implement necessary
actions. The team includes members from
Group sustainability, procurement, communica-
tions, compliance, HR and safety functions.
Outokumpu in COP26
Outokumpu was invited to participate in the
Vision 2045 summit in connection with the
COP26 meeting in Scotland in November
2021. The agenda of the summit was
formed around the UN’s Sustainable
Development Goals.
Based on a new materiality analysis
conducted during 2021, Outokumpu
updated its focus on the SDGs and
selected six goals that are most relevant
either through the way we operate or
through our products: affordable and clean
energy, decent work and economic growth,
industry, innovation and infrastructure,
responsible consumption and production,
climate action and partnerships for goals.
“We have a strong track record in
sustainability, but we have to also work
with our partners and suppliers to enable
our work towards a world that lasts forever,”
says Stefan Erdmann, CTO and Group
Sustainability.
As a part of our participation, a short
documentary film was made to explain
how Outokumpu contributes to global
sustainability and to the United Nations’
Sustainable Development Goals.
See the documentary
Sustainable Development
Goals in our focus
We are a signatory to the United Nation’s
Global Compact initiative, and we have
committed to United Nation’s Sustainable
Development Goals (SDGs). We contribute
to several SDGs either through the way we
operate or through our products.
In 2021, our focus on the SDGs was realigned
according to our updated materiality analysis.
Our main focus is on the following six goals:
affordable and clean energy, decent work and
economic growth, industry, innovation and
infrastructure, responsible consumption and
production, climate action and partnerships for
goals.
Read more about our impact on the SDGs
Sustainability at Outokumpu
Outokumpu Annual report 2021 | Sustainability review 5 / 44
Recycled
material
content
on a high level
Our stainless steel contains the highest
rate of recycled material content in the
industry. Recycled material content includes
steel scrap and recycled metals from other
residuals.
More on resource efficiency
No significant
environmental
incidents
Outokumpu’s target is to have no
significant environmental incidents, and
the company has had no such incidents for
many years.
More on our environmental impact
Reduced CO
2
emissions
intensity
In 2021, our science-based climate target
was updated to align with the 1.5°C climate
ambition.
More on our actions on climate change
Work-related
injuries
continued
to decline
Our total recordable injury frequency rate
(TRIFR, per million working hours) continued
to decline and was 2.0 compared to 2.4 in
2020.
More on safety and health
Significant
improvement
in energy
efficiency
The improvement in energy efficiency was
supported by digitalization projects and
higher volumes than the year before.
More on energy efficiency
Active
participation in
our employee
survey
We achieved our target for the
Organizational Health Index survey
participation rate.
More on our people
Sustainability performance in 2021
Outokumpu has set
ambitious goals and key
sustainability performance
indicators. The company also
follows up and measures
other selected economic,
social and environmental
indicators.
All sustainability figures are available on the
sustainability data tool on Outokumpu’s
website
TARGET
0
/ RESULT
0
TARGET
92.5%
/ STATUS
90.1%
TARGET 2030
42%
/ STATUS
15%
TARGET
>80%
/ RESULT
86%
TARGET
<2.2
/ RESULT
2.0
TARGET 2030
3.00
/ STATUS
3.15
MWh per tonne
Sustainable performance
Outokumpu Annual report 2021 | Sustainability review 6 / 44
Global megatrends such as population growth
and accelerating mobility and urbanization
have resulted in increased carbon emissions
and climate change. Stainless steel can help
to build solutions and infrastructure for a more
sustainable world.
Stainless steel produced by Outokumpu has
the lowest total carbon footprint in the industry,
helping our customers to reduce their carbon
footprints. We have committed to reducing our
emissions even further throughout the whole
value chain.
Ambitious goals to mitigate
climate change
In 2021, Outokumpu launched a new sustain-
ability strategy and more ambitious climate
targets to further strengthen our position as
the industry leader in sustainability. As part
of the new sustainability strategy, Outokumpu
increased its greenhouse gas emission
reduction target and committed to the Science-
Based Targets initiative’s (SBTi) 1.5 °C climate
ambition.
Outokumpu’s updated science-based target is
to reduce scope 1, 2 and 3 greenhouse gas
emissions by 42% per tonne stainless steel
by 2030 from a 2016 base year. This target
was approved by the Science Based Targets
initiative in December 2021.
Reporting and target setting was further
developed, and the new target covers over
95% of scope 1 and 2 and over 95% of scope
3 emissions as required in the new SBTi
standard. In the previous target about 80% of
scope 3 emissions were included. The target is
in line with the short-term Business Ambition
of 1.5 degree objectives. In the long-term,
Outokumpu is committed to reaching carbon
neutrality in own operations by 2050.
Origins of emissions
The direct greenhouse gas emissions from
Outokumpu operations are limited to CO
2
emissions. These emissions come directly
from production (scope 1), indirectly from the
use of electricity (scope 2) and from upstream
emissions mainly from the use of materials
(scope 3).
Direct emissions originate from the carbon
content of our raw materials and from the
use of fuels. Our production has increased
by 10.5% compared to baseline, but direct
emissions have increased only by 3.5% by
improving energy efficiency, replacing fossil
fuels with lower emission options, digitalization
and the positive impact of high production
volumes.
Indirect emissions in scope 2 are caused by
the use of electricity and could be reduced
Working towards
a 1.5 °C future
Outokumpu contributes to climate change mitigation by
offering sustainable stainless steel products that are
durable, long-lasting, and endlessly recyclable. We also work
continuously to minimize our own carbon profile and have
established ambitious science-based targets.
Ice fishing by our
Tornio mill in northern
Finland. Our climate
target is in line with
keeping the global
warming within 1.5
degrees.
Environment | Climate change
Outokumpu Annual report 2021 | Sustainability review 7 / 44
0.0
0.5
1.0
1.5
2.0
202322212019181714–16
2030292827262524232221201918172016
0.0
0.5
1.0
1.5
2.0
2.5
by about 50% with the low-carbon electricity
strategy. Scope 3 emissions increased by
7.5% compared to the base year. The increase
was less than production increase. Electricity
emissions are reported as market-based emis-
sions and also published as location-based
emissions with the specific emission factors for
electricity published by the country statistics.
Other indirect emissions for steel production
are mainly upstream emissions from material
use of for example ferroalloys (except ferro-
chrome which is included in direct and indirect
emissions of scope 1 and 2) as well as lime
and dolomite, transportation and to a lesser
extent from some other scope 3 emissions.
Emissions arising from the externally used
carbon monoxide and external services are
included in scope 3 emissions.
At the moment, there are no estimation
methods for the complex downstream
emissions of stainless steel available. Case
studies from consultants indicate CO
2
net
savings of steel use from life cycle assessment.
Toward a lower carbon footprint
Our total company carbon profile, including
upstream emissions, is the lowest in the
industry. As stainless steel production is energy
intensive, we continuously strive to make
our operations more energy efficient and to
maximize the use of low-carbon electricity
in our operations. Increasing the recycled
material content in our stainless steel and
improving resource efficiency are key factors in
reaching lower CO
2
eq
emissions and reducing
upstream emissions.
We are also working with our raw material
suppliers to decrease our upstream emissions.
We are in the process of integrating CO
2
eq
emissions into purchase decision making and
working on innovations across industries to
discover new ways of reducing CO
2
emissions.
In 2021, the total specific CO
2
eq
emissions
were reduced by 14.3% compared to the
baseline of 2014–2016. Key drivers for
reduced emissions were the increased energy
efficiency and maintaining a high level of
recycled material content. Energy efficiency
was especially improved with digitalization of
processes at our site in Tornio, Finland. Travel
restrictions due to the COVID-19 pandemic
lowered business travel emissions by 75%
compared to pre-pandemic levels.
In 2021, Outokumpu consumed overall 29,300
TJ of primary fuels and electricity with a slight
increase due to much higher production. The
overall energy intensity improved significantly
from 11.0 to 9.9 GJ per tonne crudes steel.
See all data on CO
2
emissions in the sustain-
ability data tool on Outokumpu’s website
Climate commitment to
science-based targets
Outokumpu is the only stainless steel company
committed to the Science Based Targets
initiative (SBTi). The initiative considers
companies’ greenhouse gas reduction targets
science-based if they are in line with the level
of decarbonization required to keep the global
temperature increase below 1.5°C.
Outokumpu’s previous science-based target for
2016–2023 was to reduce scope 1, 2, and 3
greenhouse gas emissions by 20% per tonne of
stainless steel from a 2014–2016 base period.
This target follows the well-below 2°C scenario
convergence criteria of the steel industry’s
decarbonization approach and the electricity
decarbonization approach, where the specific
emission reduction target is 95% by 2050.
Outokumpu’s targets were renewed during
2021. This year we report the existing target
development to show the performance of
last years and the development of the new
science-based target for the next decade. The
updated science-based target is to reduce
scope 1, 2 and 3 greenhouse gas emissions by
42% per tonne stainless steel by 2030 from a
2016 base year.
Low-carbon roadmap
Outokumpu has developed its roadmap to
reach the set targets. Electric arc furnaces,
in use at our mills, are the best available
technique for stainless steel production. The
continuous work to increase energy and
material efficiency, the amount of recycled
material and the amount of low carbon
electricity are currently the main drivers. In
addition to these, several other projects have
also been identified.
In 2021, an internal instruction for calculating
the CO
2
impact of projects was implemented
and a total of 190 improvement projects were
identified to have an impact on CO
2
reduction.
The expectation of business-as-usual scenario
is a 0.5% yearly reduction in energy intensity
by implementation of energy efficiency projects.
Furthermore, the energy intensity performance
Target for science-based target criteria
Outokumpu’s CO
2eq
emission intensity,
tonnes of CO
2eq
per tonne steel
New approved target for
science-based target criteria
Outokumpu’s CO
2eq
emission intensity,
tonnes of CO
2eq
per tonne steel
Upstream CO
2
emission intensity
Transport & travel
Indirect
Direct
Upstream CO
2
emission intensity
Indirect
Direct
All scopes
The new reporting condition of the SBTi resulted in a
recalculation of the baseline and in higher emission intensity
figures.
Reduction target of 20% by 2023
Environment | Climate change
Outokumpu Annual report 2021 | Sustainability review 8 / 44
How are we fighting climate change
Outokumpu committed to a more ambitious Science Based Targets climate initiative to keep global
warming within 1.5 degrees. Our head of sustainability Juha Erkkilä explains our climate target.
By how much have you
already reduced the carbon
footprint so far?
At the end of 2020 we had already reduced
our CO
2
emissions by 17%, so we had nearly
reached our science-based target of cutting
our CO
2
emissions by 20% from 2014–2016
levels and that is why we decided to increase
our ambition. We have reduced our overall
CO
2
emissions from 5 million to 4 million
tonnes since 2016. Reporting on carbon
footprint is not anything new to Outokumpu;
we have done it for several decades and
reported all scopes since 2016. We have
the lowest carbon footprint in the industry,
and our customers save our planet from
10,000,000 tonnes of carbon dioxide by
using our stainless steel – every year.
What can you still do?
There is still plenty to be done. Our next step
is to further reduce our total carbon footprint
by some 30% by 2030 compared to the
2020 level. This target is now being approved
by the Science Based Targets initiative, the
highest standard in credible climate targets.
Outokumpu is the only stainless steel
company with an approved Science Based
Target which we should be proud of, especially
since we have already delivered on these
targets in plan. We can achieve this new
target by using recycled materials, further
improving energy and material efficiency,
increasing the use of renewable and low
carbon energy, improving yield, utilizing waste
heat, taking into account the carbon footprint
of each of our suppliers and selecting the
right suppliers, reducing the carbon footprint
of transport, replacing coke with biomaterials
and liquefied natural gas with biogas and
other fossil-free heating methods such as
electrification.
What about carbon neutrality?
We have said that we will reach it in our own
operations by 2050. At the same time, we
have also set a reduction target by 2030
for the carbon footprint of our suppliers, and
we will work with them to reach that goal.
The ways to reach carbon neutrality are
essentially the same as those in cutting the
emissions by 30%. Using hydrogen – as in the
production of carbon steel – is not an option
in stainless steel as we are not reducing
iron ore in our processes, but we have used
electric arc furnaces for years already and
are now investigating replacing coke with
biomaterials. Coke is the biggest factor in our
own direct emissions, it is used as a reducing
agent to remove oxygen from chromite ore.
We have already developed and tested the
use of bio-based materials, and the results
indicate that coke could be replaced with
bio-based materials that could fit directly into
the current production assets – but as said,
that is still under investigation. We are also
working on carbon-free ferrochrome manufac-
turing and we are confident that we can make
our operations carbon neutral.
of cold rolling mills is expected to reach the
best performance of the last years by 2023.
The strategy to further reduce CO
2
eq
emissions
of electricity is to expand the low-carbon
electricity supply, invest in renewable energy
projects and buy certificates. In 2021,
Outokumpu bought guarantees of origin for
0.5% of electricity used in the EU area from
the energy producers.
Implementation of higher grade of digitalization
shall confirm further yield, energy and material
efficiency improvement for the company’s
operations which directly impacts the CO
2
emissions.
In the Tornio mill, the majority of direct CO
2
emissions originate from coke which is used
as a reductant in the ferrochrome production.
Carbon monoxide is a side-stream from
that reduction process. It is recycled as a
heating fuel in ferrochrome and stainless
steel production and about one third is sold
outside. The use of carbon monoxide creates
CO
2
emissions that are allocated according
to the use either in ferrochrome, stainless
steel or external use. For the short-term
target a significant share of fossil coke is to
be replaced by bio coke and would reduce a
notable amount of CO
2
emissions in Tornio. In
the long run, direct reduction for ferrochrome
could replace completely the use of coal-based
reductants.
Most direct CO
2
emissions come from the use
of heating fuels, i.e. natural gas, propane and a
small amount of oil. In the long run, these fuels
could be replaced either by induction heating
or by the use of carbon neutral fuels, such as
Environment | Climate change
Outokumpu Annual report 2021 | Sustainability review 9 / 44
205020452040203520302 02520202016
0.0
0.5
1.0
1.5
2.0
2.5
biogas. The scenario for the short-term target
includes a change to lower emission fuels as
replacement of propane by natural gas where
reasonable and plans to use carbon neutral
bio-fuels in some operating sites.
A further option to reduce CO
2
emissions in
the atmosphere is the Carbon Capture and
Storage/Utilization (CCS/CCU). Studies with
external partners are ongoing.
Indirect and transport emissions
Over 60% of the greenhouse gas emissions
correlates to the scope 3 emissions mainly
coming from material use as ferronickel, burnt
lime and dolomite as well as other alloying
elements. Alloying elements are used to
generate the different grades and quality
of stainless steel. The roadmap follows two
strategic approaches.
For the short-term target raw material
purchasing is taking the carbon footprint of the
Area Recommended TCFD disclosures
Source of
information in reporting
Governance
Disclose the
organization’s governance
around climate-related
risks andopportunities.
a) Describe the board’s oversight of climate-
related risks and opportunities.
b) Describe management’s role in assessing and
managing climate-related risks and opportunities.
SR 4 Sustainability at
Outokumpu; FS 6
SR 4 Sustainability at
Outokumpu; FS 6–7; GC
15–16
Strategy
Disclose the actual
and potential impacts
of climate-related risks
and opportunities on the
organization’s businesses,
strategy, and financial
planning where such
information is material.
a) Describe the climate-related risks and
opportunities the organization has identified over
the short, medium, and long term.
b) Describe the impact of climate-related
risks and opportunities on the organization’s
businesses, strategy, and financial planning.
c) Describe the resilience of the organization’s
strategy, taking into consideration different
climate-related scenarios, including a 2°C or lower
scenario
SR 6–10 Climate change;
FS 11; CG 24
SR 6–10 Climate change;
FS 11; CG 24
SR 6–10 Climate change;
FS 11; CG 24
Risk management
Disclose how the
organization identifies,
assesses, and manages
climate-related risks.
a) Describe the organization’s processes for
identifying and assessing climate-related risks.
b) Describe the organization’s processes for
managing climate-related risks.
c) Describe how processes for identifying,
assessing, and managing climate related risks
are integrated into the organization’s overall risk
management
SR 6–10 Climate change;
FS 6–7, 11; CG 15–16, 24
SR 6–10 Climate change;
FS 6–7, 11; CG 15–16, 24
SR 6–10 Climate change;
FS 6–7, 11; CG 15–16, 24
Metrics & Targets
Disclose the metrics and
targets used to assess
and manage relevant
climate-related risks and
opportunities where such
information is material.
a) Disclose the metrics used by the organization
to assess climate related risks and opportunities
in line with its strategy and risk management
process.
b) Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions, and
the related risks.
c) Describe the targets used by the organization
to manage climate related risks and opportunities
and performance against targets.
SR 6–10 Climate change;
FS 8
SR 6–10 Climate change;
FS 8
SR 6–10 Climate change;
FS 7–8
Outokumpu’s emissions scenarios,
Scope 1, 2 & 3 emission intensity
Upstream emissions
Direct and indirect emissions
Target 2030:
42% reduction
supplier into account to align the purchasing
to suppliers with lower carbon emissions. The
second approach is the increase of recycling
as steel scrap and recycled metals from any
waste management can replace raw material
use. The amount of scrap depends on the
availability of suitable scrap. Recycling is
followed by the key performance indicator of
recycled material content. For the roadmap an
increase of recycled material use is estimated
and ideally would end up in a mainly circular
stainless steel production.
The transition to the low-carbon roadmap
also contains projects to reduce the
transport emissions. Two projects focus on
switching from road transport to electric train
transport. Outokumpu cooperates with the
communities to realize the projects together.
Further transport emissions reductions will be
implemented in the short-term target period
by using three new vessels that use liquefied
natural gas instead of heavy fuel oil.
Reporting aligned with the
TCFD recommendations
Outokumpu acknowledges the recommenda-
tions from the Task Force on Climate-related
Financial Disclosures (TCFD) and the underlying
framework and acknowledges that there are
financial impacts in a 2°C or lower transitions
scenario. Outokumpu has performed a scenario
analysis according to the stated policies
scenario and a sustainable development
scenario analysis in line with the 1.5 degree
ambition of the Science Based Targets initia-
tive. As soon as a steel sector decarbonization
approach to net-zero scenario is available it will
be taken for further scenario analysis.
Environment | Climate change
Outokumpu Annual report 2021 | Sustainability review 10 / 44
Climate change scenario analysis
The stated policies scenario takes into account
countries’ energy and climate related policy
commitments, including nationally determined
contributions under the Paris Agreement, to
provide a baseline scenario against which
we assess the additional policy actions and
measures needed to achieve the sustainable
development scenario (SDS). The SDS sets
out the major changes that would be required
to reach the main energy-related goals of
the United Nations Sustainable Development
Agenda, including an early peak and subse-
quent rapid reduction in emissions, in line
with the Paris Agreement, universal access
to modern energy by 2030 and a dramatic
reduction in energy-related air pollution. The
trajectory for emissions in the sustainable
development scenario of IEA is consistent with
reaching global “net-zero” CO
2
emissions for
the energy system as a whole by around 2070.
(Source: International Energy Agency or IEA Iron
and Steel Technology Roadmap, 2020)
To translate the steel industry scenarios to the
stainless steel production, it is assumed that
the emission intensity of the steel sector is
the same as the intensity of the stainless steel
production, including scope 3 emissions. The
target year of the scenarios is set to 2050
in line with the company’s carbon neutrality
target. The assumption of the SDS includes
the possible CO
2
reduction projects at different
maturity grades according to the developed
carbon neutral road map. It is assumed in
the SDS scenario that nickel containing
stainless steel grades are produced mainly
by recycling. All projects are to be realized
during the journey in addition to the efficiency
improvements.
Analyzed scenarios have been estimated under
pessimistic, optimistic and realistic imple-
mentation of the projects and technologies
for the carbon neutral roadmap to 2050. It is
expected that compensation or new carbon
capture, sequestration and utilization options
for some remaining amount of emissions are
needed.
Climate change risks
The climate change risks have been analyzed
on today’s situation, as well as on medium and
long-term time scale. The physical risks were
estimated by the Atlas of the Human Planet
of the EU’s Joint Research Center from 2017
and 2019. According to these sources, our
company’s operation sites are not exposed to
or have mitigated relevant physical risks due
to climate change. Extreme weather conditions
can have a limited impact on operations. Water
risk was further assessed on medium and
long-term time scale by the Aqueduct program
from World Resource Institute for 2030 and
2040.
Only limited change in the risk categories of
operation sites can be observed. Especially
the site in San Luis Potosí, Mexico, situated
in an arid area, will be under future water risk
increase. The water management of this site is
in focus and will be further evaluated on future
water stress.
The transition risks to Outokumpu are driven
by changes to climate policies, which can have
adverse impact to Outokumpu’s operating
environment and financial position as by an
increased price of greenhouse gas emissions
and the linked rising electricity price. The risk
on realization of lower emissions technology
will become effective in the coming years. The
risk of losing customers and market share is
assessed and included in the risk management
system.
In the beginning of 2022, Outokumpu
announced that its long-term incentive plans
were linked to the company’s science-based
climate targets.
Opportunities of a
low-carbon society
Climate change is one of the three megatrends
driving our business. The life-cycle of a
stainless steel solution can have a lower
climate impact compared to other materials
such as carbon steel. As stainless steel is
corrosion resistant and a long-lasting material,
it stands out in many applications of renewable
energy production such as in high temperature
power plants, solar farms, and biofuel plants.
This growing market in the transition to a
low-carbon society gives Outokumpu the
opportunity to increase the revenue.
Continuous increasing of material recycling
and energy efficiency as well as change to use
lower emission fuel and electricity have signifi-
cantly reduced the product’s carbon profile.
This is driving the competitive advantage on
high alloy steel with low-carbon footprint that
customers are increasingly demanding.
Investors are looking for financing sustainable
projects or investing in sustainable companies.
The low-carbon profile of Outokumpu’s
stainless steel enables financial advantages
in investments and the transition to the
low-carbon society.
Emissions trading and
fair competition
81% of Outokumpu’s all direct CO
2
emissions
fall under an emissions trading system (ETS).
The main risks of the started trading phase
2021–2030 of the emissions trading system
to Outokumpu involves the pass-through costs
of allowances to the electricity price. The
system has maintained free allocation to avoid
carbon leakage. The free allocation decreased
according to the lower benchmarks and lower
cost pass through factor. Outokumpu forecasts
to have adequate amount of the EU emission
allowances until the end of this decade.
However, future decisions on for example EU
ETS including the carbon border adjustment
mechanism (CBAM), may have an impact on
this forecast.
Allowance prices increased significantly and
are expected to further increase especially as
the Green Deal of the European Commission
requests further greenhouse gas reduction, and
the benchmark for free allocation will decrease.
European Commission is preparing carbon
border adjustment mechanisim and plans to
phase out the emissions trading system. The
discussed proposal is not considering the
stainless steel special conditions as a high
price level and the high impact of the scope
2 and scope 3 emissions. There is a high risk
that the carbon leakage avoidance measure
in the trading system will be removed but
not overtaken by the planned carbon border
adjustment mechanism for stainless steel
industry.
Environment | Climate change
Outokumpu Annual report 2021 | Sustainability review 11 / 44
0
20
40
60
80
100
20212020201920182017
Outokumpu’s operations are energy intensive.
For the recycled steel to melt, it is heated to
over 1,400°C. The process requires a high
amount of electricity as the best available
technique for melting recycled steel is to use
electric arc furnaces.
Outokumpu is continuously striving to make
its production operations more energy and
material efficient. Although the melting of
recycled steel and the production of stainless
steel consume a lot of energy, stainless steel
Origin of electricity, %
Renewable sources
Nuclear
Fossiles
1)
Includes electricity
mix of Mexico for the
first time.
1)
Energy
efficiency in focus
Improving the energy efficiency of our
operations is one of the main drivers to
achieve our ambitious climate targets.
In our mill in Krefeld,
the waste heat
generated during
the operation of the
bright annealing line
is utilized to generate
heat in other parts
of the mill. It is often
small measures for
energy efficiency and
climate protection
which in total
contribute significantly
to make our production
more sustainable.
enables energy efficient solutions from a
life-cycle perspective by saving energy during
its use phase.
Energy efficiency improved
significantly
In 2021, our energy intensity per tonne
stainless steel was reduced by 10%. The
improvement of energy efficiency, calculated
as a sum of different process steps including
ferrochrome, was 2.6% compared to the
baseline 2018–2020. The reached energy
efficiency improvement corresponds to a
yearly saving of 0.18 million MWh in 2021. In
2021, the energy efficiency target was helped
by digitalization projects in Tornio and higher
volumes compared to the previous year.
Outokumpu’s target is to achieve an improve-
ment of energy efficiency by 0.5% each year by
2030, reported as improvement compared to
base-period of 2018–2020. In 2021, energy
efficiency was 3.15 MWh/t against the target
of 3.26 MWh/t. Additionally, cold rolling
mills are expected to reach the level of best
performance of the last seven years by 2023.
The energy efficiency target for 2030 is set to
reach 3.00 MWh/t.
The biggest energy-saving potential lies in the
optimization of yield. Yield refers to how much
sellable products we can make of the metal
Environment | Circular economy & resource efficiency
Outokumpu Annual report 2021 | Sustainability review 12 / 44
Increasing the share
of wind power
In 2021, Outokumpu and Gasum signed
two new 10-year power supply agreements
for renewable wind power. The contracted
wind power energy covers almost entirely
the electricity consumption of Outokumpu’s
Kemi mine. According to the agreement,
deliveries will begin in the summer of 2023.
The agreement is a step towards achieving
our emission reduction targets. Increasing
the share of low-carbon electricity is one of
the most important ways to achieve carbon
neutrality by 2050.
“With the new agreement, we can further
increase the already high share of
low-carbon electricity in our production.
The wind power agreement is a natural
continuation of good cooperation with
Gasum. We are currently working together
on the LNG terminal in the Port of Tornio,
which has enabled us to replace propane
in our production with liquefied natural
gas,” says Mika Orpana, Head of Energy
and Utilities, General Procurement at
Outokumpu.
raw materials added to the process. Energy
reduction and efficiency plans are included in
environmental management systems at all our
sites.
Toward low-carbon electricity
Outokumpu has centralized energy procure-
ment in order to secure a sufficient energy
supply, to ensure predictable, competitive,
and stable energy prices, and to optimize the
energy portfolio also on low-carbon electricity.
In 2021, 80% of our electricity sources came
from low-carbon (renewable and nuclear)
sources. Outokumpu participates in several
programs that promote the use of low-carbon
electricity such as wind power, hydropower,
combined heat and power as well as nuclear
power. In 2021, Outokumpu signed two
deals to increase wind power in electricity
procurement by securing 10-year wind power
agreements with Gasum in Finland.
As primary energy sources, we use natural
gas, propane, or other fuels, such as diesel.
Fossil fuels cover about 80% of our total fuel
consumption. Outokumpu does not consume
fuels from renewable sources in production
processes today, but we utilize our own
recovered carbon monoxide process gas which
accounts for 20% of our total use of fuel.
Process gases and waste heat are also used to
heat buildings on sites.
For example, the combined heat and power
plant in Tornio produces heat for the Tornio
site out of recovered process gases, and
in Dahlerbrück, Germany, we have our own
hydropower plant to generate some 10%
of the electricity needed in the production.
Outokumpu is a shareholder in a wind power
park in Tornio and in the Fennovoima nuclear
power plant project in Finland. Fuel switch to
lower carbon emission fuels is ongoing. Natural
gas is in use at our sites in Germany, Mexico,
the US, the UK and Finland. We still have some
improvement potential left in Sweden where
we are actively studying options for alternative
fuels.
See more details in the sustainability data tool
on Outokumpu’s website
Energy used in operations
Gigawatt hours, GWh 2021 2020 2019
Electricity 4,641 4,371 4,490
Carbon monoxide gas 700 625 670
Natural gas 2,106 2,019 2,011
Propane 546 508 562
Diesel, light and heavy fuel oil and other 153 159 186
Energy 8,145 7,682 7,919
Energy use in GJ per tonnes crude steel 9.9 11.0 10.9
Market-based electricity emission
factor, kg CO
2
eq/
MWh
0
50
100
150
200
250
300
20212020201920182017
* 0.5% of electricity use in EU market is coming
with guarantees of origin from ownerships in power
production
*
Environment | Circular economy & resource efficiency
Outokumpu Annual report 2021 | Sustainability review 13 / 44
Operating at the core
of the circulareconomy
Stainless steel is a durable material that fits perfectly
into the circular economy. Recycling saves resources, and
stainless steel is made of recycled materials. At the end of
its life cycle, stainless steel is fully recyclable, without any
quality degradation.
In a way, our stainless steel mills are significant
recycling facilities, producing new products
out of recycled steel, recovering and recycling
everything reasonable in our production, and
finally selling by-products from the manufac-
turing process to replace natural resources.
Highest recycled material
content in the industry
Recycled steel from both stainless and carbon
steel is our most important raw material.
Increasing the recycled material content of
stainless steel is the most efficient way for
Outokumpu to reduce the overall environ-
mental footprint.
The recycled steel content of our stainless
steel, defined according to ISO 14021, was
86.3% in 2021. This includes pre- and post-
consumer scrap. Including the use of recycled
metal from our waste streams, the recycled
material content of our products was 90.1%
in 2021 against our target of 92.5% for 2021.
The result was impacted by the low availability
of steel scrap. We aim to reach and maintain
the high level of 92.5% until 2023.
One key factor in reaching such a high level
of recycled material content is the recovery
and recycling of metals from the production
processes, e.g. from dust and scales. We
Waste management
Tonnes
Generated Diverted from landfill Landfill
Non-hazardous waste 1,509,257 1,115,902 393,356
Scales 12,697 12,697 0
Slag 336,862 0 336,862
Tailing sands 1,069,265 1,069,265 0
Other waste 90,434 33,940 56,494
Hazardous waste 147,772 76,390 71,382
Steelmaking dust 73,794 56,182 17,612
Oily sludge 9,346 8,543 803
Regeneration & hydroxide sludge 35,334 8,711 26,624
Neutralization sludge 22,919 0 22,919
0ther waste 6,379 2,954 3,425
Our most important
raw material is
recycled steel, pictured
here in our scrap yard
in Avesta, Sweden.
Increasing the recycled
material content of
our stainless steel is
the most efficient way
for us to reduce our
overall environmental
footprint.
Environment | Circular economy & resource efficiency
Outokumpu Annual report 2021 | Sustainability review 14 / 44
20212020201920182017
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Circular economy in
action in Tornio
The modern stainless steel industry is
a prime example of circular economy in
action. In fact, Outokumpu’s Tornio mill
is Europe’s largest material recycling
center. Tornio site processes annually over
1 million tonnes of recycled steel, corre-
sponding to around 1.4 million scrapped
cars.
“When you buy a new washing machine you
may get your old pot back in a totally new
form. Your good old friend from the kitchen
may have ended up to Outokumpu Tornio
mill and been melted into recycled steel
and further used by a washing machine
manufacturer as part of a brand-new
product”, explains Niklas Wass, Executive
Vice President, Operations, business area
Europe.
In addition to recycled steel, side streams
from the production, such as dust from
smelting and scales from rolling are
recovered and reused as much as possible.
Other by-products are also utilized to the
fullest. For example, the slag generated
as a by-product of Tornio’s ferrochrome
production can be utilized almost
completely in road construction insulation
or in concrete production.
Total waste development,
tonnes per tonne steel
Recycled
Recovered
Landfilled
Tailing sand
Tailing sand
Tailing sand
Tailing sand
Tailing sand
are continuously looking for best ways to
recycle the metals of our melt shop dust. Dust
recycling increased especially at our site in
Calvert, the US. These side streams are either
treated on site or by an external facility for
recycling in our melt shops. Metal recycling
is the main driver of the reduction of the
upstream material emissions (scope 3).
In addition to metals, other materials, such as
slag formers, acids, and gases, are needed in
the production process although they do not
become part of the stainless steel products.
Some of these input materials are needed
to minimize or prevent emissions into the
environment. As far as reasonable, these are
also recovered and recycled in the process.
For instance, the used acids are continuously
regenerated for reuse, and the hydrogen from
the bright annealing process is recovered in
the incineration of the process furnace.
Recycling as much as possible
In our production, all production material
streams are studied carefully to find the means
of fully recycling, reusing, or selling them as
by-products. Our approach to reaching lower
waste amounts is twofold: we aim to reduce
the total volume of landfill waste from our
own operations and increase the proportion of
materials sold as by-products.
The biggest waste items at Outokumpu are slag
that are not used, tailing sand from the mining
operation, and sludges, dust, and scales from
the stainless steel production. While waste
is recycled whenever possible in our own
production, our production still generates
landfill waste. Therefore, we decided to set
a target for waste (other than slag) going to
the landfill to be reduced by 0.5% per year. In
2021, all waste to landfill per tonne stainless
steel was reduced from 0.59 tonnes to 0.52
tonnes.
The amount of tailing sands from the mining
operation slightly increased in 2021 compared
to the previous year, as the production
of chrome concentrate increased. Waste
management is in our focus and we reuse,
recycle and recover as much material as
reasonable. Scales and metals from precipi-
tator dust or from slag are recycled and acids
are regenerated. Other recovered materials like
lime, bricks, and some sludges were mostly
used in our melt shops to substitute virgin
additive materials like slag formers. Tailing
sand is deposited in the pond of the mining
area itself.
Outokumpu’s waste management is described
in more detail on Outokumpu’s website
Turning slag into by-products
Outokumpu sold or used 1.24 million tonnes of
slag as the main by-product of operations. Slag
is an essential material in the steel melting
process, and it is made from lime or other
natural minerals.
Outokumpu has developed slag-based mineral
products for road construction, refractory,
concrete production and for water treatment.
The use of our slag by-products reduces
the amount of landfilled waste, saves virgin
materials, and leads to lower CO
2
emissions.
For example, in road construction, slag use is
an environmentally and economically sustain-
able solution.
In 2021, Outokumpu established a company-
wide working group to develop value-added
products of slag and other sidestreams.
In 2021, the use rate (including use, recovery,
and recycling) of all slag was 79.0%. The
remaining share of slag was sent to landfill.
The use rate depends on the local market for
construction materials and on the acceptance
of secondary material instead of virgin
materials.
Environment | Circular economy & resource efficiency
Outokumpu Annual report 2021 | Sustainability review 15 / 44
0
10
20
30
40
20212020201920182017
0
10
20
30
40
50
60
20212020201920182017
Environmental
impacts minimized
We aim to reduce our impact on the environment by
proactively developing our production processes, energy and
material efficiency. Our growing environmental efficiency is
based on long-term efforts and continuous improvement.
The biggest environmental impacts of stainless
steel production are dust emissions from melt
shop and ferrochrome production processes
into the air, water use and discharges from
production, use of direct and indirect energy,
and the waste created in the production
process.
Environmental compliance
Our environmental network follows closely the
environmental performance of our operations,
their permit status and legal compliance. The
network conducts internal site audits in the
production units according to risk screening.
Environmental incidents have been reduced
continuously. In 2021, there were 16 permit
breaches*, but all were temporary and did not
have a significant impact on the environment.
Outokumpu reported each incident to envi-
ronmental authorities, carried out corrective
actions immediately or resolved the incidents
together with the authorities. No environmental
damage was detected.
As our main raw material is recycled steel, we
take all possible precautionary measures to
check the input material for any unwanted
content, such as mercury and radioactive
contaminated material. In 2021, there were
Steel melt shop
particle emissions, grams/t
Total amount of environmental
incidents at operational sites
One of the main
attractions in
northern Finland is
the Tornio river with
its thriving ecosystem
and economy. It is
one of Europe’s
largest salmon rivers.
* One case was reported after the end of the reporting
period.
Includes all environmental incidents in addition to the
permit breaches.
Environment | Environmental impacts
Outokumpu Annual report 2021 | Sustainability review 16 / 44
eight sources detected. Five of them could
be separated from scrap supply, three were
input in the process. All of the incidents
were dealt with in accordance with authority
guidance and did not cause exposure. We work
together with our suppliers to decrease the
share of unwanted materials in our production
processes. All input material, the liquid steel
and waste gas of the melting process, is
controlled regarding radioactive contamination.
Dust emissions remained low
Steel melting and rolling processes generate
dust and scales that are collected, treated
and, whenever possible, recycled in our own
production. For example, raw material metals
(chromium, nickel, and molybdenum) are
recovered from dust, sludges, and scales in
specialized internal and external recovery
plants. Our dust filtering systems are extremely
efficient and remove 99% of the particles.
The measured particle emissions from all of
our production processes were 230 tonnes
in 2021. A large share of the particles, 183
tonnes, were emitted from the ferrochrome
production process. However, the emission
measurements include high uncertainty
causing a remarkable fluctuation in the results
year by year. The level of dust emissions from
the melt shops is within the limits of environ-
mental permits and in line with BAT levels. No
significant further reduction is expected.
Water withdrawal and discharges
Million m
3
2021 2020 2019
Surface water 32.3 46.1 45.4
Sea water 13.1 n/a n/a
Municipal water 1.2 1.1 1.2
Groundwater 2.3 2.6 2.4
Rainwater 1.9 2.4 1.8
Water withdrawal by source 50.7 52.2 50.7
Water discharges by type and destination
Cooling water out 14.5 13.2 13.4
Wastewater out 21.1 22.1 22.4
Discharge to surface water 13.3 20.9 21.1
Discharge to sea water 6.7 n/a n/a
Emissions to water
Metal discharges to water, tonnes 30 44 39
Nitrogen in nitrates, tonnes 1,220 1,070 1,046
Water is reused as
much as possible
Water is used in our production process in
annealing, pickling, and cooling. The withdrawal
of water is metered and rainwater is estimated
by average rainfall and the surface of captured
rainwater. It is treated and recycled as much
as possible, and only some is discharged to
the municipal wastewater system.
All wastewater is treated in the company’s
own treatment plants or in municipal water
treatment systems before it is discharged.
The main discharges into water are metals
and nitrates. The discharge is measured and
supervised by the authorities. Out of the 16
permit breaches that occurred in 2021, six
cases were minor non-compliances in waste-
water. They were coordinated with authorities,
immediately removed and analyzed.
Wastewater treatment depends on the
contamination of the wastewater. The water
is treated directly in the water circle at the
process step and before discharge. According
to the needs, treatments are oil skimming,
neutralization, flocculation, and sedimentation
to extract metals and, when necessary, a Cr(VI)
reduction process. Nitrate is often treated
in the municipal water treatment to reduce
discharge. In these cases, the steel allocated
discharge cannot be monitored. The water
impact is managed by the municipal treatment
operators.
The water used in the production is mainly
surface water from rivers and sea and often
includes rainwater. The impact of water
withdrawal is evaluated at sites where river
water is used, and where data on the river
water is available. The impact was screened by
the percentage of withdrawn water compared
to the river flow on a yearly basis in 2020.
None of the sites had an impact on the river,
meaning the withdrawal was below 5% at all
sites. The river water quality in Avesta, Sweden,
remained unchanged with a very limited impact
according to an impact study on the river
Dalälven.
Outokumpu operates a cold rolling mill in San
Luis Potosí, Mexico, in a dry, arid area, where
groundwater is a scarce resource for people.
The groundwater withdrawal accounts for about
0.27 million m³ and the freshwater discharge
to municipal waste water system was at about
0.07 million m³. Water recycling and treatment
at this site are especially ambitious to
minimize the groundwater impact. According to
the water risk assessment, future water stress
change will be further evaluated.
Limited impacts from the mine
Outokumpu operates the only chrome mine
in the EU located in Kemi, Finland. We are a
member of The Finnish Network for Sustainable
Mining, and Kemi mine is committed to the
Finnish sustainability standard for mining.
The environmental impacts of the mine are very
limited due to the nature of the process. The
minerals are in oxide form and very stable with
only a minimal amount of sulfur compounds.
Chemicals are not used in the beneficiation
process, which is based on gravity separation.
The Kemi mine is almost self-sufficient with
water as it recycles water on site and collects
rainwater. The underground mine takes
drilling water from old open pits (rainwater),
and drilling water is also recycled inside the
Environment | Environmental impacts
Outokumpu Annual report 2021 | Sustainability review 17 / 44
The rich birdlife
makes the Kemi
mine area unique
The unique ecosystem of the Kemi mine
area has created a diverse environment for
different bird species. The area is popular
with local bird watchers, and Outokumpu’s
cooperation with the local bird watch
association Xenus has continued for
decades.
The association monitors the birds in the
area and organizes various bird tours for
its members. “The basin area of the Kemi
mine is very rich in birds,” says Pentti
Rauhala, the association’s long-time
member, who has been actively monitoring
the birds in the mining area since the
1950s.
“During the breeding season, we visit the
area almost daily. You see something great
almost every time,” says Rauhala. Various
waterfowl, ducks and waders are the most
common bird species in the area and, for
example, herons nest in the area.
underground mining process. All dewatering
from the mine is pumped to the closed circuit
of the tailings site and concentrator plant on
the surface level. Furthermore, a significant
amount of 1.0 million m³ of rain and snow
melting waters were collected in the process in
2021. The Kemi mine discharges 2,980,000
m³ water from the area, including rainwater,
whereas the water intake from the municipal
supply is only 19,200 m³.
During 2018–2021, the Kemi mine carried out
a project to increase the resource efficiency
of the mine. The project was about the depth
extension and building underground mine
infrastructure from 500-level to 1,000-level
(meters) below surface. The area of the mine
site has not been expanded.
The biggest impact on the environment from
the mine is nitrates in the discharge water
which originate from explosives. However,
the amount of nitrates is reduced by natural
processes in the internal water recycling
system of the mine site. Another environmental
aspect is chlorites from underground mine
water that originates from natural geological
formations. Land use of mining is limited to the
existing mining area as mining is underground.
Tailing sand is deposited in the tailing ponds
of the mine area which will be landscaped as
forest when full.
Environmental impact assessment process
continued at the Kemi mine in 2021. In the
process, the mine is looking to find more
sustainable processes related to material
recovery.
Areas of high biodiversity value
Site
Site area
in km
2
% of total
owned land
Calvert, US 4.69 18.8%
Dahlerbrück, Germany 0.063 0.3%
Kemi, Finland 9.16 36.7%
Tornio, Finland 6 24.0%
Biodiversity
Outokumpu is committed to supporting
biodiversity and takes it in consideration in its
decision-making. The main way for Outokumpu
to contribute to maintaining biodiversity
globally is through the reduction of greenhouse
gas emissions. The production of stainless
steel does not occupy or reserve large areas of
land or have a significant effect on the biodiver-
sity of the surrounding natural environment.
Outokumpu’s production sites are not located
in sensitive areas. However, Outokumpu has
identified areas of high biodiversity value that
are owned by the company or adjacent to our
sites. These sites comprise 80% of the total
owned land.
Outokumpu’s site in Tornio, Finland is located
near Natura protected water areas. No risk to
the protection basics of those areas have been
identified according to Natura assessment
conducted in 2020. The Natura assessment
has taken into account the effects of operation
on the protection criteria for Natura sites in
the vicinity of the Tornio industrial area on the
Finnish and Swedish sides. Some very rare
biotopes have been found just by the mill area
as well as some protected animals, such as a
frog species and otters.
The Kemi mine is adjacent to two Natura
protected peat and wetland areas but no
indication, claim or report of any negative
impact of mining activities on biodiversity have
been identified. In 2021, a Natura assessment
was done to the nearby Kirvesaapa Natura
area. The assessment noted that the current
production has no significant impacts to the
area. Also an ecological survey conducted
during 2020–2021 found several different
habitat types, vegetation and bird faunas in the
nature around the mine area with no impacts
from the mine. The Kemi mine cooperates with
local ornithological society to monitor the local
biodiversity. During 2021, the Kemi mine and
Tornio operations have both done fish plantings
in addition to permit obligations to increase
biodiversity.
In Dahlerbrück, Germany a protected area
is partly located on the company’s property.
There are e.g. endangered deciduous forests
and natural silicate rock biotype with some
endangered animal habitats and plant species
such as crinkled hairgrass and fern.
In Calvert, Alabama, the US, some 80 hectares
of the property is defined as wetland including
some restrictions on land use. The site
management has identified as a biodiversity
aspect that part of the wetland area is home to
a wide array of wildlife, like wild turkeys, bears,
fox squirrels, gopher tortoises and snakes,
among other species.
Environment | Environmental impacts
Outokumpu Annual report 2021 | Sustainability review 18 / 44
Strengthening
our sustainable
supplychain
Sustainability is at the heart of our business and our
stakeholders require assurance that the materials
for their applications are procured and produced in
an ethical and responsible manner.
Outokumpu’s supply chain activities are
guided by our Code of Conduct, Supplier
Requirements and our Corporate Responsibility
Policy. Outokumpu is also committed to the
Modern Slavery Act, the United Nations Guiding
Principles on Business and Human Rights
(UNGP) and we are implementing the UN’s
Protect, Respect, and Remedy Framework, as
well as the OECD Due Diligence Guidance for
Responsible Supply Chains of Minerals from
Conflict Affected and High-Risk Areas.
Strict requirements on
ourselves and our suppliers
As our customers require a lot from us, we
place the most stringent requirements on
ourselves, and we require the same from our
suppliers. All suppliers and subcontractors
are expected to comply with our Code of
Conduct and meet our Supplier Requirements,
which require our suppliers to respect and
protect human rights as set forth in the ILO’s
Declaration on Fundamental Principles and
Rights at Work, the International Bill of Human
rights, and specifically the rights of particularly
vulnerable groups, such as indigenous peoples.
Suppliers are required to have processes and
policies in place that ensure the health and
safety of their employees, the protection of the
environment, and the selection of sub-suppliers
that also fulfil our requirements.
By accepting Outokumpu’s Supplier Require-
ments, our suppliers agree to answering
self-assessments and to being audited on site.
Outokumpu’s suppliers are onboarded and
monitored in accordance with our Know Your
Business Partner Instruction.
In 2021, Outokumpu had around 6,880
suppliers. In our significant production units,
around 50% of the spend was made on local
suppliers.
Our procurement activities are divided into
general procurement and procurement of raw
materials. Raw materials are all ingredients
that are in the steel we produce. General
procurement purchases everything that is
needed for our production activities and
everything else we do at Outokumpu.
A year of accelerated progress
2021 was a year of acceleration for
Outo kumpu’s sustainable sourcing practices.
During spring, Outokumpu’s Code of Conduct
and the Supplier Requirements were
updated, adding important sustainability
elements and requirements for our suppliers.
General procurement engaged in a project
assessing their key suppliers with an updated
We are part of a
global supply chain by
producing stainless
steel for leading
brands in demanding
industries around the
globe. Our customers
expect us to provide a
traceable supply chain
and, therefore, we
have in place stringent
requirements on our
suppliers, too.
People & society | Supply chain
Outokumpu Annual report 2021 | Sustainability review 19 / 44
and the US where our melt shops are
located. The main alloying element, chromium,
originates from our own chrome mine that
differentiates us from our competitors. Our
mine in Kemi, Finland is the only chrome
mine in the EU and we produce ferrochrome
for all our steel melt shops and for sale. We
are one of the few companies in the stainless
steel industry with an integrated production
– covering the production from the mining of
chromite and ferrochrome production to the
melting, hot rolling, cold rolling, and finishing
of stainless steel. In 2021, Outokumpu had
around 180 raw material suppliers in 52
countries.
Material and
service suppliers
Outokumpu’s supplier countries
Risk-based approach
Onboarding and monitoring of raw material
suppliers follows a risk-based approach. The
countries in which our suppliers operate are
mapped against country-based risk indices,
against the countries listed in the Dodd Frank
Act Section 1502, as well as conflict-affected
and high-risk areas (CAHRAs) as published by
the European Union. 100% of our raw material
suppliers were assessed with this risk-based
approach. In 2021, 21 of Outokumpu’s raw
materials suppliers operated in countries with
an increased risk, covering 22% of the total
spend on raw materials.
Sustainability self-assessments
It is our target to assess all our active raw
material suppliers regularly with sustainability
self-assessments. In autumn 2021, we
partnered with supplier sustainability platform
EcoVadis to evaluate the sustainability
performance of our raw material suppliers in
depth and on a regular basis. 19 suppliers
had valid scorecards in 2021, with an average
rating score of 51 (scale 1–100), covering 33%
of the spend. The suppliers not yet assessed
were prioritized for assessment in 2022 using
a risk- and spend-based approach.
Visits, on-site audits, and impact
assessments with sustainability focus
Suppliers are selected for visits and on-site
audits with sustainability focus based on a
number of criteria, including their risk level,
their results from the due diligence process
during onboarding, their EcoVadis performance,
spend and potential sustainability-related
incidents.
self-assessment. During autumn, raw material
procurement employed a supplier sustainability
manager, signed a contract with supplier
sustainability assessment platform EcoVadis,
extended the supplier evaluation scorecard
with sustainability and continued the collection
of supplier and product specific CO
2
eq
emission
intensities for selected products. Towards
the end of the year, resources in the supplier
sustainability management team in raw
material procurement were increased with
three additional positions in the team.
Outokumpu also engaged with an external
partner to assess the situation at one of its
Brazilian suppliers, after a report published
by the Finnish NGO Finnwatch in February
2021. In addition, Outokumpu conducted the
human rights risk assessment in accordance
with UNGP together with a third-party advisor,
assessing the risks that Outokumpu imposes
on human rights, both with its own operations,
as well as with its purchasing activities. Read
more about the human rights risk assessment
in Human rights management section in this
report.
Raw material
procurement
Our most important raw material is recycled
steel, which primarily originates from Europe
People & society | Supply chain
Outokumpu Annual report 2021 | Sustainability review 20 / 44
2021 was still affected by restrictions to travel-
ling due to the COVID-19 pandemic. During the
autumn, one supplier was audited by certified
Outokumpu personnel due to a radioactivity-
related incident. The audit concluded with
very good results, highlighting only a few
improvement potentials. As a consequence
of Finnwatch’s report on Outokumpu’s supply
chain in February 2021, one supplier from
Brazil was subject to a focused on-site impact
assessment. The assessment was conducted
by a third party specialized in sustainability
and human rights and accompanied by an
Outokumpu representative.
For 2022, several more impact assessments
for suppliers in high-risk countries are planned
and will be conducted together with third-party
experts. Allegations have been raised related
to one of our suppliers in Guatemala and the
impact assessment has been started in 2021
and will include a visit to Guatemala in early
2022. During the assessment we do not only
visit our supplier, but we also engage with
external stakeholders, such as the affected
communities, NGOs or other institutions.
Supplier performance evaluation
and improvement support
During 2021, 16 of Outokumpu’s raw material
suppliers were evaluated towards their overall
performance, covering 61% of the spend. The
average score was 89 (scale 1–100). The
evaluation focused on four areas: procurement,
quality, technology, and logistics. Towards the
end of the year, Outokumpu’s raw material
procurement extended its supplier performance
evaluation. In addition to the four existing
areas, the sustainability performance of a
supplier is considered in the evaluation. The
sustainability performance is measured with a
number of criteria, including the score reached
in the EcoVadis self-assessment. The new
criteria will be in use from 2022 onwards.
Conflict minerals
The term “conflict minerals” refers to minerals
originating from conflict-affected and high-risk
areas. Especially tin, tantalum, tungsten, and
gold (the “3TG”), but also cobalt are linked to
risks in the supply chain. Those risks include
the risk of contributing to or being associated
with significant adverse impacts, including
serious human rights abuses and conflict. Outo-
kumpu adds tungsten and cobalt to a small
number of its products. Outokumpu takes into
account the OECD Due Diligence Guidance on
Responsible Supply Chains of Minerals from
Conflict Affected and High Risk Areas. New
and existing suppliers of tungsten and cobalt
are requested to provide information on their
supply chain using the reporting templates of
the Responsible Sourcing Initiative. In 2021, all
suppliers of tungsten and cobalt provided the
reporting templates, and no tungsten or cobalt
originated from conflict-affected and high-risk
areas.
Capacity building
During 2021, capacity building in the areas
of social and environmental issues within raw
material supply chains took place in form of
five trainings related to the topics sustainable
procurement strategy, CO
2
emissions, supplier
management including sustainability, EcoVadis
concept, and human rights. 50% of category
managers and buyers participated in all
trainings, and everyone participated in at least
one of the trainings. The average participation
rate was 71%.
General
procurement
General procurement supplies all of the mate-
rials and services regarding all of the produc-
tion sites in Europe. General procurement
purchases production consumables, energy
and utilities, process and auxiliary equipment,
spare parts, general supplies, maintenance,
and other services and transportation.
In 2021, the general procurement had
approximately 6,700 suppliers in 49 countries.
256 suppliers have been qualified as key
suppliers, and they cover over 60% of the total
spending.
Risk-based approach
The general procurement applies a risk-based
approach in supplier management. A supplier
shall be qualified before they can be approved
and added to the Outokumpu supplier portfolio.
In the qualification process, the potential
risks and/or opportunities are identified and
evaluated. This ensures that the suppliers
comply with the Outokumpu Supplier Require-
ments and can provide conforming products or
services on a consistent basis.
When introducing a new supplier, the supplier
needs to confirm by signing a letter of
confirmation that they fulfil the Outokumpu
Supplier Requirements, Code of Conduct and
ethical principles.
Suppliers from major sanctioned countries
as well as countries with limited regulatory
quality, rule of law, control of corruption and
environmental performance may cause a higher
supplier risk. Therefore, supplier qualification
prior to supplier approval and periodic
requalification of the existing suppliers in risk
countries is required.
Risk countries are defined as major sanctioned
countries as per Know Your Business Partner
Instruction. Countries are classified as high,
medium, or low risk categories. The compli-
ance and sustainability teams are consulted for
defining the risk countries.
In 2021, financial screenings for 145 new and
existing suppliers were conducted in general
procurement. Of the screened suppliers, four
are located in medium or low risk countries,
which are defined in the Know Your Business
Partner Instruction. Screening is always carried
out for new suppliers as well as for existing
suppliers when risks are identified, for example
in a financial credit or management change.
In addition, the master data team carries
out compliance screening as a part of the
onboarding process for all new suppliers, and
the compliance team does periodic screenings
for all active suppliers as well as conducts
case-by-case enhanced screenings, as required.
Sustainability self-assessments
General procurement makes self-assessments
to evaluate suppliers. The self-assessments
include auditing the transparency of the
supplier’s production chain from the suppliers’
raw materials to the delivery of finished
products and it covers the areas of ethics and
sustainability, occupational health and safety,
environmental management, quality, supply
and production control, supply chain and
People & society | Supply chain
Outokumpu Annual report 2021 | Sustainability review 21 / 44
Summary of actions in sustainable raw material sourcing taken in 2021 and planned for 2022
2021
Commitment to
the UNGP
• Commitment to the United Nations’ Guiding Principles of Business and Human rights (UNGP)
• Policy review to reflect this commitment
• Renewed Code of Conduct and Supplier Requirements with emphasis on human rights
• All personnel trained on the renewed Code of Conduct
Human
rights / UNGP
implementation
• Human rights risk assessment with Deloitte in accordance with the UNGP completed
• Capacity building on human rights in procurement
• Engagement of external experts for assessing suppliers’ human rights impacts
• Identification of high-risk suppliers for on-site assessment program with external experts
Supplier
requirements
and onboarding
• Renewed Supplier Requirements with emphasis on human rights
• Amendment to the Supplier Requirements for raw material suppliers
• Integration of sustainability into our supplier evaluation
• Review of suppliers’ onboarding process and intensified human rights due diligence
Supplier
monitoring
• Increased resources in supplier sustainability
• Development of incident management process
• Engagement of sustainability platform EcoVadis to assess suppliers
• Supply chain mapping extended to beyond our direct suppliers
• Collection of supplier-specific CO
2
emission intensities for selected raw materials started
• Three on site-visits after the ease of travel restrictions
• Preparation for next human rights impact assessment including site visit in Guatemala
2022
Human
rights / UNGP
implementation
• Finalization of Human Rights Policy
• Integration of human rights risk assessment and due diligence process into existing risk
management
• Definition of actions for identified salient human rights risks, including learnings from on-site
assessment in Brazil
• Intensified human rights due diligence to be implemented in the supplier onboarding process
• Assessment program for identified high-risk suppliers together with external experts
Supplier
requirements
• Development of the Outokumpu Supplier Code of Conduct
• Contract review to ensure that all contracts cover sustainability elements
Supplier
monitoring
• Continue collection for supplier-specific CO
2
emission data
• Increase the number of suppliers into EcoVadis rating system
• Evaluate suppliers with new evaluation template including sustainability
• Increase number of on-site visits, audits and impact assessments
supplier management and company manage-
ment. The self-assessment questionnaire is
available on Outokumpu’s website.
Self-assessments are carried out for key
suppliers on a regular basis as well as for new
and existing suppliers when quality, production,
sustainability, or similar kinds of risks or claims
have been identified. If there have been many
claims for the same supplier during a short
time period, it is always considered imperative
to carry out a self-assessment and an on-site
assessment.
In 2021, the general procurement function
executed an extensive self-assessment
program. Approximately 220 self-assessment
questionnaires were sent out to our key
suppliers. By end of the year, 182 answers had
been received and evaluated. The assessment
reports are shared with the suppliers, and
corrective actions for non-conformities as
well as improvement opportunities are
agreed upon. A remarkable number of good
practices were also noted in the evaluations.
This was a quantum leap forward in quality
and sustainability management with our key
suppliers, which is one of the strategic focus
areas for 2022. In addition to the key supplier
self- assessments, a couple of other self-
assessments have been carried out regarding
the quality or reputational risk or when a new
supplier was introduced in 2021.
Visits and on-site audits with
sustainability focus
Due to the COVID-19 pandemic, no on-site
audits were conducted during 2021. As a
continuation for self-assessments, on-site
audits will be continued when the pandemic
situation allows for it. Suppliers for on-site
assessments are selected based on the results
of the self-assessments. Both self-assessments
and on-site audits are used as continuous
improvement tools and for fostering closer and
more open relationship between the suppliers
and Outokumpu.
Supplier performance evaluation
and improvement support
To drive the continuous improvement of
suppliers, the key suppliers’ performance is
regularly evaluated by scorecards to identify
improvement opportunities. Suppliers are
assessed by using the following criteria:
technology, quality, supply, cost, safety,
environment, and financial risk. The perfor-
mance evaluation is carried out together with
the stakeholders from the production and led
by the category manager. The results are used
for defining the improvement actions with the
supplier. The supplier performance assessment
was carried out for 54 key suppliers in 2021,
with an average rating score of 3.6 (on a scale
of 0 to 5).
Capacity building
Workshops about the self-assessments have
been arranged for the category managers
relating to the self-assessments results, evalua-
tion criteria and minimum requirements in the
self-assessment categories including ethics,
sustainability, and human rights.
People & society | Supply chain
Outokumpu Annual report 2021 | Sustainability review 22 / 44
What happened?
Finnwatch reported problems with Vale’s Onça
Puma mine in Brazil and criticized our supply
chain monitoring. We took the information
seriously and immediately started to investi-
gate the issue.
What have you done during the
year to act on the situation?
A lot. Immediately after the report, we decided
to let an external partner conduct an inde-
pendent impact assessment into Vale’s Onça
Puma mine in Brazil. This assessment was
completed during 2021. We also developed
and described a process for ESG incidents, to
make sure that reported cases are handled
with appropriate attention and actions.
On top of that, we have enhanced our entire
supplier monitoring. We have reviewed our
Supplier Requirements and set a stronger
focus on social responsibility and human
rights, including the UN Guiding Principles on
Business and Human Rights. We integrated
sustainability as a criterion in our supplier
evaluation and we started to map our supply
chain beyond our direct contract partners.
We also conducted the human rights risk
assessment in accordance with the UNGP,
together with experts from Deloitte. The
assessment focused not only on Outokumpu’s
own activities, but also on the risks within our
supply chain.
What has the biggest
change been?
Maybe the biggest change has been that
Outokumpu has now partnered with supplier
sustainability platform EcoVadis to evaluate
the sustainability performance of our raw
material suppliers on a regular basis. The
results of the ratings are considered in
our supplier scorecards, together with
procurement performance, quality, logistics
and technology. They are also an input to
our on-site audit planning – with easing
travel restrictions we are going to pick up our
activities in this area.
Might there be more
cases like Vale?
We do have other suppliers in high-risk
countries in our supply chain. Therefore, we
started last year a human rights impact
assessment program to investigate our raw
material suppliers in high-risk countries. We
started with Brazil and now continue with
Guatemala, with other countries to follow. We
will be supported by the external experts that
supported us in Brazil.
Have you visited Vale
and the mine?
Yes, we have been in dialogue with Vale and
affected people. We have met with Vale, the
Xikrin indigenous people and several institu-
tions in Brazil in December 2021, together
with an independent expert. We discussed
with the Xikrin indigenous people to hear
their opinions on the process and learn about
their lives and their problems. We also got
very positive feedback and were invited back.
Actually, we were told that it was the first time
that a European customer showed up there
and showed interest in the indigenous people
directly.
What is the purpose
of these visits?
As a customer, it is our responsibility to
ensure that our suppliers have effective
processes and actions in place to protect
the environment and human rights. If the
assessment comes to the conclusion that
the processes and/or mitigation actions of a
supplier can be improved, we seek to agree
on these improvements together with the
supplier. To make sure that the actions are
really effective, we may define indicators that
can be monitored over time, and we ask our
supplier to communicate those indicators to
us.
What remains to be done?
Monitoring suppliers is not a project but
continuous work for us. In 2022, we will
continue to increase engagement with our
suppliers, and I am happy to announce that
my team will be strengthened with additional
resources. Together we will for example
finalize the review of our onboarding process
and put a higher emphasis on human rights
due diligence. We have also started an
human rights impact assessment program for
suppliers in high risk countries together with
the same independent expert that supported
us with the investigation in Brazil. We will
for example visit one supplier in Guatemala,
where we are also going to investigate
the potential impacts of the company on
indigenous communities and other external
stakeholders.
Working in sustainable supply chain
A Finnish NGO, Finnwatch, reported problems with our ferronickel
supplier, the Brazilian mining company Vale. HannahStratmann,
SupplierSustainability Manager at Outokumpu, takes us through the
case.
People & society | Supply chain
Outokumpu Annual report 2021 | Sustainability review 23 / 44
Proactive focus
on safety
At Outokumpu, we operate safely always. We believe
that continuous strong safety performance correlates
with improved quality and operational efficiency.
Everyone at Outokumpu has the right to a safe and
healthy working environment.
Taking every step necessary to protect
ourselves and our colleagues, we are continu-
ously reducing our accident record year on year.
We aim to be the industry leader in safety with
the vision of zero accidents.
Proactive safety measures
Our proactive safety management system,
which includes hazard recognitions and Safety
Behavioral Observations (SBOs), supports us
in striving toward our safety targets. Hazard
recognitions and SBOs are utilized to flag
potential risks and unsafe acts and behaviors
before they lead to accidents. Lessons from
past incidents are shared with other sites in
the monthly Safety Call hosted by the CEO.
Our daily work is guided by common safety
principles, standards, guidelines, and our
ten Cardinal Safety Rules. Safety audits are
performed regularly according to a standard-
ized audit program.
Our safety network which comprises of every
site safety manager and is coordinated by the
Group safety function meets monthly to ensure
up-to-date safety topics are communicated
effectively and best practices are shared and
adopted.
Quarterly safety themes
In late 2020, quarterly safety themes were
launched at Outokumpu. Each quarter, a
specific theme is selected, highlighting the
most important issues in safety. The quarterly
themes reflect the areas in safety where we
have the most room for improvement. These
focus areas have been determined based on
analysis of previous accidents and their causes.
By setting out improvement objectives for
the specific themes each quarter, sites can
review their practices and share findings and
best practices with other sites. Sites are also
encouraged to come up with ways to involve
employees to highlight the importance of each
theme and cascaded key learnings throughout
the organization.
In 2021, the first quarter safety theme was
hand safety, as hands and fingers continue
to be the body parts with most injuries. The
theme for second and third quarter focused on
contractor control. The theme was introduced
over the summer maintenance period where
outputs of the theme could be implemented
and measured to gain maximum effect. The
safety theme for the fourth quarter focused
on reviewing our acid handling procedures
to incorporate all acids and the hazards and
Oihana Ramos started
as Outokumpu’s Head
of Health and Safety at
the end of 2021. “My
experience in safety
is originating from the
mills, working side-by-
side with operations
and maintenance.
Safety has always been
the main priority also
in my previous roles.”
People & society | Safety
Outokumpu Annual report 2021 | Sustainability review 24 / 44
0
1
2
3
4
5
6
20212020201920182017
Hand safety in focus
Quarterly safety themes for 2021 were
launched with the theme of hand safety, as
hands and fingers continue to be the body
parts with most injuries. For example in
2020, over half of all recordable accidents
involved injuries to wrists, hands or fingers.
As a part of the theme in 2021, all sites
implemented the Hands Are Not Tools
program. For example, in Krefeld, Germany,
the program was started by identifying the
ten most hazardous manual tasks that could
lead to hand injury. For these tasks controls
were put in place immediately to lower the
risk, while technical solutions were planned
to replace manual tasks with automated
processes to eliminate the risks completely.
As a part of the safety theme, other sites
came up with their own safety innovation as
well. In Tornio, Finland, operators produced
their own safety videos demonstrating how
to prevent hand injuries with new tools.
In Calvert, the US, team members were
encouraged to focus on hand safety at
home too and discuss the theme with their
families. To support the discussions at home,
a handout for children to fill in could be
printed. Top 15 submissions were selected
and given gift cards as a prize.
Work-related injuries by region, accident and employee type
Group
BA
Europe
BA
Americas
BA Long
Products
BA Ferro-
chrome Employees
Contrac-
tors
TRIFR
1)
2.0 2.2 1.8 1.1 3.3 2.0 2.3
LTIFR
2)
1.3 1.5 1.0 0.0 2.2 1.2 1.3
Total recordable injuries
3)
45 26 11 2 6 33 12
Fatalities 0 0 0 0 0 0 0
Lost time injuries 28 18 6 0 4 21 7
Restricted work injuries 2 1 0 0 1 0 2
Medically treated injuries 15 7 5 2 1 12 3
1)
Total recordable injury frequency includes fatalities, lost time injuries, restricted work injuries and medically
treated injuries, per million working hours.
2)
Lost time injuries including fatalities and lost time injuries, per million working hours.
3)
Includes fatalities, lost time injuries, restricted work injuries and medically treated injuries.
Work-related injuries
*
Lost time injuries
Fatalities
Restricted work injuries
Medically treated injuries
* Per 1 million working hours.
risks associated with managing dangerous
substances.
Improved safety despite
the COVID-19 pandemic
In the start of the pandemic in 2020, Outo-
kumpu took several rigorous safety measures
on the Group level to mitigate the negative
effects of the COVID-19 pandemic on people
and operations. The implemented measures
were proven to be effective with very limited
impact on our operations while maintaining the
health and safety of our employees.
During 2021 and with the roll-out of the
vaccinations, the focus in the management
of the pandemic was transferred from the
Group-level crisis management team to local
crisis teams who implement site-specific rules
and instructions according to the regulations
and recommendations of local authorities.
In Germany and the Calvert site in the US,
Outokumpu established vaccination centers
for our employees during 2021. In Calvert, the
center offered vaccines also to the neighboring
communities in the rural area where access to
vaccines was limited.
Safety performance
Outokumpu uses total recordable injuries
per million working hours of employees
and contractors (TRIFR) as the main safety
performance indicator. Group TRIFR declined
from the previous year and was 2.0 against
the target of <2.2 (2.4). Group LTIFR (lost time
injuries per million working hours) was 1.3
against the target of <1.2 (1.4).
The rate of all work-related accidents (total
recordable injuries and first aid treated injuries
per million working hours) was 11.9 (13.7).
Proactive safety action frequency was 8,185
(5,353). This includes reported hazard
observations, SBOs, and other preventive
safety actions per million working hours.
Health and wellbeing
Outokumpu encourages its employees to take
care of their physical health by offering various
exercise benefits and discounts to sports and
well-being services. Different health support
programs are also run across our sites. In
addition, occupational hygiene measurements
are being carried out at the Outokumpu sites
to ensure a healthy working environment.
The number of occupational diseases diag-
nosed in the Group was 0 (2020: 0). The total
absentee rate was 3.1% (3.3%).
People & society | Safety
Outokumpu Annual report 2021 | Sustainability review 25 / 44
A year of closed bubbles
and remote work
During the pandemic our priority has been
to ensure the health and safety of our team
members. Countless actions have been taken,
starting with global and local guidelines on
social distancing, hygiene and cleaning, travel
bans as well as limiting face-to-face meetings
and visitor access.
Thanks to the continuous effort and
commitment of our operators – working in
several shifts 24/7 – our mills have been
running at high capacity throughout the year,
and we have been able to deliver top-quality
stainless steel to our customers. Working in a
closed bubble and restricting social contacts
has become routine at our mills, even with a
heavier workload and very strong demand for
stainless steel – approximately 70% of our
team members have worked continuously at
the mills.
To protect our employees and business and
avoid further infections, we have encouraged
remote work whenever possible. Towards
the end of the year, we prepared for a hybrid
working model, which aims for a balanced
combination of office work and remote work
and emphasizes trust and flexibility.
The company’s premises are the primary place
of work for all personnel. However, employees,
whose tasks are suitable for remote work will
have the possibility to work remotely. We want
to be as flexible as possible but also maintain
the good elements of working together,
acknowledging that face-to-face work in the
office is important for workplace well-being,
team spirit, collaboration and connecting to
company and its priorities. We have created
a common framework for remote work for our
operations; however, as the situation varies by
country, local guidelines are to be followed.
Building more dialog
during the pandemic
To map the personnel’s views on future steps
for the company, internal webinar discussions
were hosted by members of the Outokumpu
Leadership Team in the second quarter.
Altogether 19 company-wide virtual sessions
were arranged in English, Finnish, Swedish,
and German. These Our Way Forward webinars
were very well received, attracting over 1,000
team members to discuss the progress of our
strategy as well as market development. Team
members were also able to share their views
on how work should be organized in practice
after the pandemic when we take the company
forward together. We started the webinars with
team members working in the office. The plan
Building the best
work environment
2021 was heavily impacted by the continuing pandemic
and the strong rebound in demand. We are looking ahead
to how we can develop the company going forward and
promote diversity, equity, and inclusion. We want everybody
to feel comfortable and engaged to work at Outokumpu.
Even during the
pandemic, approx-
imately 70% of our
team members have
continued to work at
our mills. Working in
a closed bubble has
become routine.
People & society | Our people
Outokumpu Annual report 2021 | Sustainability review 26 / 44
Outokumpu Ways of Working
We operate safely. Always.
We work safely, comply with our cardinal safety rules, assess potential risks and take appropriate
actions to mitigate them.
We leverage the power
of one Outokumpu.
We work together, share and combine our knowledge, across functions and regions to create best
value for our customers.
We deliver.
We live up to our promises with clear roles and clear accountabilities. We have a passion for
continuous improvement.
We grow people and
value diversity.
We foster diversity and create work environment that allows all team members to contribute and
develop.
We act sustainably.
We are driven by creating sustainable impact, environmentally, socially and economically.
We are a trusted partner.
We are a reliable and trusted partner towards all our stakeholders, our customers, employees,
investors and the communities we operate in.
is to continue staff meetings at the production
facilities as the pandemic eases.
Embedding Ways of
Working into daily work
Our Ways of Working steer our journey toward
our vision of being our customer’s first choice
in sustainable stainless steel. We have outlined
the Outokumpu Ways of Working to clarify and
define the way we need to work together.
To embed the Outokumpu Ways of Working into
our daily work, our teams have been empow-
ered to start discussions on what the Ways of
Working mean in our every-day business and to
observe how we conduct ourselves in relation
to these six fundamental elements. By creating
a joint understanding of how we work together,
and especially recognizing behavior supporting
our Ways of Working, we are better equipped to
evaluate necessary areas of improvement.
For example, in relation to being a trusted
partner, special attention was paid to compli-
ance in line with the launch of our renewed
Code of Conduct. To raise knowledge and
awareness of ethics and compliance topics
and to start discussions on ethical dilemmas
that we might face during our daily activities,
we introduced ethics and compliance-related
case scenarios that managers can go through
and discuss with their teams. These case
scenarios covered, for instance, sustainable
business practices and the importance of
knowing our business partners.
Going forward, our teams will work together
to identify improvement areas and recognize
successes. By emphasizing the significance of
changing conducts and behaviors in relation
to the productivity and well-being of team
members, we are encouraging our team leads
to recognize also small changes, ideas, and
actions to improve the alignment in our Ways
of Working.
Long-term development in
organizational health
Our global employee survey Organizational
Health Index (OHI) was conducted in
September–October 2021. The OHI survey is
an important part of Outokumpu’s development
towards a truly high-performing organization,
and we will continue the work to improve our
results in organizational health. Moreover,
these regular surveys support our Ways of
Working by creating a common understanding
concerning our consistency in our daily
behaviors and actions.
Our employees’ thoughts and feedback are
important in creating our future together,
as our ambition is to build the best work
environment for all of us at Outokumpu. Our
world-class participation rate – even during
Bringing our Ways
of Working to live
Amidst the COVID-19 restrictions, at our
sites we have engaged our teams to bring
our Ways of Working to live through team
disucssions. In Degerfors, Sweden, kicking
off our Ways of Working in practice included
conducting a series of workshops with
teams in shifts, where we asked: “What do
our Ways of Working mean for your own
team?”
During the workshops, all six elements of
Ways of Working were communicated, and
participants were encouraged to work on
examples from their daily work.
“We have had good initial discussions with
operators. The workshop is a good opportu-
nity for employees to reflect on what Ways
of Working mean for them. The participants
have been active and contributed to the
discussion,” said Albin Karlsson, who
heads the team at the cutting lines.
People & society | Our people
Outokumpu Annual report 2021 | Sustainability review 27 / 44
Strengthening
marginalized voices
To shed light on underrepresented groups
and provide a positive platform to ensure
these underrepresented voices are
amplified we have implemented a Diversity,
Equity, and Inclusion initiative in the
Americas.
The goal of the initiative is to ensure that
our team actively reflects the diversity in
the communities we serve and offer a work
environment that promotes equality and
inclusion. To provide an outlet for strength-
ening marginalized voices, networking
groups were created to focus on African
American, Latin and Hispanic, and female
team members. The groups welcome all
employees who are passionate about
the cause, regardless of their ethnicity
and gender. Together the groups work
toward the common goal of engaging and
empowering team members to use their
voices in a proactive way.
the pandemic – demonstrates the strong
engagement of our team members with the
company. With a response rate of 86% and
over 19,000 open-ended answers, the survey
makes visible our employees’ views all over the
world and provides a comprehensive picture
of the company to develop both organizational
health and performance.
The overall company score in the survey was
68. After two exceptional years, we consider
the overall result positive, although slightly
weaker than in 2019. Looking further back, we
can see great improvement in our organiza-
tional health, as our index score started at 50
in 2016. With a score of 68 in 2021, we are
still in the second quartile against all industry
benchmarks.
However, across our sites, business areas,
functions and locations, the differences in
the results have increased. The result in the
business area Europe was slightly weaker
than in 2019, and also in the business areas
Ferrochrome and Long Products the results
decreased, whereas in the Americas both
response rate and the result improved. Group
functions’ results are substantially better
compared to the site results.
The OHI survey encourages us towards long-
term development and addresses underlying
issues which must be understood before shifts
in behavior and culture can be realized to drive
organizational health. Even small changes in
mindset or behavior can have a great impact
and they are needed to improve our organiza-
tional health: everyone’s input is necessary.
To support our teams in their discussions
regarding the results of the OHI survey, we
have created a new online game. When
discussing the results and defining the
necessary development actions, we stress
that change is not a top-down exercise.
Organizational health improves efficiently
and sustainably when you drive it from top to
bottom, bottom to top and side to side.
As before, with the help of the survey results
we will identify our strengths and development
areas. To drive improvement, a number of
initiatives will take place according to the local
areas which need development. As a whole,
the OHI survey of 2021 provides a baseline for
future development and, based on the survey
findings, we will develop our people strategy for
the coming years.
Promoting diversity,
equity, and inclusion
Our new sustainability strategy launched in
May takes us further with our environmental,
social, and governance (ESG) foundation.
Sustainability is integral to our strategy,
including global activities on diversity, equity,
and inclusion. During 2021, we prepared
activities for the following years to promote
diversity, equity, and inclusion within the Group
at all levels globally.
We take pride in the diversity of our team,
which is made up of people living across
several continents and of many different
nationalities, cultures and backgrounds,
religions, genders, sexual orientation, and age
groups.
For example, in the Americas we have
established a Diversity, Equity, and Inclusion
initiative to ensure our team actively reflects
diversity and to provide a work environment
that promotes equality and inclusion. The initia-
tive is led by the Americas Management Team.
The aim is to attract and retain the best talent
through growth and development while yielding
positive results in the organization’s success
measures. To increase transparency, we share
the demographics for our recruiting efforts with
our Team Member Networking Groups.
In 2022, to support creation of a work
environment that allows all team members
to contribute and develop, we will conduct a
global inclusion survey and create awareness
of the topic throughout the organization. We
want all team members to feel welcome and
that they are equally heard and have equal
opportunities. We believe that by making this
company as diverse as possible, we encourage
different points of view, different talent, and
benefit from different life experiences, thus
making us a much stronger organization.
Improving leadership
We believe it is essential that leaders are
equipped to perform at the top level in their
role. To make this possible, we are improving
our leadership by implementing the Leadership
Pipeline program. Our Step-Change in Leader-
ship Excellence program develops leaders at
all levels, bringing clarity to the expectations of
the role and pushing accountability forward in
the organization in a coherent way.
During the Leadership Excellence program
leaders practice how they can create value
in leadership roles and what the main
People & society | Our people
Outokumpu Annual report 2021 | Sustainability review 28 / 44
Growing talent
International Talent Project initiative
provides our young talents with an
opportunity to demonstrate their strengths
and capabilities, practice working in
cross-functional and international teams,
and grow their networks.
All talents are matched with a challenging
business project outside of their own
function. Taking talents out of their comfort
zone and letting them work in areas new to
them allows to gain new perspectives and
grow their experience.
The teams worked passionately, and from
start to finish virtually, on their projects,
participating also in project management
training. In October, participants finally
met face-to-face and shared the outcomes
of their projects with other participants,
project leads, and senior leader sponsors.
All teams received good feedback and the
project outcomes will be implemented in
respective functional areas.
responsibilities are in leading people, whether
they are leading other individuals, other
leaders, or a function. Empowerment is
linked with leadership development activities,
incorporating the idea of helping others to
succeed and gaining results through others.
This mindset generates more role clarity,
well-being, and tools to focus on adding value.
Across our organization, management teams
have participated in multiple Team Excellence
workshops, in which the teams learn to
function as a cohesive unit, with a clear team
purpose and vision, aligned priorities and key
deliverables in alignment with the company
strategy. This Team Excellence program is part
of our Step-Change in Leadership Excellence
program, and it will be offered to teams also
during 2022. So far, over 20 teams have
participated in these Leadership Excellence
workshops, supporting team improvement
activities globally.
The associated Leading Leaders and Leading
Others training modules enable individual
leaders to complete the transition into the
leadership role that needs to be executed
to add the most value to their team and the
organization. The Leadership Pipeline meth-
odology is also implemented in our License to
Lead shift-leader program, which is targeted at
first-line managers in operations.
By investing in leadership development and
strengthening our leadership capabilities, we
can significantly impact our business perfor-
mance and organizational health. To assess
the effects of the extensive leadership training,
we plan to conduct an external assessment on
impact measurement.
Developing our talents
and future leaders
The key target of our talent management is
to ensure we remain competitive and flexible
in how we promote and develop our future
leaders. The ambition of this initiative is to
ensure we have enough successors within
Outokumpu. We have established several
processes and programs to build and future-
proof our talent and succession pipeline and to
secure our competitive advantage in the future.
Our talent management team has defined
the roadmap for the coming years, and our
more rigorous talent management process
aims at ensuring that we attract and hire,
develop, and deploy graduates who have the
potential to go beyond the role that they are
carrying out today, and who have the drive to
grow internationally. In our international and
process-driven organization, key roles require
international and cross-functional experience
accompanied by excellent leadership skills.
We have established extensive programs and
development opportunities to grow our talents
and different talent pools: young talents, those
with high potential, and top leadership. For
example, our global Form your Future program
sets the basis for international career growth
at Outokumpu, whereas our International Talent
Project initiative provides young talents with
an opportunity to work on important projects
in cross-functional and global teams along
with a possibility to grow their networks and
understanding of the company and stainless
steel across borders and functions.
During 2021, we have continued to improve
and harmonize our HR processes to bring
about efficiency and a better end-user
experience for managers and employees. As
part of this process, a harmonized recruitment
process was launched in Europe & APAC at
the beginning of the year. The process was
designed to help us work more efficiently,
increase productivity, and provide a better
experience for our recruiting managers and
candidates. The harmonization translates also
into process improvements and greater clarity.
Building capabilities
Despite the on-going COVID-19 restrictions
and limited options for arranging face-to-face
training sessions, we continued with training
and coaching efforts to further increase the
skills sets of our team members to enable the
best execution of our goals. Again, we were
able to maintain a fair number of training and
development measures despite the social
distancing restrictions and travel guidelines.
Building on the experience, training, and mate-
rials from the previous year, we supported our
own subject matter experts and managers by
enhancing their virtual training skills. We have
also recognized the need to support teams and
team members working and meeting remotely,
especially those in the matrix organization. The
provision of tools and support will carry on into
2022.
During the year we continued to train and
certify colleagues across our sites as Lean
Six Sigma Green Belts and Black Belts to
support and facilitate continuous improvement
in our operations. For example, in Terneuzen,
the Netherlands, we applied lean and agile
methods and practices in Green Belt training,
People & society | Our people
Outokumpu Annual report 2021 | Sustainability review 29 / 44
E-bikes offered to
employees in Finland
The well-being of our employees and
protection of the environment are important
for Outokumpu. When both aspects can be
combined, we don’t hesitate to take action.
During 2021, Outokumpu decided to
support employees in Finland to acquire
bicycles as an employment benefit, which is
supported by the government. Specifically,
e-bikes were made available to order for
employees. The bicycle can be used for
commuting between home and work but in
the spare time too.
The acquisition of bicycles also supports
Outokumpu’s sustainability goals and our
commitment to reducing carbon emissions.
Cycling and outdoor activities refresh the
mind and increase endurance both at work
and in leisure time. Commuting helps to
achieve the minimum amount of health
exercise recommended and reduces daily
sitting. It also reduces CO
2
emissions when
replacing commuting by car.
starting with online sessions for theory training
as well as coaching sessions.
As our Code of Conduct was revised in 2021,
our employees were trained on the topic during
the year. To encourage our team members
to improve their project management skills,
we offer several options to get acquainted
with methods and tools for running projects
and managing change successfully. We
are also piloting a program for young and
internationally- oriented production workers, and
we are building a global onboarding program
for new joiners.
In Sweden, we trained approximately 1,400
people in relation to our digital transformation
project Chorus, including the ERP renewal. The
training sessions on the tools and processes,
for instance, were completely virtual, and the
attendance rate was over 90%.
In 2021, a total 91% of Outokumpu employees
participated in training sessions and programs.
The amount of training days continued to
be lower compared to pre-pandemic levels,
despite the significant increase in online
training, but in 2021 we saw an increase
compared to 2020. During the year, the
overall number of training and development
days amounted to 12,301 (2020: 9,978)
and 98,411 hours (2020: 79,825). Average
training hours per employee was 10.5.
Setting and achieving targets
The core of our performance management is
the My Performance Commitment process
(MPC). The systematic MPC process ensures
the setting and achieving of individual
performance and behavior targets aligned with
Our people by region
2021 2020 2019
Finland 2,394 2,517 2,502
Germany 2,043 2,326 2,555
Sweden 1,794 1,888 1,975
The United Kingdom 469 502 560
Other Europe 750 747 727
Europe 7,450 7,980 8,319
The United States 1,011 1,010 1,064
Mexico 804 786 859
South America 80 84 87
Americas 1,895 1,880 2,010
Asia/Rest of the world 50 55 61
Group total 9,395 9,915 10,390
This table presents the number of personnel, while elsewhere in the report we use full-time equivalent personnel.
the company strategy. It also provides tools
to discuss development needs and to ensure
managers and employees understand their
tasks and how they contribute to business
targets and the strategy.
In 2022, we will incorporate our Ways of
Working and the Leadership Pipeline method-
ology in the behavior evaluation of My Perfor-
mance Commitment development discussions
to ensure consistent behavior and provide
tools for managers to assess performance and
development as well as to ensure high-quality
and consistent leadership.
The My Performance Commitment process
is documented in our common HR platform.
In 2021, 98% of employees in applicable
countries had a regular performance develop-
ment discussion with their respective manager.
The remaining 2% are mostly on parental
or other long-term leave. In countries where
local contracts or regulations do not make it
possible to have performance development
discussions, Outokumpu follows the local
procedures.
Outokumpu’s remuneration principles and
framework was largely unchanged from
the year before: incentive plans remained
the same. Salary budgets were set at very
moderate market-based levels observing the
overall market situation. For the excellent
work and stretch during the year of 2021 we
are rewarding all our employees with an extra
payment along local agreements. Our long-term
incentive programs continue to focus on
emphasizing shareholder value creation and
ownership culture and setting a performance
culture through the Group and business area-
level target setting. The commitment to our
strategy is reflected in the incentive programs
People & society | Our people
Outokumpu Annual report 2021 | Sustainability review 30 / 44
Meet the third
stainless generation
The manufacturing of stainless steel is
a great profession. Some of our team
members have this skill in their bloodline.
Samuel Öfverberg worked as a summer
trainee on the slitting lines at our Tornio
site. In the same cold rolling plant where his
father works, and his maternal grand father
before them, while his mother works in
our Finance team. ”On a railroad a stone’s
throw away from our home I’ve seen coils
since I was a kid but now it’s been great
to see for myself how stainless steel is
produced – and how my family has earned
our bread for decades. It is fascinating!”
Toni Niskala spent the summer of his life
at our cold rolling plant in Tornio driving a
forklift to load containers for the shipping
of coils and sheets to our customers. His
grandfather worked for decades in the cold
rolling plant in maintenance – also the
specialty of Toni’s father, who works on the
rolling, annealing and pickling line 5. “It’s
been nice to see that I can handle a task
that requires great precision, whether my
shift is at night or day. Also, my workmates
are the best.”
within Outokumpu. In 2022, we will introduce
sustainability targets into our incentive plans.
Simplified and delayered
organization
As part of cultivating a lean and agile organi-
zation, de-layering and reorganization of the
organization continued in 2021. We have built
a simplified and flat structure with clear roles
and responsibilities, thus creating a high level
of individual accountability. We aim to have an
organization with people and teams who are
capable of reacting quickly and adapting to the
changes in the market environment.
In 2021, the number of employees decreased
by 506 globally, after Outokumpu completed
employee negotiation processes at the
end of 2020. The target was to create cost
savings by restructuring and reducing the total
employee headcount by up to approximately
1,000 mostly by the end of 2021. As a result
of the negotiations, Outokumpu reduced
the employee headcount by 250 in Finland,
230 in Germany, and 170 in Sweden, with
further personnel reductions in the company’s
European and Americas based operations. The
total targeted employee headcount reduction
of 1,000 was almost reached by the end of
2021, with 90% of the measures completed.
Outokumpu’s aim is a full-time equivalent
number of personnel below 9,000 during 2022.
After personnel negotiations, we support our
employees in finding new roles where possible.
People can receive transition assistance,
which takes the form of job search, CV writing,
interview skills and options for training.
To ensure a greater understanding of the
company and the competitive situation in
which we operate we are committed to
informing and consulting our employees and
their representatives. In Europe, continuous
collaboration with the personnel takes place
in a joint consultative body, Personnel Forum,
which is an information channel between
our personnel and corporate management.
Personnel Forum appoints the Group Working
Committee, which is responsible for the
cooperation between management and
employees. In the committee, eight members
represent employees and four represent the
management. Normally, Personnel Forum
meets once a year. However, in 2021, we were
not able to arrange Outokumpu Personnel
Forum due to the pandemic. Additionally, the
Group Working Committee was heavily affected
by COVID-19, and the committee was able to
convene face-to-face only once, in November
2021. The other three official meetings were
held virtually, and these were arranged in
February, May, and August.
Outokumpu’s working hours, minimum notice
periods, vacation times, wages, and other
working conditions are consistent with the
applicable local laws. Outokumpu maintains a
consistent policy of freedom of association. All
Outokumpu employees are free to join trade
unions according to the local rules and regula-
tions. In 2021, 78% of the Group’s employees
were covered by collective agreements (2020:
79%). In total, 16 days in 2021 were lost due
to strikes (2020: 2,496).
People & society | Our people
Outokumpu Annual report 2021 | Sustainability review 31 / 44
Our biggest impact in the world is stainless steel that we produce and
our expertise in it – a sustainable product with a long service life. We
recognize that our operations have an impact both on a local level and
to a wider society.
Stakeholder
engagement
We are a reliable and trusted partner towards
all our stakeholders, our customers, employees,
investors, suppliers and the communities
we operate in. Maintaining a dialogue with
different stakeholder groups is an important
aspect in Outokumpu’s vision to be the first
choice in sustainable stainless steel and for
understanding what our stakeholders expect
from us. Outokumpu conducts regularly
materiality analyses to keep up-to-date on our
stakeholders’ expectations, and the latest one
was conducted in 2021, and continues regular
dialogue with its various stakeholders.
Read more about our suppliers in the supply
chain section of this report.
Customers
Outokumpu is known in the market for the high
quality of its products as corrosion resistance,
the widest product portfolio on the market,
and our technical expertise in stainless steel.
Outokumpu has a strong customer base spread
across the globe and balanced over a range
of industries. Together with our customers, we
find new application areas where stainless
can make a positive impact. Our customers
construct buildings and build infrastructure,
produce energy, and manufacture appliances
and cars, for instance. Most of our customers
are located in areas where we have our own
production in Europe and in the Americas. We
have also a global sales and service center
network covering all the main continents. Our
web shop serves our customers in Germany,
Italy and their neighboring countries.
Customers are more and more interested in
environmental aspects and carbon footprint
of their products and their entire value
chain. Outokumpu has the lowest carbon
footprint and highest recycled content in
the industry. Our customers save our planet
from 10,000,000 tonnes of carbon dioxide
by using our stainless steel – every year. All
our products have independently certified
environmental product declarations so that our
Before focusing
on stainless steel,
Outokumpu had
several mines. In
2021 we continued
to monitor our own
mine sites, taking
samples according to
our obligations as well
as on a voluntary basis.
Our team and local
authorities visit here
one of the old mines in
Hammaslahti, Finland.
People & society | Stakeholders
Outokumpu Annual report 2021 | Sustainability review 32 / 44
Calvert adopted a
stretch of highway
Sustainability is at the core of all our
operations, and in Calvert this goes beyond
the mill. Taking care of our local community
is a big part of who we are at Outokumpu.
Our Americas team has started two new
programs that allows team members to
help take care of our local environment
to keep it clean and litter-free but also
enhance the beauty of Alabama.
Outokumpu has partnered with Alabama
PALS to adopt a mile of the stretch of
Highway 43 leading to our mill, and each
month team members volunteer to clean
the highway of any trash and debris. A new
on-site recycling program began this year
to encourage recycling everyday items like
plastics, paperand aluminum.
customers can calculate the carbon footprint
of their products.
Outokumpu collects feedback from its
customers as a part of sales process. Our
customers are mostly satisfied or very satisfied
with their business relationship with us and
considered a quick reaction to requests,
understanding customer needs and easy reach
our strength. Our one improvement areas is
delivery performance which we have not been
able to improve during 2021 with the market
rebounding from the COVID-19 lows. In 2021,
customer cooperation continued mainly with
new remote forms, but towards the end of
the year we were also able to resume some
travelling and face-to-face meetings with
customers when allowed by the local pandemic
situation and even exhibit in a fair for the first
time in two years.
Communities
Outokumpu’s production sites are often
located in relatively small towns, so we are a
significant member of those communities and,
in many cases, one of the few big private-
sector employers in the area. We recognize
that our decisions might have a major impact
on communities, our personnel and local
suppliers and service providers.
Our sites have regular discussions with local
community representatives on employment,
environment, energy, or sponsoring. In addition
to the community officials and representatives,
we maintain continuous cooperation with local
schools and universities, NGOs, our neighbors,
and other companies. Ongoing permit
processes or other environmental issues
are discussed with local stakeholders. We
organize open-door events at our production
sites for neighbors. Based on feedback and
participation in the recent years, these events
have been successes. Our mills received a
lot of good and constructive feedback as
well as some helpful ideas on how to reduce
environmental impacts on the surrounding
communities. In 2021, cooperation continued
mainly remotely because of the pandemic
to safeguard both our employees and the
communities we operate in.
Based on the dialogue with neighboring
communities and discussions with authorities
in connection with environmental permit
processes, no significant negative impacts on
local communities have been identified.
Many of our production sites have long and
interesting histories: some of our sites in
Finland, Germany, Sweden and the UK have
been in use by the metal industry and integral
parts of their local communities for decades
or even centuries already. For example, in
Avesta, Sweden, the renovation of our former,
centuries-old production site Koppardalen,
received excellent feedback for preserving local
cultural history.
In the past, Outokumpu has operated mines
both in Finland and elsewhere. At the beginning
of the 2000s, the company decided to focus
on stainless steel. Currently, Outokumpu oper-
ates only one mine, the Kemi chrome mine,
which is an integral part of our stainless steel
production. In 2021, Outokumpu continued to
monitor its old mine sites, both those where
the company still has obligations and those
where they have ended. Outokumpu visited
most of the company’s old mines at least once,
taking samples according to the obligations
as well as on a voluntary basis. In 2021, two
minor environmental permit breaches were
observed: in Hammaslahti annual average of
leachate pH value and in Kotalahti annual
average of leachate iron concentration didn’t
meet the environmental permits’ requirements.
Information on old mines
List of Outokumpu’s operating sites
Non-governmental organizations
Non-governmental organizations or NGOs are
important stakeholder groups for Outokumpu
as they can provide an external view on how
large companies like Outokumpu are impacting
the nature and society and what are the
expectations towards us. This type of dialogue
has been very fruitful to bring understanding to
both sides of the table on the urgency, actions
and policies around climate change. One
recurring topic are ongoing permit processes
and other environmental issues which are
continuously discussed with environmental
NGOs.
In February 2021, a Finnish NGO Finnwatch
published a report which critically assessed
Outokumpu’s supply chain sustainability
monitoring and the company’s purchasing. For
us, the Finnwatch report was an important
reminder of the importance of responsibility
throughout our supply chain, and we continued
dialogue with Finnwatch throughout the year.
During 2021, we took countless actions
to further develop the monitoring of the
suppliers and to increase the transparency
of its sourcing. We partnered with supplier
sustainability platform EcoVadis to evaluate
People & society | Stakeholders
Outokumpu Annual report 2021 | Sustainability review 33 / 44
Environmental bridge
The city of Södertälje in Sweden needed to
replace a wooden bridge that had reached
its end of life – after only 20 years of use.
The city now wanted a bridge with long
service life and minimal maintenance, as
closing the highway for repairs is expensive.
Stål & Rörmontage, a Swedish company
that works closely with Outokumpu, has
developed an interesting concept called
the Environmental Bridge – essentially, a
maintenance-free bridge with a lifetime
of well over 100 years. They have now
installed six of these bridges in Sweden,
including the one in Södertälje made of
Outokumpu’s Forta LDX 2101 duplex
stainless steel.
“Miljöbron, as we call the Environmental
Bridge in Swedish,” says Lars-Åke Persson,
Marketing Director at SRM, “offers very
substantial benefits in terms of both the
environment and public finances. To have
a bridge that lasts much longer than
traditional structures made of either carbon
steel or wood, and has lower maintenance
costs and lower environmental impact in
terms of painting and coatings, is clearly
beneficial to society.”
the sustainability performance of our raw
material suppliers on a regular basis, updated
our Supplier Requirements and Code of
Conduct, and reviewed our policies, terms
and conditions and actions according to
the UN Guiding Principles on Business and
Human Rights. Outokumpu also set up its own
advisory council on environmental, social and
governance topics.
Associations, memberships
and public affairs
Outokumpu is a member of international
organizations and confederations, including
International Chamber of Commerce (ICC),
Eurofer, International Chromium Development
Association (ICDA), EUROALLIAGES and
EUROSLAG and is actively involved in and
supports their work. Outokumpu provides
relevant information to decision-makers and
experts relating to the development of the
business environment and legislation.
Outokumpu also participates in the work of
trade organizations and is a member of indus-
trial federations and associations in Germany,
Sweden, Finland, France, Italy, the Netherlands,
the UK, the US and Australia. These coopera-
tion organizations advance industry views and
contribute to national legislation. Outokumpu is
a member of the Sustainable Mining network in
Finland and committed to the Finnish Sustain-
able Mining standard, based on the Canadian
initiative Towards Sustainable Mining.
Our public affairs practice is to communicate
via industrial associations like Eurofer towards
governing bodies and regulators. In these
organizations, Outokumpu participates in
different working groups whose aim is to
provide expertise to help decision-makers. In
these forums, members share best practices
and obtain benchmark data relating to, among
other things, the environment, R&D, product
life cycles, product and chemical safety, and
occupational safety. Members also contribute
their own data for use in official industry or
authority reports, such as ICDA’s safety and
sustainability reporting. In 2021, Outokumpu’s
membership fees and other contributions to
the associations amounted to EUR 2.0 million.
Sponsoring and support
In sponsorships, Outokumpu prioritizes
connections to stainless steel, sustainability,
talent, and education. Outokumpu also makes
discretionary donations for the common good
as a responsible corporate citizen. These
donations are approved by the Leadership
Team or by the Board of Directors. Local
sponsorship follows the same guidelines,
and locally we have sponsored for instance
artworks by donating stainless steel, significant
local projects, and sports associations.
Outokumpu does not take part in or otherwise
support political activities, whether they are
local or national. In 2021, Outokumpu spent
approximately 180,000 euros in sponsoring.
Outokumpu supports research related to its
field of industry and maintains close coop-
eration with educational institutes. Appren-
ticeships have been offered to local colleges
and student placements have been made
available in the form of one-year programs, and
schoolchildren and local students have been
introduced to our operations.
Outokumpu has also been among the founders
of a number of national technology, research
and educational funds. These funds support
and promote university-level research and
teaching and business opportunities. Exam-
ples of these type of funds are the Technology
Industries of Finland Centennial Foundation
and the Fund for the Association of Finnish
Steel and Metal Producers.
Investors and shareholders
Outokumpu’s share is a so-called people’s
share in Finland, with households and private
persons owning more than a quarter of the
shares outstanding. The largest shareholder
Solidium Oy, an investment company owned
by the Finnish state, reduced its ownership in
Outokumpu during the year and owned at the
year-end 15.5% of the shares outstanding. The
share of international institutions increased to
31.7% in 2021.
In May, Outokumpu completed a private
placement of 40,500,000 new shares to insti-
tutional investors and raised EUR 209 million.
Deleveraging and strengthening the balance
sheet are the key targets of Outokumpu’s
new strategy, and the company used the
proceeds of the directed share issue to prepay
loans from financial institutions. The directed
share issue was completed to strengthen our
balance sheet and to reduce our net debt. The
reduction of net debt, prepayment of the more
expensive loans, and improved credit rating
significantly decreased Outokumpu’s financial
costs, which benefits all our shareholders.
Outokumpu continued the regular and
active communication with the investors
and analysts throughout 2021. One of the
key topics we discussed with the investor
community has been the strong COVID-19
People & society | Stakeholders
Outokumpu Annual report 2021 | Sustainability review 34 / 44
Nominee registered and non-Finnish holders 32%
Finnish institutions, companies and foundations 25%
Solidium Oy
1)
16%
Households 28%
rebound and exceptionally favourable market
environment, including the strong demand for
stainless steel and increased prices. Other
key topics in the discussions have been the
progress of our strategy execution, directed
share issue completed in May 2021, topics
related to the balance sheet, capital allocation,
Asian imports and trade defense measures.
Due to the ongoing and prolonged COVID-19
pandemic, almost all meetings and road shows
were virtual, as was the Capital Markets update
held in May 2021. Outokumpu also held its
Annual General Meeting in its headquarters
in Helsinki, Finland in March under special
arrangements. During the year, Outokumpu
arranged eight virtual roadshows in Europe and
in the US and met investors at three virtual
industry seminars and conferences. In total,
72 one-on-one meetings and conference calls
were held with our investors during the year.
Outokumpu’s shares are listed on the Nasdaq
Helsinki Large Cap list under the trading code
OUT1V and incorporated into the Finnish
book-entry securities system. In addition to
Nasdaq Helsinki, Outokumpu’s shares are also
traded on various alternative platforms.
The total share capital was EUR 311 million
at the end of the year 2021. All shares in
Outokumpu carry equal voting and dividend
rights. During 2021, the total number of shares
outstanding increased by 40,500,000 as a
Shareholders by group on December 31, 2021
1)
Solidium Oy is wholly owned by the Finnish state
Principal shareholders on December 31, 2021
Shares %
Solidium Oy 70,793,208 15.50
Varma Mutual Pension Insurance Company 17,133,403 3.75
Ilmarinen Mutual Pension Insurance Company 12,010,453 2.63
The Social Insurance Institution of Finland 9,298,652 2.04
Elo Mutual Pension Insurance Company 5,112,988 1.12
State Pension Fund 4,400,000 0.96
Mandatum Life 3,940,232 0.86
Danske Invest Finnish Equity Fund 3,610,000 0.79
Säästöpankki Kotimaa – Equity Fund 3,565,110 0.78
Nordea Life Assurance Finland Ltd. 2,892,912 0.63
Equity Fund Evli Finland Select 2,150,000 0.47
Säästöpankki Small Firms – Equity Fund 2,096,815 0.46
Säästöpankki Interest Plus – Equity Fund 2,087,784 0.46
Helander Hannu-Jukka 1,984,470 0.43
Sinituote Oy 1,643,560 0.36
OP Life Assurance Company Ltd. 1,467,550 0.32
OP-Finland Small Firms Fund 1,447,691 0.32
Nordea Bank Abp 1,307,556 0.29
Nordea Pro Finland Fund 1,283,306 0.28
Baan Roelof Ijsbrand 1,237,567 0.27
149,463,257 32.72
Nominee accounts held by custodian banks 143,428,839 31.39
Treasury Shares 4,302,471 0.94
Other Shareholders 159,679,881 34.95
Total 456,874,448 100.00
People & society | Stakeholders
Outokumpu Annual report 2021 | Sustainability review 35 / 44
0
30
60
90
120
150
20212020201920182017
20212020201920182017
0.00
0.05
0.10
0.15
0.20
0.25
20212020201920182017
0
2
4
6
8
10
0
1,000
2,000
3,000
4,000
€ million
80
100
120
140
160
180
200
DecNovOctSepAugJulJunMayAprMarFebJan
Market capitalization and share price development Monthly trading volume, million shares
Month-end market capitalization, € million Share price, €/share
Source: Nasdaq
Includes trading on Nasdaq Helsinki.
Source: Nasdaq
Outokumpu share price development in 2021, %
Outokumpu
Nasdaq Helsinki
Dec 30, 2020 = 100
Dividend/share, €
The dividend for 2021 is a proposal by the Board of Directors.
result of the directed share issue completed in
May. On December 31, 2021 the total number
of Outokumpu shares was 456,874,448, and
Outokumpu held then 4,302,471 of treasury
shares (Dec 31, 2020: 4,372,236 shares).
In 2021, Outokumpu’s share price was EUR
6.01 at its highest and EUR 3.36 at its lowest
(2020: EUR 4.44 at its highest and EUR 2.08
at its lowest). The share price closed at EUR
5.50 at the end of the year, so it increased
70.8% from the closing price of 3.22 at the
end of 2020. The market capitalization was
EUR 2,513 million at the end of the year,
compared to the EUR 1,341 million in the end
of the previous year.
During 2021, the average daily trading volume
in Outokumpu shares on Nasdaq Helsinki was
3.5 million shares. 880 million Outokumpu
shares were traded in total on Nasdaq Helsinki
during the year, and they represented a value
of EUR 8,734 million (2020: 1,101 million
shares with a value of EUR 5,325 million).
People & society | Stakeholders
Outokumpu Annual report 2021 | Sustainability review 36 / 44
On board! Towards
carbon neutral metals
Outokumpu has joined a three-year research
program, Towards Carbon Neutral Metals
(TOCANEM) as part of a consortium of
multiple metal industry companies and
universities in Finland. The research program
is an important step in Outokumpu’s
roadmap towards carbon neutrality.
Juha Erkkilä, Head of Sustainability at
Outokumpu, says: “The program supports
fundamental research necessary for imple-
menting and developing technologies that
will help Outokumpu to reduce CO
2
emission
intensity across all direct and indirect scopes.
Teaming up with a consortium will allow the
use of the best research resources and
provide access to technologies outside of our
current capabilities.”
The project is part of the implementation of
national and EU level low-carbon roadmaps.
In Finland, the largest CO
2
reduction potential
in the industrial sector lies in metals
production.
Launch of R&D strategy
In 2021 a new R&D strategy was introduced,
building on the Outokumpu strategy and
Outokumpu Ways of Working. R&D Must Win
Battles are “Sustainable production process
technologies” and “Future products and
customer applications”, which are addressed
with eight R&D programs. The R&D team
continued working in the three R&D centers
located in Avesta in Sweden, in Krefeld in
Germany and in Tornio in Finland focusing
on execution of the R&D programs. In 2021,
Outokumpu’s R&D expenditure totaled EUR
14 million, 0.2% of net sales (2020: EUR 21
million and 0.4%, 2019: EUR 17 million and
0.3%).
Sustainable production
process technologies
In 2021 Outokumpu joined a three-year
research program Towards Carbon Neutral
Metals (TOCANEM) financed by Business
Finland. The research program is an important
step in Outokumpu’s roadmap towards carbon
neutrality. It enables Outokumpu to study and
develop necessary technologies needed to
reach ambitious climate targets and to support
Outokumpu’s industry leading position in
sustainability. Within this program fundamental
research necessary for implementing and
developing technologies that will help
Outokumpu to reduce CO
2
emission is ongoing.
The utilization of BioCoke instead of fossil
coke for FeCr production is one key topic, as
well as optimized pickling processes to avoid
or minimize use of hazardous hydrofluoric
acid (HF). In order to accelerate our process
development and to improve the process
capabilities modeling tools are widely used.
Future products and
customer applications
Megatrends drive stainless steel demand
growth and motivates R&D to develop new
steel grades and improve existing grades for
new applications. The focus is lying on the
Pro product family for demanding end-use and
offering sustainable solutions for high customer
satisfaction. To expand our product portfolio of
high-alloy materials, Therma Alloy 800/800H
and 800HT were developed to market launch.
In order to develop stainless steel materials
for cost efficient solid oxide cell technologies
Outokumpu joined a three year research
project with partners along the value chain
and universities. The project is financed by
Sweden’s innovation agency Vinnova.
External research collaboration
Outokumpu has an extensive network of
external R&D collaboration partners, including
Research and
development
R&D, as part of the Technology and Group Sustainability
team, ensures that our partners inside and outside of
Outokumpu receive exceptional value through leading
technical expertise. Shaping the future by developing
breakthrough innovations as well as enabling a sustainable
future is part of the R&D mission.
top class universities and institutes, technology
suppliers and customers. Outokumpu actively
participates both national and international
collaborative R&D projects and programs. For
instance, Outokumpu is involved in European
Partnership for Clean Steel – Low Carbon
Steelmaking in Horizon Europe funding
program.
People & society | R&D
Outokumpu Annual report 2021 | Sustainability review 37 / 44
2021, multiple actions were taken to remind
and educate employees about the importance
of competition law rules. As part of this work,
process improvement was made and docu-
mentation updated, various training events
were held and communications concerning
the competition law rules were made globally.
The senior management of the company was
closely involved in these activities, highlighting
the importance of complying with competition
laws and regulations as well as enhancing the
company’s policies on this topic.
During 2021, actions were also taken in the
other identified key risk areas. Outokumpu
has a Know Your Business Partner Instruction
detailing the main principles and rules related
to establishing and monitoring relationships
with business partners and managing risks
related to such parties. In 2021, specific
trade compliance-related communications
were delivered, and Know Your Business
Partner eLearning was conducted again for
all administrative employees. The eLearning
achieved a completion rate of 100%. Third-
party risks were further mitigated by process
improvements and organizing training events
on the topic of trade compliance for targeted
groups. Further emphasis was also placed on
data protection through process improvements,
the update of documentation, and trainings. In
addition, engaging communications on various
topics regarding ethics and compliance, such
as anti-corruption, were delivered throughout
the year.
Ethics and compliance risks, including risks
related to corruption, are assessed and
reviewed annually and described in the Key
risks section in the Annual report. Information
regarding our misconduct reporting can be
found in the review by the Board of Directors,
Corporate Governance statement, and on the
website.
* The completion rate of the Code of Conduct
eLearning has been calculated based on the number
of employees to whom the training has been
assigned to, which differs from the headcount figures
elsewhere in this report.
Ethics and
compliance
Outokumpu is committed to conducting business with high integrity. Responsible and
ethical business practices concern everyone at Outokumpu. To secure this commitment,
Outokumpu has a group-wide ethics and compliance program in place. The program is a
key tool in building a sustainable ethics and compliance culture and helping employees
to comply with laws and regulations as well as internal rules and to make sound, ethical
decisions as part of their daily work.
During 2021, the implementation of all
elements of the ethics and compliance
program continued efficiently in close co-oper-
ation with the leadership, business areas, and
group functions. The roles and responsibilities
of ethics and compliance governance bodies
were reviewed and partly updated, which
included extending the network of compliance
contact persons and establishing a new global
network to further drive the implementation
of Outokumpu’s data protection program.
Furthermore, interaction with management
teams and managers in business areas and
group functions was emphasized through
trainings and engaging communications.
Outokumpu’s Code of Conduct is the core
element of Outokumpu’s ethics and compli-
ance program, as it sets the standards for what
is the right thing to do. That means acting
honestly, responsibly, and in an ethical manner
in everything we do. The revision of the Code
of Conduct was finalized in 2021, and the
emphasis was especially placed on Outokum-
pu’s commitment to the UN Guiding Principles
on Business and Human Rights. The revised
Code of Conduct was launched in May 2021
with mandatory Code of Conduct eLearning
for all Outokumpu employees. The eLearning
was completed by 89% of Outokumpu’s
employees in 2021. In addition, engaging Code
of Conduct-related webinars and other internal
and external communications were made to
various stakeholders.
Outokumpu adheres strictly to competition
laws and regulations and is continuously
putting significant efforts into this area. In
People & society | Ethics and compliance
Outokumpu Annual report 2021 | Sustainability review 38 / 44
Doing the right thing
Anna-Maija Heinonen, Head of Compliance, talks about the meaning
of responsible and ethical business practices.
It is said that Outokumpu
conducts business with high
integrity. What does this mean?
Acting with a high level of integrity is crucial
for Outokumpu as a trusted partner. Trust is
the key in conducting business in a respon-
sible and ethical manner. Our customers and
other stakeholders trust that we are playing
by the rules and making sound, ethical
decisions when working with them. They trust
us and it is critical that we keep that trust
by acting in the right way. At Outokumpu,
responsible and ethical business practices
are everyone’s responsibility and every single
act matters.
What have been the key
achievements within ethics and
compliance during 2021?
We have worked efficiently to further
implement Outokumpu’s ethics and
compliance program in close co-operation
with leadership, business areas and group
functions. In 2021, we have especially
emphasized that responsible and ethical
business practices are owned by everyone at
Outokumpu. In order to foster this message
throughout the organization, we have held
various training events on different topics
regarding ethics and compliance, such
as competition law compliance, provided
engaging communications, such as through
ethics and compliance-related case studies,
and strengthened the discussion on the
importance of ethical decision-making as part
of our daily activities. We have also worked
closely with several functions, such as with
the sustainability team on ESG topics and
with the internal audit on the review and
update of Outokumpu’s internal investigations
operating model in light of the EU Directive
on whistleblower protection. In addition, a
remarkable effort on this topic has been the
revision and launch of our Code of Conduct
for all Outokumpu employees globally.
What has changed in the
Code of Conduct?
The revised Outokumpu Code of Conduct was
launched successfully, both internally and
externally, in May 2021. The revised Code
of Conduct reflects Outokumpu’s current
business practices, stricter global compliance
requirements, and our commitment to various
international declarations and principles, such
as the UN Guiding Principles on Business
and Human Rights. In addition, the updated
Ethical Principles have been fully integrated
into the Code of Conduct and the whole
document has been organized on the basis of
Outokumpu’s new Ways of Working. Further-
more, we have emphasized the responsibility
of managers, added case examples, and
highlighted the importance of speaking up in
case there are any concerns.
How has the revised Code
of Conduct been taken
by the employees?
The Outokumpu Code of Conduct is applicable
to all employees, and we also expect that
suppliers comply with our Code of Conduct
and Supplier Requirements. It has been great
to see that Outokumpu’s employees have
been actively part of the revision and launch
of the Code of Conduct globally, and how
meaningful they see responsible and ethical
business practices and our Code of Conduct.
It has also been a significant effort to get
employees trained on the Code of Conduct.
Again, this has been achieved through joint
efforts and close co-operation with colleagues
from various functions at Outokumpu.
People & society | Ethics and compliance
Outokumpu Annual report 2021 | Sustainability review 39 / 44
Human rights at
Outokumpu
Outokumpu is committed to conduct its
business with high integrity. We respect and
promote human rights and conduct business in
a safe, sustainable and ethical manner.
Human rights are addressed in several publicly
available company documents: Outokumpu’s
Code of Conduct, our Corporate Responsibility
Policy, our Supplier Requirements, and our
Modern Slavery Statement. A stand-alone
Human Rights Policy and a Supplier Code of
Conduct are in preparation and expected to be
published during 2022.
Outokumpu is committed to the UN Guiding
Principles on Business and Human Rights
(UNGP) and fully honours internationally
recognized human rights as set forth in the
International Bill of Human Rights and the ILO
Declaration on Fundamental Principles and
Rights at Work. Outokumpu promotes diversity
and condemns discrimination and intolerance
of all kinds. Outokumpu complies with interna-
tional labour treaties and condemns all forms
of forced labour or use of child labour. There is
a freedom of association at Outokumpu.
Outokumpu also expects its customers and
suppliers to respect internationally recognized
human rights, and they must strive to avoid
causing or contributing to adverse human
rights impacts through their own activities and
seek to prevent or mitigate adverse human
rights impacts linked to their operations
through business relationships.
Affected human
rights:
Risks related to:
Right to
equality
Health &
safety
Right to rest
and leisure
Right to
environment
Freedom from
discrimination
& other rights
related to
minorities
Freedom from
slavery
Children’s
rights
Indigenous
rights
Supplier monitoring and
on-site assessments
Truck drivers’ working
conditions
Human trafficking in
trucks or other parts of
the supply chain
Workplace attractiveness
Greenhouse gas
emissions of our own
and suppliers’ operations
contribute to climate
change
Human right affected
Human right not affected
Salient human rights issues
People & society | Human rights
Outokumpu Annual report 2021 | Sustainability review 40 / 44
The CEO has the most senior level of oversight
and accountability for human rights in Outo-
kumpu. Responsibilities are cascaded down via
the Chief Technology Officer, who represents
sustainability in the company’s leadership
team to the VP – Group Sustainability who is
responsible for the management of ESG risks.
In 2022, the integration of human rights risk
management into the existing risk manage-
ment of Outokumpu will be led by the Head of
Supplier Sustainability Management, as most
of the identified high human rights risks are
connected to Outokumpu’s sourcing activities.
Learnings and
development in 2021
In 2021, Outokumpu committed to the UNGP.
In addition to investigating the potential human
rights impacts of a supplier in Brazil after the
report by Finnish NGO Finnwatch, we started
to implement the UNGP by drafting a human
rights policy and conducting a human rights
risk assessment to identify our potential and
actual impacts on human rights and our most
salient human rights issues. A second case of
potential human rights infringements at one
of our suppliers in Guatemala was brought
to our attention towards the end of the year,
which confirmed the urgent need for effective
management of human rights risks.
Identification of salient
human rights issues
In 2021, we carried out workshops with
internal stakeholders to identify the most
salient human rights risks. In addition, external
experts also reviewed Outokumpu’s public
and internal documents. Also, the report of
Finnwatch on Outokumpu’s human rights
due diligence and the views of the supplier
and the indigenous community affected were
considered in the process.
The identified human rights risks were rated
based on their scale, reach and remediability
to be able to make a prioritization based on
their severity, as well as on their probability
to occur. As a result of the human rights risk
assessment, we identified the most salient
human rights issues.
Management of salient
human rights issues
Management of salient human rights issues
requires the involvement of stakeholders.
When analysing the results of the human rights
risk assessment, it was found out that many
actions had already been done to prevent
human rights infringements, especially related
to for example safety and environmental
protection. In 2022, the salient human rights
risks will be checked for existing mitigation
actions that need to be linked to the human
rights risks. Risks without or with insufficient
mitigation actions will be defined and
implemented.
Risks related to salient
human rights issues
Supplier monitoring and on-site
assessments
As can be seen, most of Outokumpu’s salient
human rights issues are linked to sourcing
activities, which includes both the production
of the materials purchased, as well as their
transport. If supplier monitoring and on-site
assessments are conducted insufficiently, all
listed salient human rights are at risk. Another
important area is the due diligence that our
suppliers conduct on their suppliers and
business partners. For example, if this due
diligence is insufficient, there is a risk that
sub-suppliers of our suppliers are involved
in money laundering, terrorist funding or
corruption, infringing the right to equality and
our strict zero-tolerance policy for these types
of misconduct.
Truck drivers’ working conditions
In our business, goods need to be transported.
This is valid for the materials that we purchase,
the materials that we sell, as well as transport
between our own production sites. Truck
driver’s working conditions and the potential
infringement of their right to equality and their
right to rest and leisure are an issue that many
companies, including Outokumpu, face.
Human trafficking in trucks or other parts
of the supply chain
Not only truck driver’s rights are an issue
than many companies face, but also human
trafficking in international truck transport is
a topic that needs to be addressed. Human
trafficking is a world-wide problem that comes
in many shapes and sizes, harming adults
and children in countries rich and poor alike.
Therefore, also for us in Outokumpu it is
important to pay attention to this risk, as
also trucks that transport Outokumpu’s raw
materials and finished products could be
misused for this purpose.
Workplace attractiveness
Outokumpu is a stainless-steel producer with
an own ferrochrome mine. Traditionally, the
steel and mining industry is a male-dominated
one. There is a risk that females or minorities
may feel uncomfortable or fear that Outo-
kumpu is not an attractive place to work at.
Greenhouse gas emissions of our own and
suppliers’ operations contribute to climate
change
Both our own operations, as well as the
operations of our supplier emit greenhouse
gases, which contribute to global warming
and climate change. Climate change and
its increasing frequency of extreme weather
events, natural disasters, raising see levels,
floods, heat waves, droughts, desertification,
and water shortages threaten human rights, for
example the right to life (health & safety), and
the right to environment.
Access to remedy
All stakeholders can raise their concerns to
Outokumpu in various ways, including through
our SpeakUp channel. SpeakUp is an externally
operated channel to report breaches of
the Outokumpu’s Code of Conduct or other
misconduct. This can be done confidentially
and anonymously, if allowed by the local laws
and regulations. The channel is available
through our website and can be used in several
different languages.
Read more about human rights management
at Outokumpu
People & society | Human rights
Outokumpu Annual report 2021 | Sustainability review 41 / 44
Outokumpu Oyj reports on the material
developments of continuing sites and changes
in 2021 as part of the Annual Report. The
reported data includes all continuing sites.
Additional information is published on the
company’s website. The Annual Report 2021,
including Sustainability Review, was published
in March 2022.
Outokumpu’s report has been prepared in
accordance with the GRI Standards: Core
option according to the GRI Standards
reporting requirements. The materiality
assessment from 2021 and continuous
communication with stakeholders were the
basis for the decision on material topics and
relevant disclosures.
Full GRI disclosure
The independent practitioner’s assurance
report on the limited assurance conclusion
is available on page 43 in the Sustainability
Review. The Financial Statements 2021 have
been audited, and the auditor’s report is
available after the FInancial statements.
Measurement and
estimation methods
Economic responsibility
Most figures relating to economic responsibility
presented in this report are based on the
consolidated financial statements issued by
the Outokumpu Group and collected through
Outokumpu’s internal consolidation system.
Financial data has been prepared in accor-
dance with International Financial Reporting
Standards (IFRS). Outokumpu’s accounting
principles for the Group’s consolidated
financial statements are available in note 2 to
the consolidated financial statements.
All financial figures presented have been
rounded, and consequently the sum of indi-
vidual figures may deviate from the presented
aggregate figure. Key figures have been
calculated using exact figures. Using the GRI
guidelines as a basis, economic responsibility
figures have been calculated as follows:
Direct economic value generated
Direct economic value generated includes all
revenues received by Outokumpu during the
financial year. The sources of revenue include
sales invoiced to customers, net of discounts
and indirect taxes, revenues reported as
other operating income (including gains from
the disposal of Group assets), and revenues
reported as financial income, mainly dividend
and interest income.
Economic value distributed
Operating costs include the cost of goods and
services purchased by Outokumpu during the
financial year. Employee benefit expenses
include wages and salaries, termination
benefits, social security expenses, pension
and other post- employment and long-term
employee benefits, expenses from share-based
payments and other personnel expenses.
Taxes paid to the government include income
taxes. Deferred taxes are excluded from the
figure. Payments to providers of capital include
interest costs on debt and other financial
expenses during the financial year. Capitalized
interest is deducted from this figure. The
dividend payout is included in the payments to
providers of capital according to the proposal
by Outokumpu’s Board of Directors.
Community investments consist of donations
to and investments in beneficiaries external to
the company.
Local suppliers
In this report, vendors are defined as local if
they are located in the same country as the
Outokumpu location. Significant locations for
suppliers are production units that have a
melt shop, ie. Avesta, Sweden; Calvert, the US;
Sheffield, the UK and Tornio, Finland.
Environmental responsibility
Outokumpu’s climate change target is based
on science and approved by the Science Based
Target initiative. The target includes CO
2
eq
intensity of direct and indirect emissions of
electricity and upstream emissions. Emissions
are consolidated on production control.
CO
2
eq
emissions of electricity are calculated
and monitored by the emissions factor of
Outokumpu’s electricity mix of 130 kg CO
2
eq
/
MWh (2020: 152 kg CO
2
eq
/MWh), given by the
electricity supplier for the used electricity and
calculated as weighted average. It includes
0.5% of electricity use in EU market which
is coming with guarantees of origin from
ownerships in power production. In addition,
the location-based electricity emissions are
disclosed. They are calculated by the published
country- specific emissions factors of the
electricity generation of 2019 or 2020 if
available.
CO
2
eq
emissions outside the company
(scope3), except electricity, are covered by
more than 95%. They are calculated as follows:
• For alloys: by emissions factors of the
life-cycle assessment of relevant association.
Emission factor of ferronickel was calculated
with 30% from supplier specific emissions
and 70% of LCA e-factor published in 2021.
Emissions of sold ferrochrome are not
allocated to the stainless steel production of
the company.
• E-factor for lime and dolomite are calculated
with 63% from supplier specific emissions.
For used gases, electrodes and coke: by
emissions factors of ISO14404.
• For upstream emissions of light fuel oil: by
emissions factors of WorldSteel Association.
• For internal and product transport: by typical
distances and type of transport with the
well-to-wheel emissions according a study
(EEA/ACC/18/001/LOT1) of the European
Environmental Agency for the European
transport and with the published e-factors of
US EPA for US transport.
• For business travel: for the cars, trains
and flights by CO
2
eq
reports of the service
provider.
Upstream transport was assessed on data of
environmental product declaration of 2020 but
excluded from scope 3 emissions.
Scope of the report
Outokumpu has published its sustainability review as part
of the Annual Report 2021. Sustainability information is
also available at www.outokumpu.com/sustainability.
Scope of the report
Outokumpu Annual report 2021 | Sustainability review 42 / 44
The recycled content according to ISO14021
(recycled steel content) is calculated as the
sum of pre and post consumer scrap related to
crude steel production. Additionally, we report
on the recycled material content including
all recycled metals from treated own waste
streams entering the melt shop.
Energy efficiency is defined as the sum of
specific fuel and electricity energy of all
processes calculated as energy consumption
compared to the product output of that
process. It covers all company productions:
ferrochrome with 15%, melt shop, hot rolling
and cold rolling processes. Used heat values
and the consumption of energy are taken from
supplier’s invoices.
Water withdrawal is measured for surface and
sea water, taken from municipal suppliers and
estimated for rainwater amount.
Waste generation details on company’s typical
waste categories of hazardous and non-haz-
ardous classification are reported on webtool
data. In 2021, waste is reported as generated,
diverted from landfill and landfilled. Information
on onsite and offsite treatment and landfill
were not available. Waste treated is counted
as landfilled waste.
Customers’ CO
2
savings are calculated with the
difference of world’s stainless steel footprint of
6.12 tonnes CO
2eq
per tonne crude steel with
40% scrap recycling and 30% of nickel pig iron
production and Outokumpu’s footprint of 1.77
tonnes CO
2eq
per tonne steel and company’s
production.
Social responsibility
Health and safety figures
Health and safety figures reflect the scope of
Outokumpu’s operations as they were in 2021.
Safety indicators (accidents and preventive
safety actions) are expressed per million hours
worked (frequency). Safety indicators include
Outokumpu employees, persons employed by a
third party (contractor) or visitor accidents and
preventive safety actions. A workplace accident
is the direct result of a work-related activity
and it has taken place during working hours at
the workplace.
Accident types
• Lost time injury (LTI) is an accident that
caused at least one day of sick leave
(excluding the day of the injury or accident),
as the World Steel Association defines it.
One day of sick leave means that the injured
person has not been able to return to work
on their next scheduled period of working
or any future working day if caused by an
outcome of the original accident. Lost-day
rate is defined as more than one calendar
day absence from the day after the accident
per million working hours.
• Restricted work injury (RWI) does not cause
the individual to be absent, but results in
that person being restricted in their capabil-
ities so that they are unable to undertake
their normal duties.
• Medically treated injury (MTI) has to be
treated by a medical professional (doctor or
nurse).
• First aid treated injury (FTI), where the injury
did not require medical care and was treated
by a person themselves or by first aid trained
colleague.
• Total recordable injury (TRI) includes
fatalities, LTIs, RWIs and MTIs, but FTIs are
excluded.
• All workplace accidents include total
recordable injuries (TRI) and first aid treated
injuries (FTI)
Proactive safety actions
Hazards refer to events, situations or actions
that could have led to an accident, but where
no injury occurred. Safety behavior observa-
tions (SBOs) are safety-based discussions
between an observer and the person being
observed. Other preventive safety action
includes proactive measures.
Sick-leave hours and absentee rate
Sick-leave hours reported are total sick leave
hours during a reporting period. Reporting units
provide data on absence due to illness, injury
and occupational diseases on a monthly basis.
The absentee rate (%) includes the actual
absentee hours lost expressed as a percentage
of total hours scheduled.
Employee benefit expenses
Employee benefit expenses include wages and
salaries, termination benefits, social security
expenses, pension and other post- employment
and long-term employee benefits, expenses
from share-based payments and other
personnel expenses.
Training costs
Training costs include external training-related
expenses such as participation fees. Wages,
salaries and daily allowances for participants
in training activities are not included, but the
salaries of internal trainers are included.
Training days per employee
The number of days spent by an employee in
training when each training day is counted as
lasting eight hours.
Bonuses
A bonus is an additional payment for good
performance. These figures are reported
without social costs or fringe benefits.
Personnel figures
Rates are calculated using the total employee
numbers at the end of the reporting period.
The calculations follow the requirements of GRI
Standards. The following calculation has been
applied e.g.
Hiring rate = New Hires / total number of
permanent employees by year-end
Average turnover rate = (Leavers + New Hires)
/ (total number of permanent employees by
year-end × 2)
Days lost due to strikes
The number of days lost due to strikes is calcu-
lated by multiplying the number of Outokumpu
employees who have been on strike by the
number of scheduled working days lost. The
day on which a strike starts is included.
Scope of the report
Outokumpu Annual report 2021 | Sustainability review 43 / 44
Independent practitioner’s
limited assurance report
To the Management of Outokumpu Oyj
We have been engaged by the Management
of Outokumpu Oyj (hereinafter also the
“Company”) to perform a limited assurance
engagement on Selected sustainability
information for the reporting period 1 January
2021 to 31 December 2021, disclosed in
Outokumpu Oyj’s Sustainability Review 2021
and in Outokumpu Oyj’s online sustainability
tool available on Outokumpu’s website.
Selected sustainability information
The scope of our work was limited to assurance
over the information summarized below.
The information covers Outokumpu Oyj, as
indicated in the Outokumpu Oyj’s Sustainability
Review 2021 and in Outokumpu Oyj’s online
sustainability tool. We have not been engaged
to provide assurance on any information
relating to prior reporting periods or to any
other information in the Outokumpu Oyj’s
Sustainability Review 2021 and in Outokumpu
Oyj’s online sustainability tool.
The economic, social and environmental
sustainability indicators covered within the
scope of assurance include Topic-Specific
Disclosures as well as General Disclosures. The
Topic-Specific Disclosures are a combination of
GRI Standards Disclosures and the Company’s
own disclosures. The assured indicators
disclosed within the Outokumpu’s Sustain-
ability Review 2021 have been identified in the
Company’s GRI Standards Content Index, which
is available on the company’s website. All of
the disclosures in the online sustainability tool
have been assured.
Management’s responsibility
The Management of Outokumpu Oyj is
responsible for preparing the Selected
sustainability information in accordance with
the Reporting criteria as set out in Outokumpu
Oyj reporting instructions described in
Outokumpu Oyj’s Sustainability Review 2021
and the GRI Standards of the Global Reporting
Initiative. The Management of Outokumpu Oyj
is also responsible for such internal control
as the management determines is necessary
to enable the preparation of the Selected
sustainability information that are free from
material misstatement, whether due to fraud
or error.
Practitioner’s independence,
other ethical requirements
and quality control
We have complied with the independence and
other ethical requirements of the International
Code of Ethics for Professional Accountants
(including International Independence
Standards) issued by the International Ethics
Standards Board for Accountants (IESBA Code),
which is founded on fundamental principles of
integrity, objectivity, professional competence
and due care, confidentiality and professional
behavior.
PricewaterhouseCoopers Oy applies
International Standard on Quality Control 1
and accordingly maintains a comprehensive
system of quality control including documented
policies and procedures regarding compliance
with ethical requirements, professional
standards and applicable legal and regulatory
requirements.
Practitioner’s responsibility
Our responsibility is to express a limited assur-
ance conclusion on the Selected sustainability
information based on the procedures we have
performed and the evidence we have obtained.
We conducted our limited assurance engage-
ment in accordance with the International
Standard on Assurance Engagements (ISAE)
3000 (revised) “Assurance Engagements
Other than Audits or Reviews of Historical
Financial Information”. The Standard requires
that we plan and perform the engagement to
obtain limited assurance about whether the
Selected sustainability information is free from
material misstatement.
Independent assurance report
Outokumpu Annual report 2021 | Sustainability review 44 / 44
In a limited assurance engagement, the
evidence-gathering procedures are more
limited than for a reasonable assurance
engagement, and therefore less assurance
is obtained than in a reasonable assurance
engagement. An assurance engagement
involves performing procedures to obtain
evidence about the amounts and other
information in the Selected sustainability
information. The procedures selected depend
on the practitioner’s judgment, including an
assessment of the risks of material misstate-
ment of the Selected sustainability information.
Our work consisted of, amongst others, the
following procedures:
• Interviewing a representative of senior
management of the Company.
• Conducting three video interviews with sites
in Finland, Sweden and the United States of
America.
• Interviewing employees responsible for
collecting and reporting the selected
information on sustainability indicators at the
Group level.
• Assessing how Group employees apply the
reporting instructions and procedures of the
Company.
• Testing the accuracy and completeness of
the information from original documents and
systems on a sample basis.
• Testing the consolidation of information and
performing recalculations on a sample basis.
• Considering the disclosure and presentation
of the Selected sustainability information.
Limited assurance conclusion
Based on the procedures we have performed
and the evidence we have obtained, nothing
has come to our attention that causes us
to believe that Outokumpu Oyj’s Selected
sustainability information for the reporting
period ended 31 December 2021 are not
properly prepared, in all material respects, in
accordance with the Reporting criteria.
When reading our limited assurance report,
the inherent limitations to the accuracy and
completeness of sustainability information
should be taken into consideration.
Our assurance report has been prepared in
accordance with the terms of our engagement.
We do not accept, or assume responsibility to
anyone else, except to Outokumpu Oyj for our
work, for this report, or for the conclusions that
we have reached.
Helsinki 2 March 2022
PricewaterhouseCoopers Oy
Authorised Public Accountants
Tiina Puukkoniemi
Partner, (KHT)
Sustainability Assurance and Reporting Lead
Janne Rajalahti
Partner, (KHT)
Independent assurance report
Governance
This Governance section
includes Outokumpu’s Corporate
Governance Statement,
Remuneration Report as well as
information on key risks.
Outokumpu Annual report 2021 | Governance 2 / 32
Regulatory and structural framework
Outokumpu Oyj, the Group’s parent company,
is a public limited liability company, listed on
Nasdaq Helsinki and incorporated and domi-
ciled in Finland. In its corporate governance
and management, Outokumpu Oyj complies
with the laws and regulations applicable to a
Finnish public company, the company’s Articles
of Association and the Corporate Governance
Policy approved by the company’s Board of
Directors.
Outokumpu follows the Finnish Corporate
Governance Code, effective as of January 1,
2020. The Finnish Corporate Governance Code
is issued by the Finnish Securities Market
Association and adopted by Nasdaq Helsinki.
The governing bodies of the parent company
Outokumpu, i.e., the General Meeting of
Shareholders, the Board of Directors, and
the President and Chief Executive Officer
(CEO), have the ultimate responsibility for
the management and operations of the
Outokumpu Group.
The latest Corporate Governance Statement
and other updated corporate governance
information can be found on the Group’s
Corporate Governance website.
The General Meeting of Shareholders convenes
at least once a year. In accordance with the
Finnish Companies Act, the General Meeting
of Shareholders is the highest decision-making
body of the company. The Act provides
that certain important decisions such as
amendments to the Articles of Association,
approval of the financial statements, increasing
or decreasing share capital, decisions on
dividends, and the election of the Board
of Directors and the auditors, are the
exclusive domain of the General Meeting of
Shareholders. In addition, the Annual General
Meeting makes advisory resolutions on the
Remuneration Policy and the Remuneration
Report.
Corporate Governance
Statement 2021
Outokumpu
Oyj, the Group's
parent company, is
incorporated and
domiciled in Finland.
Its headquarters are
located in Helsinki.
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 3 / 32
Composition and operations of the Board of Directors December 31, 2021
Kari Jordan
Chairman of the
BoardofDirectors
b. 1956, Finnish citizen
M.Sc. (Econ.), Vuorineuvos
(Finnish honorary title)
Outokumpu Board member
2018–
Chairman of the Board 2018–
Chairman of the Remuneration
Committee
Work experience
CEO: Metsäliitto Cooperative 2004–2017
President and CEO: Metsä Group 2006–2018
Chairman: Metsä Board Corporation 2005–2018
Chairman: Metsä Fibre Oy 2006–2017
Chairman: Metsä Tissue Corporation 2004–2017
Executive Vice President and Member of the Group Executive
Management: Nordea AB and predecessors 1994–2004
Member of the Board of Management: OKOBANK 1987–1994
Vice President: Citicorp Investment Bank Ltd 1986–1987
Several management positions: Citibank Plc 1981–1986
Work experience
Chief Financial Officer and Deputy to the CEO: Metso Outotec
2020–
Chief Financial Officer and Deputy to the CEO: Metso
Corporation 2016–2020
Executive Vice President and Chief Financial Officer: Cargotec
Corporation 2008–2016
SVP, Investor Relations and Communications: Cargotec
Corporation 2005–2008
VP, Investor Relations: Metso Corporation 2004–2005
Investor Relations Manager: Metso Corporation 2002–2004
Equity Analyst: Mandatum Stockbrokers (part of Sampo group)
1999–2002
Associate Consultant: Arkwright AB, Stockholm, Sweden
1997–1998
Positions of trust
Supervisory Board member: Varma 2021–
Board member (2012–2016) and Audit Committee Chairman
(2014–2016): Metso Corporation
Board member: Basware Corporation 2010–2013
Eeva Sipilä
Vice Chairman of the
BoardofDirectors
b. 1973, Finnish citizen
M. Sc. (Econ.), CEFA
Outokumpu Board member
2017–
Vice Chairman of the Board
2020–
Chairman of the Audit
Committee
Positions of trust
Vice Chairman of the Board of Directors: Nordea Bank Abp
2019–
Chairman of the Supervisory Board: Varma Mutual Pension
Insurance Company 2015–2019
Vice Chairman of the Board: Nokian Tyres Plc 2018–2021
Chairman of the Board: Finland Chamber of Commerce
2012–2016
Chairman of the Board: Finnish Forest Industries Federation
2009–2011
Vice Chairman of the Board: Confederation of Finnish Industries
(EK) 2009–2011, 2013–2014
Holds several positions of trust in foundations and non-profit
associations.
All Board members are independent of the company and its significant shareholders. Board of Directors’ CVs are also available at our webpages
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 4 / 32
Work experience
Executive Vice President, Head of Stora Enso Paper, member of
the Group Leadership team 2014–
Senior Vice President, Paper Sales, Printing and Living: Stora
Enso 2013–2014
Senior Vice President, Office Paper Sales, Printing and Reading:
Stora Enso 2012–2013
Director, Customer Service Centre West, Publication Paper:
Stora Enso 2010–2012
Several managerial positions in the paper business, 1996–2010
Business analyst, Jaakko Pöyry Consulting, Singapore
1994–1996
Positions of trust
Member of the Supervisory Board: Wienerberger AG, May 2021–
Board member: Climate Leadership Coalition 2019–
Board member (2017–), Vice Chair (2019–2020) and Chair
(2020–): EURO-GRAPH asbl
Board member: Finnish Forest Industries Federation 2015–
Kati ter Horst
Member of the
BoardofDirectors
b. 1968, Finnish citizen
M.Sc. (Econ.), MBA (Interna-
tional Business)
Outokumpu Board member
2016–
Member of the Remuneration
Committee
Work experience
Chief Executive Officer: Salzgitter AG 2011–2021
Vice Chairman, Executive Board: Salzgitter AG 2007–2011
Chief Financial Officer: Salzgitter AG 2001–2011
Executive Board Member: Salzgitter AG and Preussag Stahl AG
1996–2001
General Representative and Head of Central Corporate Planning:
Preussag Stahl AG 1995–1996
Positions of trust
Member of the EIB Group Climate and Environment Advisory
Council: 2021–
Chairman of the German Steel Industry Employer’s Association
2020–
Member of the Presidential Board: Federation of German
Industries (BDI) 2018–2021
Member of the Senate (2014–2016) and Chairman of the
Senate: Fraunhofer Society 2016–
Member of the Supervisory Board: Aurubis AG 2009–2021
Member of the Supervisory Board: TÜV Nord AG 2008–
Member of the Supervisory Board: Öffentliche Versicherung
Braunschweig (Insurance) 2002–
Heinz Jörg Fuhrmann
Member of the
BoardofDirectors
b. 1956, German citizen
PhD, Metallurgy, University of
Berlin, Germany
Master’s Degree, Metallurgy,
RWTH Aachen University,
Germany
Honorary Professor, RWTH
Aachen University, Germany
Outokumpu Board member
2021–
Member of the Remuneration
Committee
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 5 / 32
Work experience
Ambassador of Finland: London 2015–2019
Ambassador of Finland: Berlin 2011–2015
Director General, Europe: Ministry for Foreign Affairs of Finland
2008–2011
Deputy Director General, Americas and Asia: Ministry for Foreign
Affairs 2007–2008
Chief Policy Adviser, Team Lead of Trade Policy and International
Relations: Confederation of Finnish Industries, EK 2005–2006
Director General, Americas and Asia: Ministry for Foreign Affairs
2003–2005
Deputy Director General, Americas and Asia: Ministry for Foreign
Affairs 2002–2003
Deputy Director General, Trade Policy and Economic
Cooperation: Ministry for Foreign Affairs 2000–2001
Deputy Director General, the EU Secretariat: Ministry for Foreign
Affairs 1996–2000
Member of the Cabinet of the Finnish Commissioner: EU
Commission, Brussels 1995–1996
Work experience
Deputy Managing Director: Metsäliitto Cooperative 2017–
Chief Financial Officer (CFO): Metsä Group 2010–
Chief Financial Officer (CFO) and Substitute to CEO, Member of
the Group Executive Committee: Outotec Oyj 2009–2010
Chief Financial Officer (CFO), Member of the Group Executive
Committee: Outotec Oyj 2006–2009
Executive Vice President, Corporate Controller, Member of the
Group Executive Committee: Outokumpu Oyj 2005–2006
Senior Vice President, Corporate Controller: Outokumpu Oyj
2001–2005
Vice President, Corporate Controller: Outokumpu Oyj
1998–2001
Päivi Luostarinen
Member of the
BoardofDirectors
b. 1955, Finnish citizen
LL.M., University of Helsinki,
Finland
Outokumpu Board member
2021–
Member of the Audit Committee
Vesa-Pekka Takala
Member of the
BoardofDirectors
b. 1966, Finnish citizen
M.Sc. (Econ.)
Outokumpu Board member
2019–
Member of the Audit Committee
Positions of trust
Board member: Metsä Fibre Oy 2021–
Board member: Metsä Tissue Oy 2018–
Board member: Metsä Spring Oy 2018–
Chairman of the Board: Metsä Group Treasury Oy 2013–
Board member, the Economy and Tax Committee: Finnish Forest
Industries 2017–
Member of the Delegation: the Helsinki School of Economics
Foundation 2014–
Board member, the Economy and Tax Committee: Confederation of
Finnish Industries (EK) 2013–2016
Positions of trust
Member: Finnish High Court of Impeachment 2012–2015
Board member: Finnish Institute of International Affairs
2010–2014
Member of the Supervisory Board: Finnfund 2005–2006
Board member: Finnfund 2002 and deputy member
2000–2001, 2003–2005 and 2007–2009
Ms. Luostarinen has in addition held several positions, starting
in 1981, in the Foreign Service in Helsinki, at the Permanent
Mission of Finland to the UN in New York and at the Permanent
Delegation of Finland to the EU in Brussels.
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 6 / 32
Pierre Vareille
Member of the
BoardofDirectors
b. 1957, French citizen, Knight
of the Legion of Honour in July
2003
M.Sc. (Ecole Centrale Paris), BA
(Econ.) (Sorbonne University),
Degree in Controlling and
Finance (Institut de Contrôle de
Gestion)
Outokumpu Board member
2018–
Member of the Remuneration
Committee
Work experience
Chairman and CEO 2012–2013 and CEO 2013–2016:
Constellium
Chairman of the Board and CEO: FCI SA 2008–2012
Chief Operating Officer: FCI SA 2007–2008
Group Chief Executive: Wagon Plc. 2004–2007
Senior Executive Vice President and President of the Aluminium
Conversion Sector: Pechiney 2002–2004
Executive Vice President and President of the Exhaust Systems
Business Group: Faurecia 1999–2002
Chairman and CEO: GFI Aerospace (now LISI Aerospace)
1995–1999
CEO of Group subsidiaries Cefival and Specitubes 1990–1995
and several operational and staff positions 1982–1989:
Vallourec Group
Positions of trust
Vice Chairman of the Board and Lead Independent Director
(2021–), Chairman of the Nomination, Remuneration and
Governance Committee: Vallourec Group
Chairman of the Board: Société Bic SA 2018–2021
Board member (2015–), member of the Audit Committee
(2018–2019) and the Nomination and Compensation
Committee (2019–): Verallia
Founder and Co-President: The Vareille Foundation 2014–
Member of the Strategic Committee: CentraleSupelec 2008–
Lead Director and Vice President of the Board: Société Bic SA
2016–2018
Board member and member of the Audit Committee: Société
Bic SA 2009–2016
Board member: CentraleSupelec 2008–2019
Chairman: European Aluminium Association 2015–2016
President: Alumni Association of the Ecole Centrale 2011–2013
In addition, Mr. Vareille has been a Member of the Board of
Directors of diverse organizations such as the Advisory Board of
the Confederation of British Industry, the European Committee
of the MEDEF (Confederation of the French Industry) and the
GIFAS (French Aerospace Industries Association).
Julia Woodhouse
Member of the
BoardofDirectors
b. 1958, British citizen
BA (hons) History
Outokumpu Board member
2019–
Member of the Audit
Committee
Member of the ESG Advisory
Council 2021–
Work experience
Director, Global Chassis Purchasing, Ford Motor Company
2016– 2018
Director, Global Power Train Components Purchasing, Ford Motor
Company 2012–2016
Director, Ford of Europe Program Purchasing, Ford Motor
Company 2005–2011
Director, Implementation Team, Ford Motor Company
2004–2005
Director, Team Value Management, Strategy & Business
Development, Ford Motor Company 2002–2003
Positions of trust
Independent board member and member of Audit Committee
and Remuneration Committee: Surface Transforms Plc 2021–
Independent non-executive board member, Standards &
Regulation Board: Royal Institution of Chartered Surveyors 2020–
Member of the Advisory Board: Nexcel, a BP/Castrol automotive
technology start-up company 2019–2020
Member of the Strategic Advisory Board: Ford/Michelin
2016–2018
In addition, Ms. Woodhouse has held several additional roles on
committees and operating boards.
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 7 / 32
The Board assesses the independence of the
Board members and records the outcome in
the Board minutes. All members of the Board
of Directors on December 31, 2021 were
independent of the company and its significant
shareholders.
Outokumpu shares and share-based
rights (parent and subsidiaries) owned
by each director and their controlled
corporations on December 31, 2021
Board member
Number of
shares
Kari Jordan 300,000
Eeva Sipilä 45,738
Heinz Jörg Fuhrmann 5,611
Kati ter Horst 39,609
Päivi Luostarinen 5,611
Vesa-Pekka Takala 36,459
Pierre Vareille 50,440
Julia Woodhouse 25,459
Total 508,927
Operations and appointment
of the Board of Directors
The general objective of the Board of Directors
is to direct Outokumpu’s business and strate-
gies in a manner that secures a significant and
sustained increase in the value of the company
for its shareholders and to ensure that the
company acts as a reliable and trusted partner
towards all its stakeholders. To this end, the
members of the Board are expected to act
as a resource and to offer their expertise and
experience for the benefit of the company. The
tasks and responsibilities of the company’s
Board of Directors are determined on the basis
of the Finnish Companies Act as well as other
applicable legislation.
The Board of Directors has the general
authority to decide and act in all matters
not reserved for other corporate governance
bodies by law or under the provisions of the
company’s Articles of Association. The general
task of the Board of Directors is to organize
and oversee the company’s management and
operations and it has the duty at all times to
act in the best interest of the company.
The Board of Directors has established the
rules of procedure that define its tasks and
operating principles in the Charter of the Board
of Directors. The main duties of the Board of
Directors are as follows:
With respect to directing the
company’s business and strategies:
• Decide on Outokumpu’s strategy and
the long-term targets of the Outokumpu
Group (the “Group”) and monitor their
implementation;
• Decide on annual business plans and
monitor their implementation;
• Decide on annual limits for the Group’s
capital expenditure, monitor related
implementation, review performance and
decide on changes;
• Decide on any major and strategically
significant investments and monitor their
implementation;
• Decide on any major and strategically
important business acquisitions and divest-
ments and monitor their implementation;
• Decide on the Group’s external financing and
treasury matters as follows and as further
defined in the Board Charter;
i. All long-term financing arrangements by any
Group company;
ii. Any major leasing arrangements; sale of
receivables programs; short-term financing
arrangements; and pledges and guarantees;
by any Group company;
iii. Any major short-term derivatives or long-
term derivatives, or any derivatives not
done for hedging or liquidity management
purposes; by any Group company;
iv. Any other significant financing and treasury
transactions which are otherwise out of the
Group’s normal course of business;
• Decide on any other commitments by any
of the Group companies that are out of the
ordinary either in terms of value or nature,
taking into account the size, structure, and
field of the Group’s operations.
With respect to organizing the
company’s management and operations:
• Nominate and dismiss the CEO and his/her
deputy, if any, monitor his/her performance
and decide on the CEO’s terms of service,
including incentive schemes, on the basis of
a proposal made by the Board’s Remunera-
tion Committee;
• Nominate and dismiss the members of
the Outokumpu Leadership Team and to
define their areas of responsibility based
on a proposal by the Board’s Remuneration
Committee;
• Monitor the adequacy and allocation of the
Group’s top management resources;
• Decide on any significant changes to the
Group’s business organization;
• Decide on the Group’s ethical values and
modes of activity
• Ensure that policies outlining the principles
of corporate governance are in place;
• Ensure that policies outlining the principles
of managing the company’s insider issues
and related party transactions are being
observed;
• Ensure that the company has guidelines for
any other matters that the Board deems
necessary and that fall within the scope of
the Board’s duties and authority.
With respect to the preparation
of matters to be resolved by the
General Meetings of Shareholders:
• Establish a dividend policy and issue a
proposal to the Annual General Meeting on
dividend distribution;
• Make a proposal to the Annual General
Meeting concerning the election of an
external auditor and auditing fees;
• Make proposals to the Annual General
Meeting concerning the company’s Remuner-
ation Policy and Remuneration Report; and
• Make other proposals to General Meetings of
Shareholders.
With respect to internal control
and risk management:
• Discuss and approve interim reports,
statements, and annual accounts;
• Monitor significant risks related to the
Group’s operations and the management of
such risks;
• Ensure that adequate policies for risk
management are in place;
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 8 / 32
• Monitor financial position, liquidity, and debt
maturity structure;
• Monitor the Group’s control environment;
• Monitor and assess how agreements and
other legal acts between the company and
its related parties meet the requirements of
the ordinary course of business and arm’s
length terms; and
• Reassess its activities on a regular basis.
In 2021, the Board of Directors assessed
its ways of working and performance with
support from an external service provider. The
assessment results were presented to the
Shareholders’ Nomination Board.
According to the company’s Articles of
Association, the Board of Directors constitutes
a quorum when more than half of its elected
members are present. A decision by the Board
of Directors shall be the opinion supported by
more than half of the members present at a
meeting. In the event of a tie, the Chairman
shall have the casting vote.
The Annual General Meeting elects the
Chairman, Vice Chairman and other members
of the Board of Directors for a term expiring
at the close of the following Annual General
Meeting. The entire Board of Directors is, there-
fore, elected at each Annual General Meeting.
A Board member may be removed from office
at any time by a resolution passed by a
General Meeting of Shareholders. Proposals
to the Annual General Meeting concerning
the election of Board members that have
been made known to the Board of Directors
prior to the Annual General Meeting will be
made public if such a proposal is supported
by shareholders holding a minimum of 10% of
all the company’s shares and voting rights and
the person being proposed has consented to
such nomination.
Under the company’s Articles of Association,
the Board shall have a minimum of five and
a maximum of twelve members. A Board
consisting of eight members was elected at the
Annual General Meeting 2021. Board meetings
will be held as regularly as deemed necessary,
but at least five times every year. In 2021, the
Board of Directors had 12 meetings, and the
attendance rate was 100%.
Breakdown of individual
attendance at Board meetings
12 meetings in 2021 Attendance
Kari Jordan 12/12
Eeva Sipilä 12/12
Heinz Jörg Fuhrmann,
as of March 31, 2021 11/11
Kati ter Horst 12/12
Päivi Luostarinen,
as of March 31, 2021 11/11
Vesa-Pekka Takala 12/12
Pierre Vareille 12/12
Julia Woodhouse 12/12
Diversity principles of the
Board of Directors
Diversity of the Board of Directors supports
the vision and long-term objectives of the
Group. Outokumpu recognizes the importance
of a diverse Board, taking age, educational
and international background, professional
expertise, experience from relevant industrial
sectors as well as a well-balanced gender
representation into account. The Shareholders’
Nomination Board shall take the diversity
principles into consideration when preparing
its proposals to the Annual General Meeting
and the progress in achieving set objectives
shall be disclosed annually. The objective of
a well-balanced Board structure in terms of
gender representation was achieved in 2021.
The review by the Board of Directors is found
on p. 2 in the Financials section.
Composition and operations
of the Board committees
The Board of Directors has set up two perma-
nent committees consisting of Board members
and has confirmed the rules of procedure for
these committees. Both committees report to
the Board of Directors.
Audit Committee
The Audit Committee consists of a minimum
of three Board members. At least one of the
Committee members shall have an appropriate
education and special expertise in corporate
finance, accounting or auditing. The rules of
procedure for and responsibilities of the Audit
Committee have been established in the Audit
Committee Charter approved by the Board of
Directors. The task of the Audit Committee is,
in greater detail than is possible for the Board
as a whole, to deal with matters relating to
financial statements, the company’s financial
position, auditing work, internal controls and
compliance matters, the scope of internal and
external audits, fees paid to the auditors, the
Group’s tax position, the Group’s financial
policies, monitoring and assessing related
party transactions and other procedures for
managing Group risks. In addition, the Audit
Committee prepares a recommendation to
the Board of Directors concerning the election
of an external auditor and auditing fees at a
General Meeting. The Audit Committee met six
times during 2021, and the attendance rate
was 100%.
Breakdown of individual attendance
at Audit Committee meetings
6 meetings in 2021 Attendance
Eeva Sipilä 6/6
Päivi Luostarinen,
as of March 31, 2021 4/4
Vesa-Pekka Takala 6/6
Julia Woodhouse 6/6
Remuneration Committee
The Remuneration Committee consists of
the Chairman of the Board and a minimum
of two additional Board members. The
task of the Remuneration Committee is to
prepare proposals to the Board concerning
the appointment of the company’s top
management and principles relating to the
compensation they receive as well as the
company’s Remuneration Policy and Remuner-
ation Report. The terms of service and benefits
of the Leadership Team members other than
the CEO, are determined and approved by the
Remuneration Committee.
The Committee’s rules of procedure are further
defined in the Remuneration Committee
Charter, approved by the Board. The Remuner-
ation Committee met six times during 2021,
and the attendance rate was 100%.
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 9 / 32
Outokumpu’s Annual General Meeting in 2012
resolved to establish a Shareholders’ Nomi-
nation Board to annually prepare proposals to
the Annual General Meeting for the election,
composition, and compensation of the
members of the Board of Directors.
The Annual General Meeting has adopted a
Charter of the Shareholders’ Nomination Board,
last revised in 2019, which regulates the
nomination and composition, and defines the
tasks and duties of the Nomination Board.
The Nomination Board consists of five
members. Four of the members represent the
company’s four largest shareholders and the
Chairman of the company’s Board of Directors,
in his capacity as an expert member, acts as
the fifth member of the Nomination Board.
The representatives of the four largest share-
holders of the company are annually appointed
to the Nomination Board. The largest share-
holders of the company are determined on
the basis of the shareholders’ register of the
company and the ownership situation at the
closing of Nasdaq Helsinki’s last trading day in
August. The company’s shareholders’ register
only consists of shareholders who are directly
registered in the Finnish book-entry system.
Accordingly, to be eligible for membership in
the Nomination Board, a nominee-registered
shareholder needs to register the respective
shareholding directly in the Finnish book-entry
system for at least the said date.
In case a shareholder, who under the Finnish
Securities Markets Act has an obligation to
announce changes in its shareholdings and to
sum up its holdings together with the holdings
of certain other parties when doing so (flagging
obligation), presents no later than on August
31 a written request to that effect to the
Chairman of the company’s Board of Directors,
then the holdings of such shareholder and
other parties shall be summed up for the
purposes of determining the holdings of the
largest shareholders.
In case two or more shareholders own an equal
number of shares and, as a consequence, the
four largest shareholders cannot be deter-
mined, the status of these shareholders among
the four largest shareholders shall be resolved
by drawing lots.
The Chairman of the Board of Directors shall
request the four largest shareholders of the
company each to nominate one member to
the Nomination Board. Should a shareholder
wish not to use its nomination right, the right
transfers to the next largest shareholder who
would otherwise not have a nomination right.
The term of office of the members of the
Nomination Board expires annually when a
new Nomination Board has been appointed. A
shareholder may change its representative in
the Nomination Board mid-term, should there
be a weighty cause for such a change.
Decisions of the Nomination Board shall be
unanimous. If unanimity cannot be reached,
members of the Nomination Board shall
present their own proposals to the Annual
General Meeting individually or jointly with
other members of the Nomination Board.
Shareholders with the right to appoint repre-
sentatives to the Nomination Board in 2021
were Solidium Oy, Ilmarinen Mutual Pension
Insurance Company, Varma Mutual Pension
Insurance Company and the Social Insurance
Institution of Finland.
These shareholders nominated the following
individuals as their representatives in the
Nomination Board: Antti Mäkinen, Managing
Director of Solidium Oy, Jouko Pölönen,
President and CEO of Ilmarinen Mutual Pension
Insurance Company, Pekka Pajamo, CFO at
Varma Mutual Pension Insurance Company
and Outi Antila, Director General at The Social
Insurance Institution of Finland, Antti Mäkinen
was elected Chairman of the Nomination
Board, and Kari Jordan, Chairman of the
Outokumpu Board of Directors, served as an
expert member.
The Nomination Board convened three times,
and the attendance rate was 92%. The
Nomination Board has submitted its proposals
regarding the Board composition and director
compensation to Outokumpu’s Board of
Directors, and the Board has incorporated
these proposals into the notice convening the
Outokumpu 2021 Annual General Meeting of
Shareholders.
Shareholders’ Nomination Board
Breakdown of individual attendance at
Remuneration Committee meetings
6 meetings in 2021 Attendance
Kari Jordan 6/6
Heinz Jörg Fuhrmann,
from March 31, 2021 3/3
Kati ter Horst 6/6
Pierre Vareille 6/6
Temporary working groups
To handle specific tasks, the Board of Directors
can also set up temporary working groups
consisting of Board members. These working
groups report to the Board of Directors. No
temporary working groups were set up in 2021.
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 10 / 32
Executive Management
Biographical details of the CEO and the Leadership Team on December 31, 2021
Heikki Malinen
President and CEO
b. 1962, Finnish citizen
M.Sc. (Econ.), MBA (Harvard)
President and Chief Executive Officer 2020–
Chairman of the Outokumpu Leadership Team
2020–
Responsibility: Group management, legal and
compliance, safety and health and business
area Europe
Employed by the Outokumpu Group since
2020
Pia Aaltonen-Forsell
CFO
b. 1974, Finnish citizen
M.Soc.Sc. (Econ.), MBA
Chief Financial Officer 2019–
Member of the Outokumpu Leadership Team
2019–
Responsibility: Financial and business
controlling, treasury, mergers and acquisitions,
taxation, internal controls and internal audit,
investor relations, general procurement,
strategy and Transformation Office
Employed by Outokumpu Group since 2019
Work experience
Executive Vice President & CFO: Ahlström-Munksjö
2018
Chief Financial Officer: Munksjö 2015–2017
Chief Financial Officer: Vacon 2013–2015
Senior Vice President, Finance, IT and M&A, Building
and Living: Stora Enso 2012–2013
Senior Vice President & Group Controller: Stora Enso
2009–2012
Various finance and managerial positions: Stora Enso
2000–2009
Positions of trust
Board member (2017–) and Audit Committee Chair
(2018–): Uponor
Work experience
President and CEO: Posti Group Corporation (formerly
Itella Corporation) 2012–2019
President and CEO: Pöyry PLC 2008–2012
Executive Vice President, Strategy, member of the UPM
Executive Team: UPMKymmene Corporation, Helsinki,
Finland 2006–2008
President: UPM North America, Chicago, USA
2004–2005
President of Sales: UPM North America, Chicago, USA
2002–2003
Managing Partner: Jaakko Pöyry Consulting, New York,
USA 2000–2001
Engagement Manager: McKinsey & Co, Atlanta, USA
1997–1999
Director, Business Development UPM Paper Divisions,
Helsinki, Finland 1994–1996
Positions of trust
Vice Chairman (2019–2020) and Board member:
Outokumpu 2012–2020
Vice Chairman (2016–2018) and Board member:
Service Sector Employers PALTA 2013–2019
Chairman: Realia Group 2017–2020
Board member: East Office of Finnish Industries
2012–2019
Chairman: American Chamber of Commerce (AmCham
Finland) 2009–2014
Board member: Ilmarinen Mutual Pension Insurance
Company 2014–2016
Board member: Federation of Finnish Technology
Industries 2011–2012
Supervisory Board member: Finnish Fair Corporation
2014–2019
Supervisory Board member: Ilmarinen Mutual Pension
Insurance Company 2013
Board member: Botnia Oy 2006–2008
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 11 / 32
Thomas Anstots
Executive Vice President, Commercial,
Business Area Europe
b. 1962, German citizen
M.Sc. (Mechanical Engineering)
Executive Vice President, Commercial,
Business Area Europe 2020–
Member of the Leadership Team 2020–
Responsibility: Sales in business area Europe
and global marketing
Employed by Outokumpu since 2012
Work experience
Senior Vice President, Head of Sales, Business Area
Europe: Outokumpu 2019–2020
Senior Vice President, Sales North: Outokumpu
2014–2018
Vice President, Sales Central and Service Center
Operations: Outokumpu 2013
General Manager: Nirosta Service Center, Inoxum,
ThyssenKrupp Nirosta 2010–2012
Managing Director Technology: Service Center Group,
ThyssenKrupp Nirosta 2005–2009
Vice President, Business Processes and Applications:
ThyssenKrupp Nirosta 2002–2004
Plant Manager, Finish Departments: ThyssenKrupp
Nirosta 1998–2001
Various Manager and Senior Manager Positions in
Cold Rolling Mill Production, Thyssen Edelstahl/Krupp
Thyssen 1989–1997
Positions of trust
Board member and Vice Chairman: ISER Germany
2016–
Stefan Erdmann
Chief Technology Officer
b. 1972, German citizen
M.Sc. (Eng.)
Chief Technology Officer 2020–
Member of the Leadership Team 2020–
Responsibility: Research and development,
technology, sustainability, investment steering
and IT
Employed by Outokumpu since 2018
Work experience
Senior Vice President and CTO: Outokumpu
2018–2020
Technical Managing Director: Aluminium Norf GmbH
2015–2018
Vice President; Global Research and Development:
Novelis Inc 2011–2015
General Manager; Business Unit Can Europe: Novelis
AG 2009–2011
General Manager: Novelis Deutschland GmbH
2007–2009
Sales Director Painted Products: Novelis Europe
2006–2007
Various operational and managerial positions: Novelis
and Alcan 1993–2006
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 12 / 32
Martti Sassi
President, Business Area Ferrochrome
b. 1964, Finnish citizen
M.Sc. (Eng.)
President, Business Area Ferrochrome 2020–
Member of the Leadership Team 2020–
Responsibility: Business area Ferrochrome
Employed by Outokumpu since 1990
Work experience
Senior Vice President, Business Area Ferrochrome:
Outokumpu 2018–2020
Senior Vice President – Tornio Stainless and
Ferrochrome Operations: Outokumpu 2016–2018
Senior Vice President – Tornio Stainless Operations:
Outokumpu 2012–2016
Vice President – Tornio Stainless Business Excellence:
Outokumpu 2010–2012
General Manager – Tornio Cold Rolling Plant:
Outokumpu 2006–2010
Various operations and R&D positions: Outokumpu
1990–2006
Positions of trust
Board member: Technology Industry Employers of
Finland 2021–
Board member: Association of Finnish Steel and Metal
Producers 2020–
Chairman of Board: Chamber of Commerce in Lapland
2020–2021
Council member: International Chromium Development
Association 2019–
Board member: EuroAlliages 2018–
Johann Steiner
Chief Human Resources Officer
b. 1966, German citizen
M.Sc. (Econ.)
Chief Human Resources Officer 2020–
Member of the Outokumpu Leadership Team
2013–
Responsibility: Human resources, Group
communications and Global Business Services
(GBS)
Employed by the Outokumpu Group since
2013
Work experience
Executive Vice President – Human Resources and
Organization Development: Outokumpu 2016–2020
Executive Vice President – Human Resources, IT, Health
and Safety: Outokumpu 2013–2016
Executive Vice President – Human Resources and
Health, Safety and Sustainability: Outokumpu Oyj 2013
Group HR Director: SAG Group GmbH 2012
Operating Partner: Humatica AG 2010–2012
Group HR Director: Clariant International AG
2002–2008
VP Executive Policies: EADS (former DaimlerChrysler
Aerospace AG) 1999–2002
Senior Consultant: Towers Perrin 1993–1998
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 13 / 32
Work experience
Senior Vice President, Operations Europe: Outokumpu
2020
Senior Vice President, Tornio Operations: Outokumpu
2018–2020
Vice President, Quarto Plate: Outokumpu 2015–2018
General Manager Production: Outokumpu Degerfors
2010–2015
Various operational positions: Outokumpu 2002–2010
Positions of trust
Board member: Swedish Steel association
(Jernkontoret) 2015–
Niklas Wass
Executive Vice President, Operations,
Business Area Europe
b. 1977, Swedish citizen
M.Sc. (Environmental Science)
Executive Vice President, Operations, Business
Area Europe 2020–
Member of the Leadership Team 2020–
Responsibility: Operations and supply chain
management in business area Europe
Employed by Outokumpu since 2002
Tamara Weinert
President, Business Area Americas
b. 1965, German citizen
MBA, M.Sc.
President, Business Area Americas 2021–
Member of the Leadership Team 2020–
Responsibility: Business area Americas
Employed by Outokumpu since 2012
Work experience
Acting President, Business Area Americas: Outokumpu
2020–2021
SVP, Sales South & Overseas, Business Area Europe:
Outokumpu 2016–2020
SVP, Finance & Control, Business Area Europe:
Outokumpu 2013–2016
VP, Investor Relations: Outokumpu 2012–2013
Director Treasury, Risk Management, Insurance &
Investor Relations: Inoxum 2012
Director, Head of Corporate & Structured Finance:
Vattenfall 2011–2012
Treasurer: N.V. Nuon 2008–2010
Risk Management: N.V. Nuon 2000–2008
International postings in India, Singapore, Russia,
Netherlands, the US and Finland
Positions of trust
Board member: American Iron and Steel Institute 2020–
Member of the Advisory Board: Mobile Chamber of
Commerce, Alabama, US 2020–
Information on work experience and positions of trust to
be found on the Company’s website
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 14 / 32
Outokumpu shares and share-based
rights (parent or subsidiaries)
owned by the CEO and Leadership
Team members and their
respective controlled corporations
on December 31, 2021
Member of the Leadership Team
Number of
shares
Heikki Malinen 45,459
Pia Aaltonen-Forsell 10,950
Thomas Anstots 94,909
Stefan Erdmann 40,000
Martti Sassi 17,196
Johann Steiner 155,444
Niklas Wass 18,443
Tamara Weinert 30 489
Total 412,890
More information on compensation can be
found in the Remuneration Report.
CEO and deputy to the CEO
The President and Chief Executive Officer (CEO)
is responsible for the company’s operational
management, in which the objective is to
secure significant and sustainable growth in
the value of the company for its shareholders.
The CEO prepares decisions and other matters
for the meetings of the Board of Directors,
develops the Group’s operations in line with
the targets agreed with the Board of Directors,
and ensures the proper implementation of
Board decisions. The CEO is also responsible
for ensuring that the existing legislation and
applicable regulations are observed throughout
the Group. The deputy to the CEO, if one has
been appointed, is responsible for attending to
the CEO’s duties in the event that the CEO is
prevented from doing so. Currently, no deputy
to the CEO has been appointed.
Leadership Team and
Business Area Boards
The Outokumpu Leadership Team, chaired by
the CEO, is a reporting and decision-making
forum for steering and managing Outokumpu’s
corporate agenda. The Outokumpu Leadership
Team consists of the CEO, his/her deputy
(if one has been appointed) and other key
members of senior management. The Group
Functions Board is a sub-section of the Outo-
kumpu Leadership Team and a monitoring and
decision-making forum for the corporate affairs
of the Group Functions. The Group Functions
Board is chaired by the CEO. Decisions taken
by the Group Functions Board are reported to
the Outokumpu Leadership Team.
Each Outokumpu business area is steered by
a Business Area Board, chaired by the CEO.
The Business Area Boards consist of the CEO,
the CFO, the Head of the respective business
area and selected other key members of senior
management.
The decision-making authorities of the
Leadership Team and the Business Area
Boards follow from the authority of the CEO. It
is the duty of these bodies to run and develop
the Group’s operations in line with the strategy
and targets set by the Board of Directors.
The Leadership Team and the Business Area
Board meetings are convened by the CEO.
Minutes shall be kept for each meeting.
The Leadership Team, the Group Functions
Board and the Business Area Boards typically
meet once a month.
Organization structure on Dec 31, 2021
President and CEO
Heikki Malinen
Human resources
Finance
Technology and sustainability
FerrochromeEurope Americas Long Products
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 15 / 32
Internal control and
risk management
According to the Finnish Limited Liability
Companies Act and the Finnish Corporate
Governance Code, the Board of Directors is
responsible for ensuring that the company’s
internal controls are appropriately organized.
The purpose of this section is to provide
shareholders and other parties with a
description of how the internal control and risk
management of financial reporting is organized
in Outokumpu. As a listed company, the Group
has to comply with a variety of regulations. To
ensure that all the stated requirements are
met, Outokumpu has introduced principles
for financial reporting and internal control and
deployed them throughout the company’s
organization.
Control environment
The foundation of Outokumpu’s control envi-
ronment is the business culture established
within the Group and its associated methods
of operation. The basis for the company’s
compliance and control routines is provided
by Group policies and principles, which define
the way in which Outokumpu’s organization
operates. These policies and principles include,
for example, the Corporate Responsibility
Policy and Ethics Statement. The Outokumpu
Code of Conduct describes the Group’s basic
values and offers standardized, practical
guidelines for managers and employees to
follow. Furthermore, the Internal Control Policy,
the Approval Policy, and the Identity and
Access Management Policy define many of
Internal control system and the main features of the
risk management and control procedures
Risk management process in Outokumpu
Risk reporting
(external/
internal)
Identification
Leadership team
Business areas and Group functions
Operations
Process owners
Boards and managing directors of subsidiary companies
Evaluation and
prioritization
Mitigation and control
Regular risk updates
Risk and control
monitoring
Responsibility for risks
the principles related to the system of internal
controls.
The performance management as well as the
risk management and internal control process
are key management activities in enabling an
efficient control environment. Throughout the
Group’s operations, the planning activities and
the setting of both operational and financial
targets are executed in accordance with Outo-
kumpu’s overall business targets. Management
follow-up of related achievements and risks
is carried out through regular management
reporting and meeting routines.
The Internal Control function oversees and
develops Outokumpu’s system of internal
controls and tests the established controls.
The function is also responsible for Group-wide
governance, risk and compliance coordination.
With the lead of the Internal Control function,
Outokumpu has continued to further develop
and implement global, aligned and consistent
risk management and internal control process,
which will improve assurance for the Group
to reach its key targets. In the course of
2021, implementation of the new risk and
control management process started and the
effort is expected to continue during 2022.
Furthermore, a review of segregation of duties
management was carried out. Certain improve-
ment actions, e.g. related to emergency access
management (EAM) process, were carried out
during the year, and a roadmap for further
improvements in the coming years was defined.
Risk management
Outokumpu operates in accordance with the
risk management policy approved by the
company’s Board of Directors. The policy
defines the objectives, approaches, and areas
of responsibility in the Group’s risk manage-
ment activities. Supporting Outokumpu’s
strategy, the aim of risk management is to
identify, evaluate, mitigate, control and report
risks from shareholders and other stakeholders’
point of view such as customers, employees,
financiers, suppliers and regulators.
Risk management organization
The Board of Directors carries ultimate respon-
sibility for risk management within Outokumpu.
The CEO and members of the Leadership Team
are responsible for defining and implementing
risk management procedures, and for ensuring
that risks are both properly addressed and
considered in strategic and business planning.
Outokumpu’s Risk Management Steering
Group, led by the CFO, is the governing body for
risk management in Outokumpu. Other steering
groups led by CFO, such as Financial Risk
Steering Group for financial risk management
and Energy Risk Steering Group for energy risk
management, contribute to company’s overall
risk management as well.
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 16 / 32
The Business areas and Group functions are
responsible for identifying, evaluating and
managing the risks connected with their own
operations. The Risk Management Steering
Group and the Board of Directors review
the key risks and actions to be taken to
manage these risks on a regular basis. The
Treasury function supports the implementation
of Outokumpu’s risk management policy,
facilitates and coordinates risk management
activities, and prepares quarterly risk reports
for management, the Board Audit Committee
and Auditors.
Risk management and internal
control procedures
Outokumpu has defined risk as anything that
could have an adverse impact on achieving
the Group’s objectives. Risks can, therefore,
be threats, uncertainties, or lost opportunities
connected with current or future operations.
Outokumpu’s appetite for risk and risk
tolerance are defined regularly in relation to
earnings, cash flows, and capital structure.
The risk and control management process is
an integral part of the overall management
processes and is divided into following
stages: 1) risk identification; 2) evaluation and
prioritization; 3) mitigation actions and control
activities, and 4) monitoring and reporting. The
process in Outokumpu is two-fold consisting
of risk management and linked to this, control
activities and control testing. The same
process is applied in different levels of the
Group’s organization.
Within Outokumpu, the process is monitored
and controlled at different organizational levels.
Regular risk updates are carried out to capture
relevant information. Scheduled control
activities are performed to provide reasonable
assurance on the adherence to company
policies and procedures. The monitoring of the
outcome of risk evaluations, as well as the
risk mitigation actions and control activities,
ensure that accurate information is provided
both internally – to business area management
teams and members of the Leadership Team
– and externally to relevant parties such as
shareholders and other stakeholders.
Internal controls for
financial reporting
Outokumpu’s control process for financial
reporting is mainly based on the Internal
Control Policy, Outokumpu Accounting Prin-
ciples and the Approval Policy, as well as on
the responsibility and authorization structure
within the Group. Policies relating to financial
reporting are usually owned and approved by
the CFO. Financial reporting in Outokumpu
is carried out in a harmonized way using a
common chart of accounts and principles.
Financial reporting is prepared in accordance
with International Financial Reporting
Standards (IFRS). The Outokumpu Accounting
Principles (OAP) are Outokumpu’s application
guidance on IFRS. The aim of the OAP
and other financial reporting policies and
instructions is to ensure that uniform financial
processes and reporting practices are used
throughout the Group. Policies and instructions
for financial reporting are reviewed on a regular
basis and revised when necessary.
The financial statements of the parent
company and stand-alone Finnish subsidiaries
are prepared in accordance with generally
accepted accounting principles in Finland,
while foreign subsidiaries follow local
accounting principles. Outokumpu also
complies with the regulations regarding the
financial reporting published by the Financial
Supervisory Authority (FIN-FSA), Nasdaq
Helsinki, and ESMA.
Identification and assessment of
risks related to financial reporting
The risks related to the Group’s financial
reporting are managed according to
Outokumpu’s risk management policy and
classified as operational risks that can arise as
consequences of inadequate or failed internal
processes, employee actions, systems, or other
events such as misconduct or crime. The risks
related to financial reporting are identified
and typically assessed in risk workshops and
in 2021 the assessments were conducted for
most of the relevant parts of financial reporting
process. Some of the identified risks and
related controls were implemented in the new
risk and control management system.
Control activities
In addition to the Board of Directors, finance
management at all levels as well as the Boards
of subsidiary companies are responsible for
ensuring that the internal controls relating to
financial reporting are in place. Outokumpu
has centralized majority of its accounting
and financial reporting in the global business
service center, which enables the efficient
execution of internal control activities.
The aim of control activities is to discover,
prevent, and correct the potential errors
and deviations in financial reporting. Control
activities also aim to ensure that authorization
structures are designed and implemented
in such a way that incompatible tasks (e.g.
one person performing a critical activity and
also being responsible for controlling that
activity) are segregated. Control activities
consist of different kinds of measures and
include reviews of financial reports by Group
management and in business area manage-
ment teams, the reconciliation of accounts,
analyses of the logic behind reported figures,
forecasts compared to actual reported figures,
and analyses of the Group’s financial reporting
processes, among others. A key component is
the monitoring of monthly performance against
financial and operational targets. These control
activities take place at different levels of the
organization.
The most important accounting items in
Outokumpu are the valuation and reporting
of inventories and other items requiring
management judgment, such as provisions.
Moreover, in difficult market situations, such
as the COVID-19 pandemic, asset impairment
calculations and the related sensitivity
analyses are equally important. These items
are carefully monitored and controlled on a
regular basis, both within business areas and
at the Group level.
Information technology and solutions play an
important role in ensuring the appropriate
structures for internal controls. The Group’s
consolidation system provides timely and
uniform financial and management reporting
from the Group entities and an effective
closing process within the whole Group.
Outokumpu is also running a business trans-
formation program to develop and improve
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 17 / 32
business capabilities and to renew parts of its
fragmented system environment. This will be
achieved mainly by harmonizing and improving
the Group’s core business processes and
implementing supporting IT systems, with
improved system-based controls embedded in
processes.
The new ERP together with other related IT
systems were successfully implemented for
the Avesta site in 2021. Preparations for
future rollouts are expected to continue in
2022. Furthermore, Outokumpu completed
the implementation of its financial closing
management system across the Group and
enhanced related internal controls in the
harmonized financial closing process. The new
system improves transparency, has embedded
process controls and drives both efficiency and
reliability of the reporting process. In 2022,
Outokumpu aims to further develop financial
reporting process by increasing the coverage
of internal controls, developing systems for
consolidation of financial information, and
increasing efficiencies and effectiveness in
financial closing processes.
Information and communication
Group-wide policies and principles are
available to all Outokumpu employees.
Instructions relating to financial reporting are
communicated to all of the parties involved.
The main communication channels employed
are regular controller meetings, Outokumpu’s
intranet, other easily accessible databases,
and email. In the pandemic situation with
remote work promoted, only a limited number
of face-to-face controller meetings have been
organized. Finance Leadership Team meetings
are organized regularly to share information
and discuss issues of topical interest to the
Group.
Furthermore, Outokumpu has established
Group Functions Board and steering groups
(e.g. for risk management and compliance
topics) in which financial reporting and internal
control issues can be discussed and reviewed.
These groups typically consist of senior
members of management and substance
experts. The aim of Outokumpu is to ensure
that common financial processes and reporting
practices are followed throughout the Group
and that effective internal controls relating to
financial reporting are established.
Monitoring activities
Both management in all Outokumpu
companies and the accounting and controlling
functions are responsible for the follow-up
and monitoring of internal controls connected
with financial reporting. Overall development
and monitoring of the internal control process
and platforms as well as control testing are
performed by Group Internal Control function.
The Internal Audit function monitors that an
appropriate control environment exists across
the Group. Risk management, Compliance
function, and external auditors are also
engaged in the follow-up of control activities.
The findings of the follow-up procedures are
reported to the Board Audit Committee and the
Group Functions Board on a regular basis.
Internal audit
Internal Audit is an independent and objective
assurance, control, and consulting function
designated to add value, improve operations,
and monitor and support the organization in
the achievement of its objectives. Through a
systematic, disciplined approach, Internal Audit
determines whether governance and compli-
ance processes, the internal control system,
and the risk and control management process,
as designed and represented by the Board of
Directors and the Outokumpu Leadership Team,
are effective and efficient.
With a strong commitment to integrity
and accountability, Internal Audit provides
value to the Board of Directors and senior
management as an objective and direct source
of information, insights and independent
advice. Internal Audit monitors adherence to
Group principles, policies and instructions,
and leads investigations on fraudulent and
noncompliant behaviors and activities. Internal
Audit performs its function on behalf of and
directly reports to the Board Audit Committee
and to the executive management. The internal
audit plan is approved by the Board Audit
Committee. In addition, the function may carry
out unscheduled audits when needed.
In 2021, Internal Audit performed five site or
thematic audits. The results of the audits that
were carried out, including their risk appraisals,
are reported and distributed in writing. In view
of the Outokumpu Code of Conduct and the
Corporate Responsibility Policy, no issues of
material risk for the Outokumpu Group were
identified. The 2022 internal audit plan will
focus on e.g. supply chain risk management
and site audits.
Outokumpu encourages everyone to raise their
concerns and there is a strict non-retaliation
policy in place regarding the concerns raised
in good faith. There are several ways to report
alleged misconduct, including SpeakUp, an
externally operated communication channel,
that offers the option to report misconduct
confidentially and anonymously, if allowed by
the laws and regulations.
SpeakUp channel is available both internally
on company intranet and for external
stakeholders via the company webpage. 40
reports of alleged misconduct were recorded
in 2021, and thereof 29 cases were reported
via SpeakUp and 11 were recognized through
other channels.
During the year internal audit process, inves-
tigations operating model as well as related
tools and methodologies were developed to
further improve efficiencies and effective ways
of working as well as to prepare for the imple-
mentation of the EU Directive on whistleblower
protection and consequent legislation.
Ethics and compliance
Outokumpu is strongly committed to the
highest ethical standards and complies with
the applicable laws and regulations of the
countries in which it operates as well as with
the agreements and commitments it has made.
Outokumpu’s Code of Conduct sets out these
ethical standards and provides guidelines
for common ways of working with the aim of
ensuring that all Outokumpu employees live up
to Outokumpu’s ethical standards.
Outokumpu’s Legal and Compliance function
is responsible for managing and continuously
developing Outokumpu’s ethics and
compliance program. Outokumpu’s ethics
and compliance program is described in more
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 18 / 32
detail in the Sustainability review. The Legal
and Compliance function reports to the CEO
and to the Outokumpu Leadership Team as
well as directly to the Board Audit Committee
on ethics and compliance related matters.
Ethics and compliance related matters are
also regularly handled in the Compliance
Steering Group, consisting of the CEO, CFO,
Head of HR, Head of Internal Controls and
Internal Audit, Corporate General Counsel and
Head of Compliance. The Compliance Steering
Group met four times in 2021. A network of
compliance contact persons and several data
protection governance bodies support the
implementation of the ethics and compliance
program in the business areas and group
functions.
Insider management
The company’s Insider Rules, the Finnish
insider laws and regulations, including the
EU Market Abuse Regulation, constitute the
primary legal framework for the insider issues
relevant to the Group and its employees.
Furthermore, the Regulation on EU Energy
Market Integrity and Transparency sets forth
similar requirements as the Market Abuse
Regulation on dealing with inside information
relating to wholesale energy products. As the
company is a participant in the wholesale
energy market, the company’s Insider Rules
apply to such energy-related inside information,
as applicable.
The persons discharging managerial responsi-
bilities in Outokumpu, in the meaning of the
Market Abuse Regulation, include members
of the company’s Board of Directors, the
CEO, and other members of the Outokumpu
Leadership Team (“the Management”). The
Management together with the persons or
companies closely associated with a member
of the Management constitutes the so called
“Notifying Persons”. Outokumpu maintains a
non-public list of the Notifying Persons.
Outokumpu applies a restricted period of thirty
(30) calendar days before the announcement,
as well the day of the announcement, of an
interim financial report, interim financial state-
ment and a year-end report – so called “Closed
Window”. During this period, the Management,
the persons subject to trading restrictions and
any legally incompetent persons under their
custody shall not conduct any transactions,
on his/her own account or for the account of
a third party, directly or indirectly, relating to
the company’s shares or debt instruments, or
derivatives or other financial instruments linked
thereto. Separate, non-public, project-specific
insider registers are maintained for insider
projects. Persons defined as project-specific
insiders are those who, in the course of their
duties in connection with a project, receive
inside information concerning the Group which,
if or when realized, is likely to have a significant
effect on the value of the company’s publicly
traded securities.
The company has the obligation to inform
the public as soon as possible of inside
information that directly concerns the company,
unless the company has decided that the
publication of the inside information shall be
delayed, in accordance with the applicable
insider regulations. The publication of inside
information shall be made in accordance with
the company’s Disclosure Policy.
Outokumpu’s Head of Legal and Compliance
function is responsible for the coordination and
supervision of insider topics.
Related party transactions
The Second Shareholders’ Rights Directive
(EU), the International Accounting Standards
IAS 24, the Companies Act and the Securities
Markets Act as well as the Finnish Corporate
Governance Code constitute the primary legal
framework in the related party transaction
principles relevant to the Outokumpu Group
and its related parties.
Definition of related parties
and maintenance of the
list of related parties
Outokumpu Oyj’s related parties are deter-
mined in accordance with the International
Accounting Standards (IAS 24) and they
include, i.a., the Group subsidiaries, members
of the parent company’s Board of Directors
and the Leadership Team as well as their
related persons and companies. The compa-
ny’s Legal and Compliance function maintains
a non-public list of Outokumpu Oyj’s related
parties, which is updated on a regular basis.
Evaluating related party transactions
A related party transaction is any transaction
which is conducted between the Outokumpu
Group and a related party of Outokumpu
Oyj. Transactions between a company and
its related parties are allowed, provided that
they promote the purpose and interests of the
company and are commercially justified.
Any transactions that are not conducted
in Outokumpu Group’s ordinary course of
business or are not implemented under
arms-length terms require specific approval
according to Outokumpu Group’s Approval
Policy. Any such transactions are escalated
for review on Group executive level and
cross-checked against the related parties.
Any related party transactions that are not
conducted in Outokumpu Group’s ordinary
course of business will require a decision
by Outokumpu’s Board of Directors and a
transaction which would be deemed material
for Outokumpu’s shareholders will also have
to be publicly disclosed. The decision making
of the Board of Directors also takes provisions
on conflicts of interest into account as board
members cannot participate in deciding
a matter concerning themselves. Board
members also have a conflict of interest and
cannot participate in decisions concerning a
transaction with one of their related parties if
that transaction is not part of the company’s
ordinary course of business or is not imple-
mented under arms-length terms.
Monitoring and reporting
related party transactions
Outokumpu’s Audit Committee monitors the
evaluation process. Related party transactions
are reported to the Audit Committee on a
regular basis. Outokumpu’s finance and control
functions monitor related party transactions
regularly in arrears as a part of the company’s
reporting and control procedures. Information
on transactions concluded between the
company and its related parties is disclosed
annually in the company’s consolidated
financial statement.
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 19 / 32
Auditors
Under its Articles of Association, the company
shall have a minimum of one and a maximum
of two auditors. The auditors must be Autho-
rized Public Accountants (KHT) or accounting
firms whose mainly responsible auditors are
Authorized Public Accountants (KHT). The
auditors shall be independent of the company.
The Board of Directors has the duty to make
a proposal to the Annual General Meeting as
to the election and fees of the auditor. The
Annual General Meeting elects the auditors
for a term of office ending at the close of the
next Annual General Meeting. A proposal to
the Annual General Meeting on the election
of auditors that has been made known to the
Board of Directors prior to the Annual General
Meeting will be made public if it is supported
by shareholders holding a minimum of 10%
of all the company’s shares and voting rights
and the person or company proposed has
consented to such nomination.
The company’s auditors submit the statutory
auditor’s report to the company’s shareholders
in connection with the company’s financial
statements. The auditors also report their
findings to the Board Audit Committee on a
regular basis and at least once a year to the
full Board of Directors. The parent company,
Outokumpu Oyj, is audited by Pricewaterhouse-
Coopers Oy, and the responsible auditor is
Janne Rajalahti, Authorized Public Accountant.
PricewaterhouseCoopers Oy is also responsible
for overseeing and coordinating the auditing of
all Group companies.
PricewaterhouseCoopers Oy was elected
as the Group Auditor in the Annual General
Meeting held on March 31, 2021 and has
been the Auditor of Outokumpu for five
consecutive terms. Both Outokumpu and
PricewaterhouseCoopers Oy emphasize the
requirement stipulating that the auditor be
independent of the company being audited.
The PwC Network Independence policy is based
on the International Ethics Standards Board
for Accountants’ (IESBA) Code of Ethics for
Professional Accountants.
Outokumpu’s Board Audit Committee
continuously monitored the non-audit services
purchased by the Group from Pricewater-
houseCoopers at the global level. In 2021,
the auditors were paid fees totaling EUR 2.7
million, of which the non-auditing services
accounted for EUR 0.4 million.
Corporate Governance statement
Outokumpu Annual report 2021 | Governance 20 / 32
Key risks
Strategic and
business risks
Risks related to Outokumpu’s
business priorities and targets
Outokumpu’s strategy is built on clear time-
bound initiatives and targets to competitively
position itself for the future by strengthening
its balance sheet in the shorter term and by
de-risking the company for strong returns in the
long run. Ultimately, company’s vision is to be
customer’s first choice in sustainable stainless
steel.
Outokumpu’s current expectations regarding
the outcome of the strategy and vision are
based on a number of assumptions that are
subject to various risks and uncertainties.
Stainless steel industry
and markets
Outokumpu believes that the long-term
prospects for stainless steel demand remain
firmly positive. Global megatrends including
population growth, urbanization, increasing
mobility and climate change will drive the need
for sustainable materials. There is a possibility
that such megatrends will realize more slowly
than expected and that the occurrence
of natural catastrophes or other adverse
changes in the global political and economic
environment can impact the stainless steel
industry, thereby reducing growth prospects
in Outokumpu’s core markets. Nonetheless,
demand in Outokumpu’s main regions and
customer segments is expected to be robust
and will continue to support long-term growth.
Also improved financial performance together
with continued de-leveraging of the balance
sheet will improve the resilience towards
possible adverse economic environment.
The risk of global overcapacity in stainless
steel has the potential to further disrupt
industry economics. The commissioning of
new export-driven capacity in Asia, particularly
in China and Indonesia, has created a
regional demand imbalance. This results in
a risk of adverse trade flows to Outokumpu’s
core markets. Given the global nature of
its operations Outokumpu has significant
exposure to the effects of trade actions and
barriers. Insufficient trade defense measures
as imposed in our home markets would be
a risk for Outokumpu’s financial performace.
On the other hand, trade defense measures
imposed by the export market countries could
undermine our access to these markets and
result to similar risks.
In general, the risks arising from unfair trade in
Outokumpu’s home markets continued to ease
remarkably in 2021. To mitigate from distor-
tions like dumping, state subsidies or weaker
sustainability performance, the European Union
has taken some important steps in the process
of creating a fairer competitive environment
between the EU and third country producers.
The decision in June to renew the EU steel
safeguard measures for another three years
was very well justified. Later, in September
the EU has also renewed the anti-dumping
duties on cold rolled from China and Taiwan
and in November additionally imposed the
definitive anti-dumping duties on cold rolled
from Indonesia and India. On top of that, the
EU initiated an investigation into the alleged
subsidies by the governments of Indonesia and
India in February. In this proceeding there will
be a chance to impose definitive anti-subsidy
duties on cold rolled imports from these
countries by March 2022.
Outokumpu’s current expectations regarding
the market trends are based on assumptions
and expectations that are subject to various
risks and uncertainties.
With increasing global demand for stainless
steel, Outokumpu expects global demand for
ferrochrome, a key ingredient in stainless steel
production, to increase correspondingly. From
its cost competitive chrome mine in Kemi
and ferrochrome production facilities in Tornio,
Outokumpu supplies a significant amount of
ferrochrome to its own stainless steel opera-
tions. As a result, Outokumpu is well placed to
maintain high utilization rates and support the
group’s growth and profitability. Risks resulting
from its production of ferrochrome are typical
operational risks and uncertainties that may
cause significant financial impacts due to the
costs for energy, coke, production downtimes
and business interruptions. Risks associated
with its external sales of ferrochrome include
COVID-19 causing uncertain ferrochrome
supply-demand balance, energy prices and
foreign exchange rates, particularly the US
dollar.
Raw materials, supplies,
and energy
Outokumpu is exposed to price changes of
alloy metals in multiple ways. The underlying
exposure consists of price fixed purchase
contracts, price fixed sales contracts and
physical stocks of priced inventories of nickel,
molybdenum, carbon steel and stainless steel
scrap as well as various grades and forms of
stainless steel. Price changes of alloy metals
Key risks
Outokumpu Annual report 2021 | Governance 21 / 32
lead to impacts on earnings, cash flows, and
balance sheet structure.
Pricing systems are applied in many markets
and may cause volatility in demand of stainless
steel. A possible adverse consequence of
volatility in demand is the negative impact
on capacity utilization ratios. In addition, the
monetary value of discounts in purchasing
(e.g. in connection with purchases of stainless
steel scrap) depends on the level of alloy
metal prices. Therefore, the price levels of alloy
metals have long-term impacts on profitability.
Stainless steel production requires substantial
amounts of certain raw materials, primarily
nickel, recycled stainless steel, ferrochrome,
molybdenum, recycled carbon steel as well as
energy and supplies. Most of these are subject
to significant price volatility due to fluctuating
customer demand, speculation, and scarcity,
which may, from time to time, be compounded
by decreases in extraction and production due
to natural disasters, the COVID-19 pandemic,
and political or financial instability or unrest.
Increases in the prices of certain raw materials,
such as nickel, ferrochrome, molybdenum, and
iron, are generally passed on to customers
through alloy surcharges. Outokumpu has
hedged part of its exposure to changing
nickel prices. Although the alloy surcharge
mechanism is intended to allow stainless
steel producers to pass on the costs of raw
materials to customers, it does not eliminate
Outokumpu’s exposure to raw material
price volatility. Financial risks related to raw
materials and energy prices are described in
note 5.3 to the consolidated financial state-
ments. In addition, the production of stainless
steel products and ferrochrome requires
significant amounts of energy, particularly
electricity, natural gas, and to a lesser extent,
propane and fuel oil. Energy costs represent a
substantial portion of Outokumpu’s total cost
of sales and energy prices have historically
varied, and may continue to vary significantly,
as a result of political and economic factors
beyond Outokumpu’s control.
Legal risks
In connection with its business activities
Outokumpu may become subject to various
legal claims and litigations. In addition to
legal claims resulting from Outokumpu’s daily
business, Outokumpu is also exposed to typical
litigation risks in connection with mergers and
acquisitions. For further information on existing
major litigations, please see note 6.1 to the
financial statements.
Outokumpu’s products are used in a wide
range of applications. For instance, certain
products are used in safety-critical applications
in the oil, gas, chemical, and petrochemical
industries. In addition, a part of Outokumpu’s
products are used in the automotive and avia-
tion industries, where key customers require
extensive third-party certification regarding the
products purchased. Therefore, Outokumpu
is exposed to product quality related liability
claims. Such claims may result in severe
damages, impacting Outokumpu’s profitability.
Outokumpu manages and mitigates its legal
risks by running internal processes as well as
governance and compliance programs and
policies, some of which extending beyond the
local minimum legal requirements.
Risks related to
environmental regulation
The European Union’s ambitious Emission
Trading System (ETS) and respective trading
system in the UK (UK ETS) present risk for
Outokumpu, indirectly in electricity prices
and directly in emission allowance costs.
Outokumpu’s European units cannot transfer
these costs to product prices due to global
competition. However, Outokumpu has secured
part of its future electricity supply – and
the associated prices – through long-term
contracts. Furthermore, Outokumpu partici-
pates in the Fennovoima nuclear power project
in Finland.
Outokumpu operates in accordance with the
prevailing laws and regulations, including
environmental, chemical, and product safety
legislation. The EU Chemicals Strategy for
Sustainability is a risk to the market for alloys
as the target is to ban most harmful chemicals
in consumer products. The approach is based
on intrinsic hazard rather than risk. This can
hamper the market of metal products, recycling
of products and materials as well as the use
of by-products. Compliance with environmental
regulations increases costs and could impact
Outokumpu's international competitive position.
Outokumpu mitigates these impacts through
the systematic identification and management
of environmental, chemical, and product
safety risks, initiatives to reduce emissions,
and by maintaining a proactive dialog with
stakeholders involved in the framing of
environmental legislation.
Key risks
Outokumpu Annual report 2021 | Governance 22 / 32
Operational risks
Major disasters and
business interruptions
Outokumpu’s production processes are
dependent on the continuous operation
of critical production equipment, including
smelters, furnaces, continuous casters, rolling
mills, and electrical equipment, e.g. electric
motors and transformers, and production
downtime may occur as a result of unexpected
mechanical failures. Operations may also
be disrupted for a variety of other reasons,
including fire, explosion, flooding, release
of harmful substances to the environment
or health, failures in information technology,
strikes, or transportation disruptions.
Furthermore, accidents may lead to production
downtimes that affect specific items of
machinery or production plants, or possibly
result in plant closures, including closure for
the duration of any ongoing investigation. This
type of disruption may cause significant busi-
ness interruptions and have a negative impact
on Outokumpu’s profitability. Primarily because
of the high temperatures required for produc-
tion, fire is a significant risk for Outokumpu.
Most of the production facilities are located in
extensive industrial zones and a fire could lead
to major damage to property and interruptions
in production. Extreme weather conditions and
natural disasters may also affect Outokumpu’s
operations, especially as a result of damage
to property or the loss of production through
extremely low temperatures, flooding, hurricane,
tornado, or drought. Outokumpu monitors such
risks by continuously evaluating its production
facilities and production processes from a risk
management perspective and also by arranging
regular fire-safety and loss prevention surveys.
Insurances cover a large proportion of the
associated risks.
Environmental accidents
The main environmental accident risks
at production sites relate to use of acids,
hazardous waste, gases, landfill activities,
gradually developing pollution and long-term
contamination of soil or groundwater or
effects of hazardous pollutants. Outokumpu
also has environmental liabilities and risks at
closed mines and production sites. Certified
environmental management systems are in
place at all production sites to manage the
environmental accident risks in a systematic
way, including external environmental audits.
In addition, Outokumpu has an internal
environmental auditing program to monitor and
ensure local legal compliance and the level of
environmental risk management.
Project risks
Outokumpu has (through a holding company
Voimaosakeyhtiö SF) committed to a 14%
stake in Fennovoima Oy, which has a
parliamentary decision-in-principle to construct
a new nuclear power plant in Pyhäjoki, Finland.
The company has selected Rosatom Overseas
CJSC as the plant supplier. Fennovoima Oy
submitted a construction license application to
the government in June 2015 and expected to
receive the construction license by the end of
2021 but it has been delayed. As the project
progresses slowly, there are uncertainties
related to commercial operations to begin
earliest in 2029. The project involves several
risks for Outokumpu which are reviewed
regularly, including project completion risks
such as continued delays, cancellations,
non-completion, technical risks, possible
tightening nuclear safety regulations, financial
risks such as budget overruns, non-competitive
cost of power, financing risks, cost and
availability of the financing, fair value of
shareholding, political and public acceptance
risks, and environmental risks. Considering the
risks involved in the project, there can be no
assurance that one or more of the project risks
will not occur or that Fennovoima Oy will have
adequate financing for the project in the event
of any future defaults by the direct or indirect
shareholders in Fennovoima Oy.
Outokumpu also faces project risks related
to other ongoing investments in the Kemi
mine expansion and the digital transformation
project, which focuses on harmonizing business
processes, including the ERP renewal. These
and other ongoing investments and projects
include similar project risks which Outokumpu
manages through its project management
process.
Cyber security risks and IT failure
Outokumpu relies on various applications
and other information technologies that are
used globally in all business areas and group
functions. Unplanned interruptions or failures
in these applications and underlying infra-
structure could result in business interruptions,
for example, in the production and supply
chain processes. Furthermore, cyber threats
and other security threats could cause leaks
of sensitive information, theft of intellectual
property, production outages or damage to
Outokumpu’s reputation.
Outokumpu is taking necessary steps to ensure
that the IT systems, solutions and processes
are efficient and reliable, and also aims to
ensure secure information management and
continuity at all company locations to avoid
data loss or situations in which business
critical information becomes unavailable.
Moreover, Outokumpu continues to improve its
cyber readiness in order to prevent possible
cyber attacks, by running and initiating various
security development activities based on
the detailed cyber threat and risk exposure
analyses.
Outokumpu continued the business transforma-
tion program to harmonize its enterprise level
data, processes, and IT systems as well as to
develop or enhance business capabilities.
Safety and personnel
Outokumpu has set its safety vision and prin-
ciples at a high level. Safety takes priority over
all other activities. All Outokumpu employees
are responsible for their own safety, but also
for the safety of their colleagues. Outokumpu
strongly believes that all injuries can be
prevented and the target is zero accidents.
Furthermore, as a part of its strategy, Outo-
kumpu has introduced ways of working to reach
its short-term targets, we operate safely always
being one of them, aiming at achieving a fully
implemented, standardized and disciplined
approach to safety that correlates with
improved quality and operational efficiency,
striving to be an industry leader.
Key risks
Outokumpu Annual report 2021 | Governance 23 / 32
Despite the ongoing efforts and actions, a
serious incident or fatal accident may occur
during working hours to Outokumpu employees
or contractors. Outokumpu considers the
risk of fatalities and serious injuries having a
significant impact on its safety culture and
its reputation as an employer. Moreover,
Outokumpu believes that great focus and the
systematic development of safety performance
and safety culture will have a positive impact
on operational performance and discipline.
Improving the safety performance through
driving the full implementation of our company
standards and processes, with a focus on risk
assessments and risk reduction plans in place
on all sites in addition to implementation plans
for other major company safety standards.
In the continued situation of the COVID-19
pandemic the safety function and operational
teams have collaborated to create safety,
hygiene and distancing rules and practices to
look after the health of our employees, prevent
the spread of the virus in the workplace and
allow us to maintain production.
Outokumpu’s ability to continue and grow
its business as well as provide high-quality
products depends, to a large extent, on the
contributions made by its key personnel. The
loss of key individuals or other employees who
have specific knowledge of, or relationships
with, trade customers in markets in which
Outokumpu operates could have significant
impacts on Outokumpu’s business. If Outo-
kumpu is unable to attract, retain, motivate,
train, and develop qualified employees at all
levels, it could have a material adverse effect
on Outokumpu’s business, financial condition
and results of operations. There can be no
assurance that Outokumpu will be able to
retain such senior managers and other key
employees. Outokumpu has implemented
processes to attract and retain key employees
in the Group. Implementation of leadership
development programs and succession
planning for key positions in the Group are
also undertaken to maintain development
opportunities and to ensure an adequate
pipeline of talent to mitigate the potential loss
of senior leaders.
Compliance, crime, and
reputational harm
Outokumpu operates globally and its activities
span multiple jurisdictions and complex
regulatory frameworks at a time of increased
enforcement activity and enforcement
initiatives globally in areas such as competition
law, anti-corruption and bribery, anti-money
laundering, data protection (including EU
GDPR compliance) and trade restrictions,
including sanctions. Outokumpu’s governance
and compliance processes may not prevent
breaches of law or governance standards.
Outokumpu also faces the risk of fraud by its
employees, external theft and crime, losses
of critical research and development data,
misconduct as well as violations by its sales
intermediaries or other third parties or at its
joint ventures and other companies in which
it has an interest, particularly if it only has a
minority stake and does not control accounting
or other rules and protocols for the conduct of
business.
Outokumpu’s failure to comply with the
applicable laws and other standards could
subject it to fines, loss of operating licenses,
loss of business, loss of management time
and company focus, breach of its financing
agreements, and reputational harm. Effective
internal controls are necessary for Outokumpu
to provide reliable financial reports and
effectively prevent and detect fraud. If
Outokumpu cannot provide reliable financial
reports or prevent fraud, this could have a
material adverse effect on its financial results.
Additionally, at the operational level, individual
employees may not comply with Outokumpu’s
statements, policies, instructions and guide-
lines and, as a result, may incur compliance
costs (including fines) and cause reputational
damage. Inadequate internal controls could
also cause investors and other third parties
to lose confidence in Outokumpu’s reported
financial information and risk management
processes, which could have a material
adverse effect on Outokumpu’s business,
financial condition and results of operations.
Outokumpu’s ethics and compliance program
aims to prevent and mitigate compliance risks
from occurring and is developed continuously.
The compliance risk assessment forms the
basis for the compliance action plan for the
forthcoming year.
Financial risks
Key financial risks for Outokumpu are:
• changes in the prices of nickel, iron, molyb-
denum, energy and emission allowance;
• currency developments affecting the euro,
the US dollar, the Swedish krona, and the
British pound;
• interest rate changes connected with the
euro, the Swedish krona and the US dollar;
• changes in levels of credit margins applied
for Outokumpu;
• risk related to prices of equities and
fixed-income securities;
• country and counterparty risk related to
customers and other business partners,
including financial institutions;
• risks related to liquidity and refinancing;
• breach of financial covenants or other terms
and conditions leading to default;
• changes in fair value of equity investments in
energy production.
The financial risks listed above and related risk
mitigation activities are described in further
detail in the note section 5 to the consolidated
financial statements.
Key risks
Outokumpu Annual report 2021 | Governance 24 / 32
Sustainability
and Corporate
responsibility risks
Outokumpu has also identified its exposures
in sustainability and corporate responsibility.
Outokumpu is identifying the most material
sustainability topics with materiality analyses
that are conducted every three years. The most
recent materiality analysis was done in 2021.
Protecting the climate
Climate change is one of the most urgent
challenges the world is facing today. Outo-
kumpu aims to protect the climate with our
sustainable stainless steel. We are developing
our operations to reach carbon neutrality by
2050. In December 2021 our new climate
target was approved by the Science Based
Targets initiative, which is that our CO
2
emis-
sions will be reduced by 42% from the 2016
baseline by the 2030. We work closely with
our customers to help them develop solutions
that further decrease their carbon footprint and
reduce burden on climate. The company focus’
on and mitigates climate change physical and
transition risks according to our commitment
to the Business Ambition for 1.5 °C target and
carbon neutral operations in 2050.
Outokumpu also evaluates its climate change
related risks, including main production
locations’ exposures on several threats. These
physical acute and chronic climate change
threats and risks include e.g. flood, sea
water level changes, exposures to hurricanes,
tornadoes and severe storms, extreme weather
conditions like lightning, rain or hail. The
transition risks to Outokumpu are driven by
changes to climate policies, which can have
adverse impact to Outokumpu’s operating
environment and financial position as by an
increased price of greenhouse gas emissions
and the linked rising electricity price. The
risk on costs of lower emissions technology
will become effective in the coming years.
More and more customers are looking on
sustainable products and we are working
on our vision be customer’s first choice in
sustainable stainless steel. The risk of losing
customers and market share is assessed; but
the company’s low carbon profile stainless
steel also drives opportunities.
Environmental impacts
The main environmental business risks for
Outokumpu are related to emissions trading
schemes, new environmental and consumer
protection demands, including changes in envi-
ronmental legislation and the potential impact
on Outokumpu’s competitive position, as
well as the risk of increased electricity prices
and emissions costs due to the European
Union’s and UK’s ambitious Emissions Trading
System (ETS). Protecting the environment in
the locations where we operate is our priority
and a part of our license to operate. We have
made significant investments in environmental
protection over the past years, and we will
continue to develop our processes even further.
We aim to have a minimal impact on nature
and biodiversity.
People, society and human rights
Outokumpu aims to actively identify risks
and uncertainties related to its exposures in
social responsibility, including human rights
related topics. This applies to Outokumpu’s
own operations globally as well as supply
chain and other business partners. In late
2021, the human rights risk assessment was
conducted in accordance with the United
Nations Guiding Principles on Business and
Human Rights (UNGP) and most salient human
rights issues were identified. The identified
human rights risks were rated based on their
scale, reach and remediability to be able to
make a prioritization based on their severity,
as well as on their probability to occur. Most
of Outokumpu’s salient human rights issues
are linked to sourcing activities, which includes
both the production of the materials purchased,
as well as their transport. Outokumpu takes
seriously all identified human rights risks, labor
practice violations and related threats as it
insists on full transparency and compliance on
human rights topics.
Circular economy
Outokumpu uses high amounts of recycled
materials. Stainless steel is endlessly recy-
clable without any loss in quality. It is also the
most efficient way to reduce the environmental
impact of production processes enabling us
to produce sustainable stainless steel. So, we
continuously aim for higher recycling rates in
our operations. Currently, Outokumpu’s rate of
recycled material content is the highest in the
industry, over 90%.
Traceability and responsibility
throughout the supply chain
Outokumpu is a part of a global supply chain
by producing stainless steel for leading brands
and demanding industries around the globe.
Our customers expect us to provide a traceable
supply chain and, therefore, we have in place
stringent requirements on our suppliers, too.
Outokumpu is reporting as part of it’s carbon
footprint the CO
2
emissions of their suppliers
in form of utilities, consumables, raw materials
and services.
Outokumpu is strongly committed to legal
compliance and an ethical way of conducting
business. Outokumpu’s Code of Conduct sets
out these ethical standards and provides
guidelines for a common way of working. All
suppliers and subcontractors must comply
with our Code of Conduct and meet our
Supplier Requirements. Outokumpu monitors
its suppliers closely through self-assessment,
screenings and audits.
Safety is one of the cornerstones in Outo-
kumpu’s strategy and ensuring the safety
and good health of our employees is the first
priority. In addition, Outokumpu takes all labor
practice violations and related threats as
well as its full transparency and compliance
in environment, social and governance (ESG)
topics seriously.
More information on sustainability and
corporate responsibility is available in Sustain-
ability review in the Annual report as well as on
Outokumpu’s website.
Key risks
Outokumpu Annual report 2021 | Governance 25 / 32
Information for shareholders
Annual General Meeting 2022
Outokumpu's Annual General Meeting will be
held on Thursday, March 31, 2022 at 1.00
pm EEST at the company’s head office at
Salmisaarenranta 11, Helsinki, Finland. In
order to prevent the spread of the COVID-19
pandemic, the Annual General Meeting will
be held without shareholders’ and their proxy
representatives’ presence at the meeting
venue. Shareholders of the company and their
proxy representatives can participate in the
meeting and use shareholder rights only by
voting in advance and by making counterpro-
posals and presenting questions in advance in
accordance with instructions in the notice to
the Annual General Meeting and otherwise by
the company.
Right to participate
Each shareholder, who is registered on the
record date March 21, 2022 in Outokumpu’s
shareholder register held by Euroclear Finland
Oy, has the right to participate in the Annual
General Meeting.
Registration and advance voting
Registration for the meeting and advance
voting will begin on March 11, 2022 at 12.00
pm, following the deadline for submitting
counterproposals to be placed for a vote.
A shareholder, who is registered in the
shareholders’ register of the company and
who wants to participate in the Annual General
Meeting, must register for the Meeting and
vote in advance no later than March 25, 2022
by 4.00 pm EET by which time the registration
and votes need to be received.
A shareholder, who has a personal Finnish
book-entry account, may register and vote in
advance on certain items on the agenda of the
Annual General Meeting from March 11, 2022
at 12.00 until 4.00 pm EET on March 25,
2022 by the following means:
• at Outokumpu’s Annual General Meeting
website (please note that the Finnish
personal identity code or business ID of the
shareholder is needed for voting in advance
and strong electronic identification with
Finnish online banking credentials or mobile
certificate of the shareholder or his/her
representative),
• by mail to Innovatics Oy, AGM/Outokumpu
Oyj, Ratamestarinkatu 13 A, 00520 Helsinki,
• by e-mail to agm.outokumpu@innovatics.fi.
In registering by mail or e-mail, a shareholder
may send the advance voting form available
on the Outokumpu’s Annual General Meeting
website on March 11, 2022 at 12.00 pm or
corresponding information.
If the shareholder participates in the meeting
by sending the votes in advance by mail or
email to Innovatics Oy before the end of the
registration and advance voting period, this
constitutes registration for the Annual General
Meeting, provided that the shareholder
information required for registration is provided.
Holders of nominee
registered shares
A holder of nominee registered shares has
the right to participate in the Annual General
Meeting by virtue of such shares, based on
which he/she on the record date of the Annual
General Meeting, March 21, 2022, would be
entitled to be registered in the shareholders’
register of the company held by Euroclear
Finland Oy. Participation in the meeting
also requires that the shareholder has been
registered into the temporary shareholders’
register held by Euroclear Finland Oy at the
latest by March 28, 2022 by 10.00 am EET.
This constitutes due registration for the Annual
General Meeting.
A holder of nominee registered shares is
advised to early enough request the necessary
instructions regarding the registration in the
temporary shareholders’ register, the issuing
of proxy documents and registration for the
Annual General Meeting from his/her custodian
bank.
More information
A complete notice to the Annual General
Meeting and information on the voting, making
counterproposals and presenting questions
as well as information on the proxy represen-
tatives and powers of attorney and holders
of nominee registered shares is available at
Outokumpu’s Annual General Meeting website.
Dividend proposal
The Board of Directors proposes to the Annual
General Meeting that a dividend of EUR 0.15
per share will be paid for year 2021. The
dividend will be paid to shareholders registered
in the shareholders’ register of the company
held by Euroclear Finland Oy on the dividend
record date April 4, 2022. The Board proposes
that the dividend be paid on April 11, 2022.
Information for shareholders
Remuneration
Report 2021
27 / 32Outokumpu Annual report 2021 | Remuneration Report
Dear Shareholder,
Remuneration Report 2021
on behalf of the Board, I am pleased to present
Outokumpu’s Remuneration Report for 2021.
This Remuneration Report has been prepared
according to the Corporate Governance Code
2020, approved by the Board of Directors
and will be presented to the Annual General
Meeting in March 2022.
The report aims to present how Outokumpu
rewarded the Board members and the
President and CEO for 2021 in a clear and
transparent way. The materialized remunera-
tion is in line with the Remuneration Policy of
the governing bodies of Outokumpu approved
at the Annual General Meeting in 2020.
In the Annual General Meeting in 2021 two
new Board Members were elected, Ambassador
Päivi Luostarinen and Professor, Doctor Heinz
Jörg Fuhrmann. Ambassador Luostarinen’s vast
experience in international relations, particu-
larly in trade policy and economic cooperation,
and Professor, Doctor Fuhrmann’s longstanding
experience in the global steel industry provide
exceptional additions to the experience and
capabilities of our Board of Directors.
In 2021, realized prices and continuous
progress on Outokumpu’s margin improvement
actions supported the Group’s profitability.
Our exceptional result is driven by a combi-
nation of strong market environment and
Outokumpu’s own decisive actions in strategy
execution. Sustainability is at the core of
Outokumpu’s operations, and during the year
Outokumpu committed to ambitious climate
targets. Safety continues to be of high priority.
For 2022 Outokumpu will start considering
a wider range of sustainability targets in its
incentive programs, starting with CO
2
emission
reduction targets. Futher targets with regards
to e.g., diversity will be worked out during
2022.
Based on these exceptional business results,
the Board of Directors decided to pay a
short-term incentive to the CEO which is higher
than the defined limits in the Remuneration
Policy, applying Section 5 of Outokumpu’s
Remuneration Policy. For the business year
2022, the regular incentive framework defined
in our Remuneration Policy will be applied
again.
The performance related long-term incentive
plan called Performance Share Plan 2019–
2021 did not reach the minimum requirement
meaning there was no share delivery from this
program.
Going forward, we will continue to review our
remuneration arrangements to ensure they
deliver on our goals for our shareholders and
investors.
Kari Jordan
Chairman of the Board of Directors
Remuneration
28 / 32Outokumpu Annual report 2021 | Remuneration Report
0
100
200
300
400
500
600
202120191817
202120191817
0
1,000
2,000
3,000
4,000
5,000
202120191817
0
200
400
600
800
1,000
1,200
Introduction – how remuneration relates to Outokumpu’s performance
Outokumpu’s Remuneration Policy 2020 sets
the framework for the remuneration of the
Board of Directors and the CEO.
The Remuneration Report 2021 follows the
Finnish Corporate Governance Code and the
applicable legislation.
The report presents how the policy has been
applied in 2021 in the paid incentives and the
alignment of remuneration with the successful
delivery of the long-term strategy and sustain-
able business results.
Outokumpu’s remuneration has a guiding
principle of Pay for Performance, for both the
short- and long-term incentive plans, supporting
Outokumpu’s long-term financial success and
the achievement of its strategic goals. Outo-
kumpu’s strategic mid-term financial targets
are based on the performance in adjusted
EBITDA and safety (TRIFR) in alignment with
Outokumpu’s strategy.
Outokumpu’s Annual General Meeting was held
on March 31, 2021. The meeting approved the
Remuneration Report 2020 in an advisory vote.
164,152,422 shares and votes, representing
approximately 39.42% of all shares and votes
in the company, participated in the voting.
128,638,263 votes, representing approxi-
mately 78.37% of the votes cast, voted for the
report and 35,514,159 votes, representing
approximately 21.63% of the votes cast, voted
against the report. 97,670 abstaining votes
were recorded.
No considerations were presented to the
company regarding the Remuneration Report
2020 in the procedure concerning the general
meeting.
The actual remuneration paid in 2021 and
reported here complies with the framework and
principles set forth in the Remuneration Policy.
The current CEO Heikki Malinen started in
May 2020, and his fixed remuneration has
remained unchanged. No short-term nor
long-term incentives were paid based on
Outokumpu’s performance in 2020.
Two new members joined the Board of
Directors in 2021: Ambassador Luostarinen
and Professor, Doctor Fuhrmann.
Observing the excellent business results, the
Board of Directors decided to reward the CEO
with a short-term incentive exceeding the
maximum level described in the policy.
The table on the right gives further insight in
how the development of the Board member
fees and CEO remuneration compares to the
development of the average remuneration
of employees and to Outokumpu’s financial
development over the last five years.
The CEO’s actual paid remuneration is well
aligned with the company’s performance
development as visualized in the graphs on the
right.
Adjusted EBITDA,
€ million
Operating cash
flow, € million
CEO remuneration,
€ thousand
Long-term incentive
Short-term incentive
1)
Base salary + benefits
1)
Paid short-term incentives have been
included in the chart on the year when
they have been paid. Usually, they relate
to the performance in the previous year.
Outokumpu performance and CEO remuneration in 2017–2021
Development of remuneration and financial development over the past five years
2021 2020 2019 2018 2017
Board of Directors
1)
, € 780,600 658,400 705,800 576,200 617,315
CEO
2)
, € 795,840 1,264,729 2,534,480 2,705,913 4,104,317
Employees’ average
3)
, € 59,448 53,637 53,922 52,159 54,554
Adjusted EBITDA, € million 1,021 250 263 485 631
1)
Total remuneration paid to the Board of Directors, including annual remuneration and meeting fees for all
members.
2)
Total remuneration paid to the CEO, including salary, employee benefits and incentives.
3)
Personnel expenses without indirect employee costs and termination benefits, divided by the average number
of employees during the year. In 2017–2020, the headcount of the employees was used for the calculation.
For 2021 onwards, the calculation is based on the full time equivalent (FTE). The average remuneration
has increased due to the higher short-term incentives and long-term incentive accruals as well as increased
overtime working.
Remuneration
29 / 32Outokumpu Annual report 2021 | Remuneration Report
Remuneration Policy briefly
Remuneration Policy for the
governing bodies briefly
The Remuneration Policy sets the framework
for the remuneration principles of the
governing bodies, i.e., the members of the
Board of Directors and the CEO in Outokumpu
with the successful delivery of Outokumpu’s
long-term strategy. The remuneration of the
Board of Directors is decided by the Annual
General Meeting based on the proposal by the
Shareholders’ Nomination Board. The adjacent
table describes the content of the policy briefly.
Remuneration element, purpose,
and link to strategy Applied to Key features of the policy
Fixed compensation
Compensates for the job responsibilities and
reflects the competencies, knowledge, and
experience of the individual.
CEO The fixed monthly salary is reviewed annually as part of the review of the CEO’s total
compensation package.
The Board of Directors will consider various factors when determining changes in the fixed
compensation, including individual contribution, business performance and alignment with
external market levels.
Pension and other benefits
May operate a defined contribution pension plan
for the CEO with an annual insurance premium.
CEO Supplementary pension plan rights are assessed based on payments. The current CEO is
not eligible for the pension plan.
Other benefits follow the applicable company policy as may be amended from time to
time such as for example mobile phone, company car and housing benefits and insurance
policies.
Fixed fee
Ensures that Outokumpu can attract and retain
Board members with the experience and skills
necessary in a company and business of this size
and complexity and its global competitive and
complex business environment to enable to set
and monitor the company strategy.
Board of Directors The Shareholders’ Nomination Board is responsible for presenting a proposal for
remuneration of the members of the Board of Directors to the Annual General Meeting.
Short-term incentives
Support the achievement of Outokumpu’s annual
financial, strategic targets.
CEO Performance measures, weightings, and targets for the selected measures are set annually
by the Board of Directors to ensure they support the strategy. These may change from
year to year to reflect business priorities and typically include Outokumpu’s financial
performance, safety, and individual strategic targets.
After year-end, the Board of Directors determines the extent to which each of the targets
have been achieved and determines the final pay-out level.
Long-term incentives
Align the interests with the shareholders and
retain by creating a long-term equity interest.
Promote shareholder value creation, performance
culture the achievement of strategic targets on
long-term.
CEO Outokumpu’s long-term incentive program consists of annually commencing long-term
incentive plans with a three-year performance period. Performance measures, weightings,
and targets are set by the Board of Directors to ensure they support the strategy and
typically include financial measures.
After the end of the performance period the Board of Directors measures the level of
performance targets achieved and confirms the long-term earning (if any) attained.
Shareholding recommendation
Ensures alignment of the interests of the
President and CEO with that of shareholders.
CEO The CEO should accumulate and, once achieved, hold a shareholding in Outokumpu
corresponding to his/her annual gross base salary. The shareholding is expected to
be accumulated out of rewards received under the share-based incentive schemes of
Outokumpu.
Remuneration
30 / 32Outokumpu Annual report 2021 | Remuneration Report
Fees of the Board of Directors
In 2021, Outokumpu’s Board members were
compensated for their time commitment,
knowledge and required experience to
contributing the long-term financial perfor-
mance and success of the company. Two new
members joined the Board of Directors in
2021: Ambassador Luostarinen and Professor,
Doctor Fuhrmann.
Outokumpu’s Annual General Meeting 2021
approved the annual remuneration to be paid
to the members of Outokumpu’s Board of
Directors. The Annual General Meeting 2021
decided that 40% of the annual remuneration
will be paid in the company’s own shares using
treasury shares or shares to be purchased from
the market at a price formed in public trading
and in accordance with the applicable insider
regulations. The annual fee is paid once a year
and members of the Board are not entitled to
any other share-based rewards. In addition to
their annual remuneration, all the members of
the Board of Directors are paid a meeting fee.
The Board members are not eligible for any
pension schemes. The fees paid to the Board
members are presented in the table below.
Remuneration and meeting fees of the Board of Directors in 2021
€
Paid in 2021
Annual compensation
Meeting fees
1)
TotalShare portion Cash portion
Kari Jordan, Chairman 66,243 96,757 12,600 175,600
Eeva Sipilä, Vice Chairman 37,226 54,374 12,000 103,600
Heinz Jörg Fuhrmann, Member
2)
28,894 42,206 6,600 77,700
Kati ter Horst, Member 28,894 42,206 12,600 83,700
Päivi Luostarinen, Member
2)
28,894 42,206 8,400 79,500
Vesa-Pekka Takala, Member 28,894 42,206 12,000 83,100
Pierre Vareille, Member 28,894 42,206 13,800 84,900
Julia Woodhouse, Member 28,894 42,206 21,400
3)
92,500
Total 276,832 404,368 92,400 780,600
1)
Meeting fees have been entered in the table on the year when they have been paid and include committee meeting fees.
2)
Appointed as a Board member March 31, 2021.
3)
Meeting fees include 7,000 € meeting fees of the ESG (Environment, Social and Governance) Advisory Council.
Annual Fees
Annual remuneration, €
Annual
remuneration, €
Meeting fee, €/
meeting
Chairman 163,000 600
Vice Chairman 91,600 600
Board Members 71,100
Meeting held in the country of residence 600
Meeting held outside of the country of residence 1,200
Remuneration
31 / 32Outokumpu Annual report 2021 | Remuneration Report
Remuneration of the CEO
€
Heikki Malinen
Accrued 2021,
payable in 2022
Heikki Malinen
2021
Base salary and benefits – 795,840, 100%
Short-term incentives
1)
1,064,700 0, 0%
Long-term incentives
2)
0 0, 0%
Total Remuneration 795,840, 100%
Long-term incentive plan 2019–2021 2018–2020
Maximum number of shares granted (gross) 97,000 43,000
Grant date May 5, 2020 May 5, 2020
Number of shares earned (gross) 0 0
Number of shares delivered (net) 0 0
Share delivery date – –
Share price at delivery – –
Shareholding recommendation
100% of individual annual
gross base salary
100% of individual annual
gross base salary
Shared owned on Dec 31, 2021
45,459
1)
Paid short-term incentives have been entered in the table on the year when they have been paid. Usually, they
relate to the performance in the previous year.
2)
The number of the shares payable as a long-term incentive represents a gross earning, from which the
applicable payroll tax is withheld, and the remaining net value is paid to the recipient in shares.
Remuneration of the CEO
The remuneration of the CEO consists of base
salary, benefits and an annually determined
short-term incentive plan. In addition, the
CEO participates in the company’s long-term
incentive plans that consist of individual
performance share plans.
CEO’s monthly base salary remained the same
than in the previous year, and the base salary
and benefits were EUR 795,840 in 2021.
CEO’s short-term incentive annual earning
opportunity remained unchanged at the target
level of 50% and at the maximum level of
100% of the gross annual base salary. The
short-term incentive paid for 2021 was
based on the achievement of the pre-defined
strategic targets for the financial year 2021,
i.e., Outokumpu’s adjusted EBITDA with the
80% weight and strategic projects with the
20% weight to drive profitability to support the
company to implement its strategy.
The Board of Directors decided to reward the
CEO with short-term incentive exceeding the
maximum level described in the policy. The
achievement of the adjusted EBITDA target
was above maximum, and achievement of the
strategic project target was on the target level,
resulting to a short-term incentive payment of
EUR 1,064,700.
The CEO participates also in the Performance
Share Plan (PSP) 2019–2021. The pre-defined
strategic target, the return on operating capital
of Outokumpu for the period, was not achieved.
CEO Heikki Malinen started his employment in
May 2020. In conjunction to this, short-term
incentive targets 2020 were approved by the
Board but the targets were not disclosed in
the Remuneration Report 2020. The CEO was
also granted PSP shares (prorated) from the
following programs: PSP 2018–2020, PSP
2019–2021 and PSP 2020–2022. The share
allotments were prorated observing the CEO’s
active time observing the start date in May
2020. Outokumpu did not reach the target
levels for PSP 2018–2020 and 2019–2021,
and subsequently no shares were delivered.
The performance share plans are covered by
the following share ownership requirement
applied by Outokumpu Group: the members of
Outokumpu’s Leadership Team, including the
CEO, are expected to own Outokumpu shares
received under the company’s share-based
incentive programs corresponding to the value
of their annual gross base salary. Half (50%) of
the net shares received from the share-based
incentive programs must be used to fulfil the
above ownership recommendation.
CEO Malinen has the right to retire at the
age of 65 and he participates in the Finnish
TyEL pension system and there are no supple-
mentary pension plans in place. The service
contract of the CEO is valid until further notice.
The CEO is entitled to a severance payment of
twelve (12) months, and the notice period is
six (6) months for both parties.
Remuneration
32 / 32Outokumpu Annual report 2021 | Remuneration Report
CEO’s earning opportunity and performance measures in the short-term incentive plans
Heikki Malinen
Earning opportunity (% of gross annual base salary)
Threshold
0.5%
Target 50%
Maximum
100%
Performance measures in 2021 Weight Achievement Payout
1)
Group EBITDA 80% Over maximum 150%
Strategic projects 20% Achieved 50%
1)
If the achievement of the group adjusted EBITDA target (as included in the management plan) is below threshold, the total short-term incentive
payout is decided by the Board of Directors. Therefore, the payout for different targets can in such cases be less than their actual achievement.
CEO’s earning opportunity and performance measures in the long-term incentive plans
PSP 2020–2022 PSP 2021–2023
Earning opportunity
Threshold
1)
2)
22.2% 25%
Target
1)
3)
44.4% 50%
Maximum
1)
4)
66.7% 100%
Grant
5)
130,451 168,800
Payout year
2023 2024
Performance measures
Performance criteria
6)
Return on operating capital compared to a peer group
(Q4/2020–Q3/2022)
Return on capital employed
(2023)
Weight 100% 100%
Achievement
Vesting period ongoing Vesting period ongoing
1)
Expressed in percentage of gross annual base salary at the time of grant.
2)
The threshold is 50% of target in all PSP periods.
3)
The target of 50% of annual base salary is prorated to time in position during the performance period, i.e., 32/36 in PSP 2020–2022.
4)
The maximum is 150% of target in all PSP periods.
5)
Number of gross shares at target level. The number of shares was determined using the share price at the time of plan approval, i.e., EUR 2.66
for PSP 2020–2022 and EUR 2.31 for PSP 2021–2023
6)
The performance criteria for the PSP programs was changed from "Return on operating capital compared to a peer group" to "Return on capital
employed" to put even more focus on the strategy execution.
Remuneration
REVIEW BY THE BOARD OF DIRECTORS ............. 2
Group key figures ............................. 14
Alternative performance measures ................ 15
Share-related key figures ........................ 18
Non-financial indicators ......................... 20
FINANCIAL STATEMENTS ........................ 21
Consolidated statement of income ................ 22
Consolidated statement of comprehensive income .... 22
Consolidated statement of financial position ......... 23
Consolidated statement of cash flows .............. 24
Consolidated statement of changes in equity ........ 25
Notes to consolidated financial statements ......... 26
Income statement of the parent company ........... 77
Balance sheet of the parent company .............. 78
Cash flow statement of the parent company ......... 79
Statement of changes in equity in the parent company . 80
Commitments and contingent liabilities
of the parent company ......................... 80
AUDITOR’S REPORT AND ASSURANCE REPORT ....... 81
Financial year 2021
Outokumpu’s financial
statements according to the
ESEF regulation are
published at
www.outokumpu.com/reports
Outokumpu Annual report 2021 | Review by the Board of Directors 2 / 87
20212020201920182017
0
200
400
600
800
1,000
1,200
20212020201920182017
0
1
2
3
4
5
6
0
250
500
750
1,000
1,250
1,500
20212020201920182017
0
500
1,000
1,500
2,000
2,500
Review by the Board of Directors
The year 2021 was a great success
for Outokumpu. In an exceptionally
strong market environment, the
company delivered its best financial
results in recent history. Adjusted
EBITDA exceeded the remarkable EUR
1.0 billion milestone and amounted
to EUR 1,021 million, while net debt
decreased to EUR 408 million. Strong
earnings per share was also a highlight
of the year. In 2021 the safety
performance was strongest on record,
and the annual total recordable injury
frequency rate improved to 2.0.
During 2021, Outokumpu focused
on de-risking the company, and
as a result of the various actions,
Outokumpu reduced its net debt to
EBITDA ratio to 0.4. Also, credit rating
agency Moody’s recognized the good
development and upgraded Outokum-
pu’s credit rating twice last year. In
November, Outokumpu increased its
EBITDA run-rate improvement target to
EUR 250 million and has now reached
a cumulative impact of EUR 198
million. De-risking continues through
the first phase of the strategy until the
end of 2022.
All business areas provided solid
results in 2021 and development in
realized stainless steel prices was
favorable. The mills were running at
full capacity throughout the year, and
deliveries increased by 13% compared
to the previous year. There have been
logistical challenges throughout the
year as global supply chains have
been under pressure. Teams have
worked very hard to overcome the
difficulties.
In 2021, business area Europe’s
adjusted EBITDA reached EUR 485
million and deliveries increased by 7%
compared to the previous year. In the
exceptionally strong market, business
area Americas’ adjusted EBITDA rose
to its highest level ever, EUR 297
million and deliveries increased by
26%. Also, business area Ferrochrome
increased its adjusted EBITDA to EUR
246 million.
Sustainability has been a key
focus area in 2021. Outokumpu is
committed to the United Nations’
Guiding Principles on Business and
Human Rights. In particular, the
company has invested time and
resources to better understand and
manage its supply chain by assessing
its raw material suppliers starting with
Brazil and followed by Guatemala,
where the work continues. The results
so far demonstrate the importance of
this ongoing work. In 2022, the aim to
conduct several supplier assessments
in high-risk countries.
Outokumpu’s updated and more
ambitious climate targets have been
approved by the Science Based
Targets initiative (SBTi), and the
targets are now aligned with keeping
global warming below 1.5° degrees.
Outokumpu is currently the only
Review by the Board of Directors ..................... 2
Group key figures ....................................... 14
Alternative performance measures ................... 15
Share-related key figures .............................. 18
Non-financial indicators ................................ 20
Net debt, € million, and
netdebt to adjusted EBITDA
Adjusted EBITDA, € million
Stainless steel deliveries, 1,000 tonnes
Net debt to adjusted EBITDA
Highlights 2021
Stainless steel deliveries were
2,395,000 tonnes
(2,121,000 tonnes).
Adjusted EBITDA amounted to
EUR 1,021 million
(EUR 250 million).
EBITDA was
EUR 1,009 million
(EUR 191 million).
Operating cash flow amounted to
EUR 597 million
(EUR 322 million).
Net result was
EUR 553 million
(EUR –116 million).
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 3 / 87
–100
0
100
200
300
400
500
600
700
800
20212020201920182017
–3
0
3
6
9
12
15
18
21
24
20212020201920182017
–200
–100
0
100
200
300
400
500
600
20212020201920182017
–0.6
–0.3
0.0
0.3
0.6
0.9
1.2
1.5
1.8
20212020201920182017
stainless steel producer to have its ambitious
climate targets approved by the SBTi, and is
firmly progressing on the path towards the
vision of being the customer’s first choice in
sustainable stainless steel.
Managing COVID-19 pandemic
Safety is a key priority at Outokumpu and
protecting the health and safety of the
employees in the global COVID-19 pandemic
continued in 2021.
The effects of the pandemic were twofold.
Outokumpu had various safety measures in
its sites and offices, while the rebound from
the 2020 slowdown showed as increased
deliveries and improved performance. The
financial impacts of COVID-19 related mainly to
the market rebound, and its impact on prices,
order books and utilization rates were stronger
than estimated. On the other hand, various
restrictions have been in place, as the company
has continued to do its utmost to safeguard the
employees – working remotely, following social
distancing as well as limiting traveling, face-to-
face meetings, and visitor access to only the
absolutely business critical instances.
Towards the end of 2021, the COVID-19
pandemic moved on to a point where the crisis
was no longer steered centrally at the Group
level. Instead, the situation is now managed at
the local level within the company guidelines
and local country rules. Nevertheless, the
COVID-19 pandemic still remains a risk going
forward.
Market development
According to CRU’s latest estimates (November
2021), global apparent consumption of stainless
steel flat products increased by 10.1% in
2021 compared to 2020. Global consumption
of stainless steel has recovered strongly
throughout 2021, supported by successful
vaccination programs, supportive fiscal and
monetary policy, and due to robust private
consumption and high demand for durable
goods containing stainless steel. The demand
in EMEA and Americas grew by 10.8% and
25.5%, respectively, while the largest region
APAC decreased by 8.5%.
Results
€ million 2021 2020
Sales 7,709 5,639
Adjusted EBITDA 1,021 250
Adjustments
Litigation provisions –15 –
Environmental provisions –10 –
Gain on disposal of
property 12 –
Restructuring costs – –59
EBITDA 1,009 191
EBIT 705 –55
Net result
for the financial year 553 –116
Earnings per share, € 1.26 –0.28
Diluted earnings per share, € 1.17 –0.28
Adjusted EBITDA margin, %
13.2 4.4
Return on capital employed, %
18.8 –1.4
Outokumpu’s sales grew by 37% compared
to the previous year and amounted to EUR
7,709 million in 2021 (EUR 5,639 million). In
the exceptionally strong market environment,
adjusted EBITDA reached EUR 1,021 million
(EUR 250 million). Total stainless steel
deliveries grew by 13% and profitability
was supported by higher realized prices for
stainless steel in Europe and Americas, and
a higher ferrochrome sales price. Fixed and
variable costs increased from the previous
year and profitability was especially impacted
by significantly higher energy and consumable
prices. In 2021, raw material-related inventory
and metal derivative gains increased to EUR
76 million (losses of EUR 16 million), mainly
due to positive timing impacts. Adjustment
items in EBITDA totaled EUR –12 million and
included an increase in litigation provisions,
an increase in environmental provision related
to closed mines in Finland, and a gain from
property sales in Germany (EUR –59 million
related to restructuring costs).
EBITDA amounted to EUR 1,009 million in
2021 (EUR 191 million) and EBIT increased to
EUR 705 million (EUR –55 million). Adjustment
items in EBIT totaled EUR –54 million (EUR
–59 million), and in addition to adjustment
items in EBITDA, they included single asset
impairments in 2021. In 2021, net result
increased to EUR 553 million (EUR –116
million).
Strategy execution
Outokumpu launched a new strategy in
November 2020 and set financial targets by
the end of 2022. The targets included a EUR
200 million EBITDA run-rate improvement and
a reduction of the net debt to EBITDA ratio
to below 3.0. In November 2021, with the
commitment to de-risk the company by the
end of 2022, Outokumpu increased the initial
EBITDA run-rate improvement target to EUR
EBIT, € million, and
return on capital employed, %
Net result, € million, and
earnings per share, €
Return on capital employed
Earnings per share
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 4 / 87
0
50
100
150
200
250
300
20212020201920182017
0
10
20
30
40
50
20212020201920182017
Financial position and cash flow
€ million 2021 2020
Net debt
Non-current debt 597 1,153
Current debt 112 251
Cash and cash equivalents 300 376
Net debt 408 1,028
Net debt to adjusted EBITDA 0.4 4.1
Net cash generated from
operating activities 597 322
Capital expenditure 175 180
Debt-to-equity ratio, %
13.1 43.6
Equity-to-assets ratio, % 48.3 40.8
Operating cash flow amounted to EUR 597
million in 2021 (EUR 322 million). In 2021,
the increase in net working capital was EUR
266 million (decrease of EUR 247 million). The
change in net working capital includes EUR 45
million of payments on the 2020 VAT deferral in
Finland (EUR 61 million positive net impact from
the VAT deferral). Inventories increased during
2021 and amounted to EUR 1,892 million at
year-end (EUR 1,177 million). Approximately
60% of the annual inventory increase came
from higher metal prices. Capital expenditure
amounted to EUR 175 million in 2021 (EUR
180 million).
Net debt decreased to EUR 408 million during
2021 (EUR 1,028 million) and consequently
gearing to 13.1% (43.6%). Net financial
expenses were EUR 80 million in 2021 (EUR 98
million). Interest expenses amounted to EUR 65
million in 2021 (EUR 78 million).
Cash and cash equivalents were EUR 300
million on December 31, 2021 (EUR 376
Equity-to-assets ratio and
debt-to-equity ratio, %
Capital expenditure* and depreciation
and amotization, € million
Capital expenditure Depreciation & amortization
Equity-to-assets ratio Debt-to-equity ratio
*Capital expenditure definition changed from accrual-
based to cash-based capital expenditure in 2020.
Figures for 2019 and 2018 have been restated
accordingly. Figures for 2017 have not been restated.
250 million. The company continues to de-risk
through the first phase of the strategy until the
end of 2022. The strategy has three key focus
areas: Lean & Agile Organization, Cost & Capital
Discipline, and Commercial Excellence.
The closing of the year 2021 marked the
one-year milestone in the first phase of
Outokumpu’s strategy. Outokumpu took various
actions throughout 2021 to move forward in its
strategy execution. More than 600 people from
different functions and all areas of the business
contributed, driving projects along through
shared governance to collectively meet the
commitment to the strategy. Projects focusing
on efficiency in the usage of raw materials and
consumables or ways to prioritize maintenance
spend did not only deliver results in 2021 but
changed the company’s ways of working to
ensure that the improvements are sustainable.
The cumulative EBITDA run-rate improvement
amounted to EUR 198 million at the end of
2021. The impact was achieved through the
execution of numerous small and medium-sized
initiatives driven by all focus areas.
Looking ahead to 2022, Outokumpu is
confident that it will reach its ambitions of EUR
250 million EBITDA run-rate improvement. The
governance and ways of working in the compa-
ny’s strategy execution have been ingrained
across the organization during the past year
and the pre-validated initiative pipeline supports
confidence to deliver against the increased
target. Despite the already strong results in the
Cost & Capital Discipline stream, it remains
the focus area in 2022. Initiative ideation is
largely focused on consumables consumption
efficiency to mitigate inflationary pressure.
million) and the overall liquidity reserves
amounted to EUR 0.9 billion (EUR 1.0 billion).
In addition to these reserves, Outokumpu
has an unutilized EUR 42 million short-term
portion of its main syndicated revolving credit
facility available. The EUR 120 million Kemi
mine facility was fully drawn at year-end. The
outstanding commercial papers amounted to
EUR 58 million on December 31, 2021 (EUR
231 million).
In April and in June, Outokumpu extended the
maturities of its revolving credit facilities: the
SEK 1,000 million facility was extended by
one year until May 2023 and EUR 532 million
facility by one year until May 2024. Both
revolving credit facilities are fully unutilized.
In May, Outokumpu carried out a private
placement of 40,500,000 new shares and
raised gross proceeds of EUR 209 million. With
these proceeds Outokumpu prepaid EUR 210
million of its EUR 330 million term loan. The
maturity for the remaining part of the loan was
extended from June 2023 until May 2024.
In December, following the strong cash flow
Outokumpu voluntarily redeemed its EUR
250 million fixed rate notes due in 2024 and
prepaid EUR 70 million of the term loan and
one of its pension loans amounting to EUR
56 million. Outokumpu also entered into a
EUR 100 million secured revolving working
capital facility with Finnvera Oyj. The facility
is expected to be available for drawdown
during the first quarter of 2022. In December,
Outokumpu secured a GBP 390 million buy-in
insurance contract with a pension insurer for
its defined pension benefit scheme in the UK,
impacting net pension assets as well as equity.
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 5 / 87
Europe 59%
Americas 25%
Ferrochrome 2%
Long Products 8%
Other operations 6%
Europe 17%
Americas 9%
Ferrochrome 54%
Long Products 2%
Other operations 18%
Business areas
Outokumpu has four business areas which
are also Group’s operating segments. More
information about the business areas can be
found in note 2.1 in the consolidated financial
statements.
Europe 2021 2020
Stainless steel
deliveries 1,000 tonnes 1,535 1,440
Sales € million 4,600 3,568
Adjusted EBITDA € million 485 142
Adjustments to
EBITDA € million 12 –47
EBITDA € million 498 95
Operating capital € million 1,724 1,573
Europe’s sales increased to EUR 4,600 million
in 2021 compared to EUR 3,568 million in
2020 and adjusted EBITDA increased to EUR
485 million (EUR 142 million). Stainless steel
deliveries increased by 7% compared to the
previous year. The 2021 result was positively
impacted by significantly higher realized prices
for stainless steel, but consumable prices and
freight costs increased, as well. Raw materi-
al-related inventory and metal derivative gains
were EUR 8 million in 2021 (losses of EUR
11 million). Adjustments to EBITDA included a
gain of EUR 12 million from properties sold in
Germany (EUR 47 million of restructuring costs
relating to personnel reductions). In 2021, the
share of EU cold-rolled stainless steel imports
from third countries reached 27% remaining
stable compared to previous year despite more
sourcing from Asia in the second half of 2021.
(Source: EUROFER, January 2022). Distributor
inventories remained at a low level throughout
2021, given robust end-use demand.
Americas
2021 2020
Stainless steel
deliveries 1,000 tonnes 742 588
Sales € million 1,947 1,195
Adjusted EBITDA € million 297 55
Adjustments to
EBITDA
€ million –15 –2
EBITDA € million 283 53
Operating capital € million 879 801
Americas’ sales increased to EUR 1,947
million in 2021 (EUR 1,195 million). Adjusted
EBITDA increased to EUR 297 million (EUR 55
million). Stainless steel deliveries increased
by 26% in 2021. Profitability in 2021 was
supported by significantly higher realized prices
for stainless steel and the improved product
mix, however consumable prices and freight
costs increased, as well. Raw material-related
inventory and metal derivative gains increased
to EUR 55 million in 2021 (losses of EUR 1
million). Adjustment items in 2021 included
EUR 15 million increase in litigation provisions.
In 2021, US real demand increased by 21%
compared to 2020 and the share of cold-rolled
imports into the US was 18% and increased
from previous year level (Source: American
Iron & Steel Institute). Cold-rolled distributor
inventories remained at a low level during
2021 but started to slightly increase at the
end of the year.
Ferrochrome
2021 2020
FeCr production 1,000 tonnes 515 498
Sales € million 604 411
Adjusted EBITDA € million 246 91
Adjustments to
EBITDA € million – –1
EBITDA € million
246 90
Operating capital € million
823 766
Ferrochrome’s sales amounted to EUR 604
million in 2021 (EUR 411 million). Adjusted
EBITDA increased to EUR 246 million (EUR 91
million). Profitability was supported by a higher
ferrochrome sales price, which was driven by
the increased European benchmark price and
Chinese spot market prices, slightly offset by a
stronger EUR/USD exchange rate. Significantly
increased electricity and reductant prices had
a negative impact on profitability. The global
ferrochrome supply market is overshadowed
by uncertainties driven by availability and price
of energy, environmental restrictions, and
logistical disruptions.
The finalization of the Kemi Mine expansion
investment will be delayed by some six months
due to an incident during hoisting shaft guide
rope installation. The delay will not cause any
risks regarding ore availability, and the costs of
the investment are not expected to increase.
Long Products 2021 2020
Stainless steel
deliveries 1,000 tonnes 250 175
Sales € million 810 493
Adjusted EBITDA € million 47 –8
Adjustments to
EBITDA € million – –3
EBITDA € million 47 –11
Operating capital € million 157 133
Sales by business area, 7,709 € million
Capital expenditure
by business area, 175 € million
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 6 / 87
Long Products’ sales amounted to EUR 810
million in 2021 (EUR 493 million) and adjusted
EBITDA amounted to EUR 47 million (EUR –8
million). Stainless steel deliveries increased by
43%, from both internal and external deliveries.
Profitability was positively impacted by the
improved product mix and higher realized
prices for stainless steel. Energy and consum-
able prices were higher and also fixed costs
increased as a result of higher sales volume
and more maintenance. Raw material-related
inventory and metal derivative gains were EUR
15 million compared to losses of EUR 3 million
in 2020.
Non-financial development
at Outokumpu
The information in this section fulfills the
requirements in the EU Directive and the
Finnish Accounting Act Chapter 3a on state-
ment of non-financial information. Outokumpu
is also reporting according to the EU taxonomy
framework and with regard to the Task Force
on Climate-related Financial Disclosures
(TCFD) disclosure recommendations. The
taxonomy reporting is based on the delegated
act specifying the technical screening criteria
under which certain economic activities qualify
as contributing substantially to climate change
mitigation and climate change adaptation.
Outokumpu is a leading global producer of
stainless steel with world-class production
assets in its key markets in Europe and the
Americas, and a global sales and service
network close to its international customers.
Stainless steel is a significant contributor to
building a sustainable world. Stainless steel is
used in building and construction, infrastruc-
ture, appliances, transportation, and heavy
industries. It is a strong, corrosion-resistant,
hygienic, and aesthetic material with a high
strength-to-weight ratio and no need for
maintenance. Outokumpu’s organization and
businesses are presented in the company’s
annual report and in notes 2.1 and 6.3 of the
consolidated financial statements.
Climate change is one of the three megatrends
driving Outokumpu’s business, together with
economic and population growth and urban-
ization. The properties and the low carbon
profile of Outokumpu’s stainless steel can help
customers to reduce their carbon footprint.
Market for solutions enabling the transition
into a low-carbon society will increase on the
way to 2 degree or 1.5 degree scenarios for
2050 and give preference to low carbon profile
companies such as Outokumpu.
Outokumpu acknowledges the recommenda-
tions from the Task Force on Climate-related
Financial Disclosures (TCFD) and the underlying
framework and acknowledges that there are
financial impacts in a 2°C or lower transition
scenario. Outokumpu has performed a stated
policy scenario and sustainable development
scenario analysis in line with the International
Energy Agency Iron and Steel Technology
Roadmap, 2020. The physical and transition
risk of climate change are assessed and
included in the general risk assessment and
management of the company.
Outokumpu’s business is based on a circular
economy. About 90% of the raw material used
in Outokumpu’s stainless steel production
is recycled. By converting scrap and metal
waste into new products the company also
protects virgin resources. Throughout the
process, Outokumpu aims to minimize the
environmental impact of its production. At the
end of its long lifecycle, stainless steel is fully
recyclable, without any loss of quality.
Outokumpu has an integrated production
process, including the company’s own chrome
mine for one of the main raw materials of
stainless steel, ferrochrome operations,
melting, hot rolling and cold rolling, as well as
finishing and service centers.
Outokumpu’s production sites are often
located in relatively small cities or towns. This
means that Outokumpu is significant for the
economies of small local communities and it
is often one of the very few large private-sector
employers in the area.
Sustainability strategy
and material topics
Outokumpu’s vision is to be the customer’s
first choice in sustainable stainless steel.
Sustainability at Outokumpu is based on three
aspects: environmental, social and governance,
which all need to be in balance. Outokumpu
introduced an updated sustainability strategy in
May 2021 to further strengthen Outokumpu’s
position as the industry leader in sustainability.
As part of the new sustainability strategy,
Outokumpu increased its greenhouse gas
emission reduction target committing to the
Science-Based Target initiative’s (SBTi) 1.5 °C
climate ambition. The new approved short-term
Science Based Target on the way to 1.5°C
target in 2050 is to reduce scope 1, 2 and
3 greenhouse gas emissions 42% per tonne
stainless steel by 2030 from a 2016 base
year.
Outokumpu regularly conducts a materiality
analysis to map stakeholders’ expectations
and to assess business impact of the Group
on sustainability. The materiality analysis was
updated in 2021. According to the updated
analysis, Outokumpu’s focus areas for accel-
eration are emission and footprint reduction,
circular economy and waste management,
sustainable supply chain management and
innovative technologies.
The company is a signatory of the United
Nations Global Compact. Outokumpu is
committed to the United Nations’ Sustainable
Development Goals, with a focus on the
following six objectives: affordable and
clean energy, decent work and economic
growth, industry, innovation and infrastructure,
responsible consumption and production,
climate action and partnerships for goals.
Policies and principles of
sustainability management
Outokumpu’s Board of Directors approves
Outokumpu’s sustainability agenda and targets.
On Group level, sustainability is managed
by the Group sustainability team headed by
Vice President – Sustainability, who reports to
Chief Technology Officer responsible for Group
sustainability. The Outokumpu Leadership
Team regularly follows the progress of Outokum-
pu’s sustainability agenda. The business areas
and functions are responsible for ensuring that
operations within their own organizations are
conducted in a responsible manner and that
monitoring, data collection and reporting are
duly carried out. All Outokumpu operating sites
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 7 / 87
are certified according to quality ISO 9001 and
environment ISO 14001 management systems.
The functioning of the systems is monitored by
both internal and external audits.
In May 2021, Outokumpu established a new
ESG Advisory Council to support Outokumpu in
continuous improvement in sustainability. The
council consists of four external advisors. The
council’s role is to challenge and comment the
company’s ESG strategy, roadmap develop-
ment and actions as well as facilitate dialogue
and exchange of views between Outokumpu
and its stakeholders. More information about
the council can be found on Outokumpu’s
website.
During 2021 an internal and cross-functional
ESG core team was also established. The team
drives, develops and supports the implementa-
tion Outokumpu’s sustainability strategy giving
executive proposals and drafts for decisions
to the Outokumpu’s management who will
then implement necessary actions. The team
includes members from Group sustainability,
procurement, communications, compliance, HR
and safety functions.
The most important policies guiding Outo-
kumpu’s sustainability management are the
Group’s Code of Conduct, Corporate Respon-
sibility Policy and the Policy on Environment,
Health, Safety and Quality (EHSQ), all available
on Outokumpu’s website. Outokumpu’s Code
of Conduct defines the common ways of
working in the Group and sets principles for
conducting business in a legal, compliant, and
ethical manner, including zero tolerance for
corrupt practices and requiring compliance
with applicable laws and regulations, including
competition laws and trade sanctions
regulations.
The Corporate Responsibility Policy describes
the main principles and rules followed by
Outokumpu in relation to the sustainable
development of the economic, environmental,
and social aspects. Outokumpu’s EHSQ
policy describes the company’s commitment
to continuous improvement in these fields,
compliance with legislation in all areas the
company operates in, and the fulfilment
of stakeholder requirements to which the
company subscribes. Outokumpu has also an
Anti-Corruption Instruction providing detailed
guidance on responsible business practices.
In addition to the EHSQ policy, Outokumpu
has strict guidelines for safety through the
Outokumpu Safety Principles and Health and
Safety Standards. Additionally, Outokumpu has
ten Cardinal Safety Rules that are a part of the
company’s operating principles.
Corporate statements, policies and instructions
are the basis of the Outokumpu operating
model in governance, risk, and compliance.
Policies and instructions are implemented
through internal communication, mandatory
training and internal control mechanisms.
Outokumpu has currently five key corporate
policies, which need to be well known by
everyone working for Outokumpu:
• Code of Conduct
• Cardinal Safety Rules
• Approval Policy
• Competition Law Compliance Policy
• Acceptable Use of IT Policy
The internal audit function flanked by
external audits consistently monitors and
tests adherence to corporate guidance and
standards, while the sustainability organization
follows-up on environmental performance
and legality on a quarterly basis. Regular
internal environmental audits by the Group’s
environmental team are performed based on
an internal risk assessment.
Outokumpu monitors its suppliers through
self-assessment, screenings and audits. Most
of suppliers are also going through a monthly
compliance screening for sanctions. The
self-assessments and audits are based on
Outokumpu’s Supplier Requirements and
focused on evaluating the suppliers’ social
and environmental responsibility and quality
management. In raw material procurement,
supplier’s sustainability performance is
assessed by sustainability platform EcoVadis.
Outokumpu complies with international,
national, and local laws and regulations, and
honors and is committed to international
agreements concerning human and labor rights,
such as International Bill of Human Rights and
condemns the use of forced and child labor. In
2021, Outokumpu focused on implementing
the UN Guiding Principles on Business and
Human Rights.
All Outokumpu employees are free to join trade
unions according to local rules and regulations.
There is zero tolerance of any form of discrim-
ination, whether it is based on ethnic origin,
nationality, religion, political views, gender,
sexual orientation, age or any other factor.
Outokumpu expects its suppliers and
contractors to comply with applicable laws and
regulations as well as Outokumpu’s Code of
Conduct and to meet the company’s Supplier
Requirements. Outokumpu aims to ensure that
modern slavery or human trafficking plays no
part in its supply chain or in any part of the
business.
Outokumpu has in place Supplier Require-
ments that set the minimum level for suppliers
regarding sustainability and ethical standards,
safety, environmental considerations, quality
management and other criteria. In 2021,
Outokumpu published an amendment to
the Supplier Requirements for raw material
suppliers.
More information about Outokumpu’s sustain-
ability related risks can be found in the section
Risks and uncertainties.
Sustainability targets
The Group’s main sustainability targets are:
Environmental
• Reducing scope 1, 2 and 3 greenhouse
gas emissions 42% per tonne of stainless
steel by 2030 on 2016 base year*). The
new short-term Science Based Target on the
way to 1.5°C target in 2050 replaces the
former target on reducing scope 1, 2 and
3 greenhouse gas emissions 20% per ton
stainless steel by 2023 from a 2014–2016
base period. (* The target boundary includes
biogenic emissions and removals from
bioenergy feedstock.)
• Increasing recycled material content to
92.5% by 2023 (all metallic input from
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 8 / 87
20212020201920182017
0
2,000
4,000
6,000
8,000
10,000
12,000
Personnel reported as full time equivalent number.
20212020201920182017
0.0
0.5
1.0
1.5
2.0
• A regular performance development discus-
sion held with all employees in applicable
countries.
Governance
• All employees trained on Outokumpu’s Code
of Conduct.
Outokumpu’s long-term target is to achieve
carbon neutrality by 2050 in scope 1 (direct)
and 2 (indirect) emissions. Currently, Outo-
kumpu is the only stainless steel producer with
an approved short-term Science Based Target
towards the 1.5-degree scenario following the
general rules of the initiative until the stainless
steel sectoral decarbonization approach is
available.
Environmental performance
The main environmental impacts from stainless
steel production are the use of virgin materials,
direct and indirect energy, dust emissions
into the air, waste created in the production
process and water discharges from production
plants.
Outokumpu uses efficient dust-filtering systems
that remove 99% of particles, and water is
reused in production as much as possible
and treated on production sites. In addition
to material efficiency through using as much
recycled material as possible, Outokumpu aims
to reduce landfill waste and reuses waste from
its production processes in its own production.
Outokumpu also aims to increase the use of
its by-product slag from its production outside
the company for example in road construction,
concrete production and water treatment.
In 2021, the use rate of slag (all slag
compared to the used and landfilled slag) was
79% (77%). The total amount of slag increased
by 7% compared to last year but more slag
could be used. On top of production waste,
tailing sand from mining is the most significant
waste item to be deposited in the mine site.
Landfilled waste intensity decreased. Although
stainless steel production increased compared
to the previous year, less waste was generated
and about the same amount of waste as in the
previous year was deposited.
The level of material recycling (all metallic input
from waste streams, such as scrap, scales or
metals from slag and dust treatment per tonne
stainless steel) was at 90.1% (92.5%).
The improvement of the energy efficiency
calculated as a sum of different process steps
Personnel on December 31
Outokumpu’s CO
2
emission intensity,
tonnes of CO
2
per tonne steel
Upstream CO
2
emission intensity
Transport & travel
Indirect
Direct
Environmental indicators
2021 2020
Scope 1, 2 and 3 (direct and indirect) CO
2
emission intensity,
tonnes per tonne of stainlesssteel 1.60 1.55
Energy intensity, GJ per tonne stainless steel 9.9 11.0
Use rate of slag, including slag from ferrochrome production, % 78.6 77.1
Total landfill waste intensity, tonnes per tonne stainless steel 0.517 0.590
Recycled material content, % 90.1 92.5
waste streams, such as scrap, scales or
metals from slag and dust treatment per
tonne stainless steel).
• Improving energy efficiency by 0.5% each
year by 2030.
• Reducing the landfilled production waste
other than slag by 0.5% each year by 2023.
Social
• Achieving total recordable injury rate of
<2.2 per million working hours in 2021.
The Group’s long-term target is to achieve
zero-level in injuries.
• High engagement rate in the annual
Organizational Health Index survey.
was very high with 6.1% compared to the
previous year.
In 2021, CO
2
intensity reduced by about 14%
from baseline period 2014–2016 and reached
72% of the targeted reduction by 2023.
All Outokumpu sites have environmental
permits that set the basic framework for
production operations. In 2021, emissions
and effluents remained within permitted limits,
and the 15 minor breaches in operations that
occurred were temporary, identified, and had
no or only a minimal impact on the environ-
ment. There were no significant environmental
incidents.
Outokumpu’s operations under the EU
Emissions Trading Scheme (ETS) will continue
to receive free emissions allocations according
to efficiency-based benchmarks and historical
activity for the next five years. In 2021, the
ETS free emission allowances of Outokumpu
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 9 / 87
were below emissions within the ETS system,
1.0 million tonnes (1.0 million tonnes in 2020).
Outokumpu is not a party to any significant
legal or administrative proceedings concerning
environmental issues, nor is it aware of any
realized environmental risks that could have a
material adverse effect on its financial position.
Social performance
Outokumpu’s main indicator for safety
performance is the total recordable injury
frequency rate (TRIFR), which includes fatal
accidents, lost-time injuries, restricted work
injuries, and medically treated injuries per
million working hours. Group TRIFR improved
from the previous year and was 2.0 against the
target of <2.2 (2.4).
Outokumpu’s personnel on full-time equivalent
basis decreased by 506 during the year and
totaled 9,096 at the end of December 2021
(2020: 9,602 and 2019: 10,078). Total wages
and salaries amounted to EUR 557 million
in 2021 (2020: EUR 547 million, 2019:
EUR 568 million). Indirect employee benefit
expenses totaled EUR 154 million in 2021
(2020: EUR 188 million, 2019: EUR 206
million).
Finnwatch, a Finnish NGO, published in
February 2021 a report on Outokumpu’s
supply chain in Brazil. As a result of the report,
Outokumpu took several actions to further
develop the monitoring of its suppliers and
to increase the transparency of its sourcing.
Outokumpu’s policies were reviewed according
to the UN Guiding Principles on Business
and Human Rights (UNGP). Outokumpu’s
Supplier Requirements were updated and an
amendment for raw material suppliers was also
published. Outokumpu conducted an on-site
review with an external third party to one of its
suppliers in Brazil. In 2021, the human rights
risk assessment was conducted in accordance
with the UNGP, and most salient human rights
issues were identified.
Outokumpu encourages everyone to raise their
concerns. All available reporting channels are
detailed in the Code of Conduct, including
the SpeakUp channel which is an externally
operated communication channel to report
misconduct confidentially and anonymously, if
allowed by laws and regulations. The SpeakUp
channel is available as a communication
channel in Outokumpu’s reporting process if
other reporting channels do not feel suitable.
Outokumpu follows the number of potential
misconducts as an indicator for its perfor-
mance in matters related to anti-corruption,
bribery and human rights. In 2021, 40 reports
of potential misconduct were recorded
through the various reporting channels. These
incidents have been assessed, and if needed
further investigated. Proper corrective and
preventative actions have been or will be taken
as a consequence. During 2021 the internal
process for managing misconduct reports and
investigations has been reviewed and redefined,
partly in anticipation of the new legislations
based on the EU Directive on whistleblower
protection.
During 2021, the implementation of
Outokumpu’s ethics and compliance program
continued in close co-operation with the
leadership, business areas and Group
functions. As part of these efforts, the revision
of the core element of the program, Code of
Conduct, was finalized and the revised Code
of Conduct was implemented in 2021 with
a mandatory e-learning for all Outokumpu
employees together with various internal and
external communications. In addition, efforts
were continued to be made in competition
law compliance, know your business partner
and data protection areas in several ways,
such as by process improvements, update of
documentation and through various trainings
and communications. Furthermore, commu-
nications on other ethics and compliance
topics, such as anti-corruption, were made
throughout the year. As part of these activities
the importance of daily ethical decision making
and responsible business practices, owned by
all employees at Outokumpu, were highlighted.
Key social indicators
2021 2020
Diversity
Employees
male, % 84 84
female, % 16 16
Managers
male, % 84 84
female, % 16 16
Board of Directors
male, % 50 50
female, % 50 50
Safety
Total recordable injury
frequency rate, per million
working hours 2.0 2.4
EU taxonomy reporting
Companies required to report non-financial
information need to disclose the taxonomy
eligibility of their economic activities for year
2021. EU taxonomy is a classification system
for categorization of sustainable business
activities that could substantially contribute
to the EU’s environmental goals. Non-financial
companies are required to disclose the share
of their revenue (sales), and capital and
operational expenditure associated with envi-
ronmentally sustainable economic activities
as defined in the EU Taxonomy Regulation
(2020/852). For year 2021, companies are
only required to report the proportion of their
economic activities that are eligible, i.e. in
scope of the regulation. For 2022, also the
proportion of aligned economic activities need
to be reported. Aligned economic activities
means that the activity meets the criteria
for sustainable economic activities that has
been established by the Regulation and its
delegated acts.
Outokumpu’s approach to the EU taxonomy
for the financial year 2021 was to assess
which of its economic activities are included
and listed in the taxonomy to define the
taxonomy-eligibility of Outokumpu’s sales,
capital expenditure and restricted operating
expenditure. Outokumpu representatives from
finance, sustainability and business functions
investigated the activities in relation to EU
taxonomy, resulting in the identification of
the eligible and non-eligible activities. Based
on this analysis the taxonomy activity 3.9,
manufacturing of iron and steel, was identified
as an eligible economic activity for climate
change mitigation. Production of ferrochrome
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 10 / 87
is not eligible and thus is reported non-eligible
activity. The key performance indicators were
calculated using the consolidated financial
information and further accounting policies are
disclosed after the key performance indicator
table below.
Taxonomy key performance indicators
2021
Total
€ million
Eligible
%
Non-
eligible
%
Sales 7,709 89 11
Capital expenditure 155 39 61
Restricted operating
expenditure 669 86 14
Outokumpu has defined the taxonomy key
performance indicators as follows:
• Taxonomy sales is presented in accordance
with IFRS, in line with the sales in the
Group’s consolidated financial statements.
The manufacturing of iron and steel is listed
as an eligible economic activity, i.e. covered
by the taxonomy (EU taxonomy economic
activity 3.9). This means that the main part
of Outokumpu’s economic activities and
sales are eligible. The main items of sales
that have been considered non-taxonomy-el-
igible include sales of ferrochrome, raw
materials, other services, and energy.
• Taxonomy capital expenditure is presented
and measured as cash-based, in line with
the capital expenditure presented in the
Group’s financial statements. Taxonomy
capital expenditure consists of purchases
of property, plant and equipment and
intangible assets, other than emission
allowances. Leases and equity investments
at fair value through other comprehensive
income have been excluded from the
amount. Capital expenditure associated with
taxonomy-eligible economic activities has
been considered eligible. Capital expenditure
related to business area Ferrochrome and
directly to corporate functions have been
considered non-eligible. Currently plans to
expand taxonomy-aligned economic activi-
ties, plans to allow the activities to become
taxonomy-aligned, or individual measures
enabling the target activities to become
low-carbon have not been separately taken
into consideration.
• Taxonomy restricted operating expenditure
consists of expenses relating directly
to maintenance and servicing of assets
as well as research and development
expenses. Of the total taxonomy restricted
operating expenditure, the part supporting
taxonomy-eligible economic activities
has been considered eligible. Expenses
related to business area Ferrochrome and
corporate functions have been considered
non-eligible. Research and development
expenses have been included in full and
considered eligible except for the part
relating to ferrochrome manufacturing. In
corporate functions, there were no research
and development expenses in 2021. Scrap
sourcing is not included in the figures for
restricted operating expenditure, as scrap is
a raw material for Outokumpu. However, the
logistics and handling of scrap, especially
the scrap produced internally as by-product,
could be considered an action which helps
Outokumpu in achieving the 70% minimum
share of recycled raw material content that
is set as a criterion for alignment in the
delegated act for climate change mitigation.
For this reporting, Outokumpu has chosen
the conservative approach not to include
these costs.
• The preparation of the key performance
indicators requires management to make
judgements, estimates and assumptions
on eligible economic activities, capital
expenditure allocated to those activities
and related operating expenditure. Only one
taxonomy-eligible economic activity has been
considered in the calculations, together with
one environmental objective, eliminating
the risk of double counting relating to
different activities or objectives. There are
still considerable uncertainties regarding the
requirements and guidelines provided by the
EU, and Outokumpu continues to develop
its calculations and definitions as new
information becomes available.
Outokumpu continues to assess taxonomy
alignment and will report on that in 2023. As
a principle, the share of aligned economic
activities can be the same or lower than the
share of eligible economic activities. While the
stainless steel manufacturing at Outokumpu
meets the scrap input threshold of 70%
required for a substantial contribution to
climate change mitigation, a full assessment
of the Do No Significant Harm principles and
the compliance with the minimum safeguards
will be performed in 2022 which will have an
impact on the alignment level.
Research and development
Research and development (R&D) ensures that
the partners inside and outside of Outokumpu
receive exceptional value through leading
technical expertise. Shaping the future by
developing breakthrough innovations as well
as enabling a sustainable future are the key
parts of the R&D mission. Outokumpu has
three R&D centers located in Avesta, Sweden,
in Krefeld, Germany and in Tornio, Finland.
R&D activities are focused on two R&D must
win battles: sustainable production process
technologies and future products and customer
applications. In 2021, R&D expenditure totaled
EUR 14 million, 0.2% of net sales (2020: EUR
21 million and 0.4%, 2019: EUR 17 million
and 0.3%).
R&D programs related to sustainable
production process technologies are focusing
on development and implementation of
technologies to reduce our CO
2
footprint and to
improve the process efficiency and capabilities.
R&D programs related to the future products
and customer applications are focusing on
developing new steel grades and improving
existing grades for new applications. The
focus is lying on the Pro product family for
demanding end-use and offering sustainable
solutions for high customer satisfaction.
Risks and uncertainties
Outokumpu operates in accordance with the
risk management policy approved by the
company’s Board of Directors. The policy
defines the objectives, approaches and areas
of responsibility in the Group’s risk manage-
ment activities. Supporting Outokumpu’s
strategy, the aim of risk management is
to identify, evaluate, mitigate, control and
report risks from shareholders’ and other
stakeholders’ point of view such as customers,
suppliers, financiers, regulators and employees.
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 11 / 87
Outokumpu has defined risk as anything that
could have an adverse impact on achieving
the Group’s objectives. Risks can therefore
be threats, uncertainties or lost opportunities
connected with current or future operations.
More information on risks and mitigation
activities can be found in Key risks section in
the Annual Report, whereas Outokumpu’s risk
management and internal control processes
and governance is described in the Corporate
Governance Statement.
Strategic and business risks
Outokumpu’s key strategic and business risks
include: risks and uncertainties relating to the
development of overcapacity of global stainless
steel production, volatility of raw material and
end product prices and availability; risks and
uncertainties implementing new IT systems
and processes; opportunities to improve
operational reliability, drive competitiveness
and further improve financial performance; the
risk of trade defense measures initiated by
the EU not being effective, adverse changes in
the global political and economic environment;
risks and uncertainties related to develop-
ments in the stainless steel and ferrochrome
markets and competitor actions; changes in
the prices of nickel, iron and molybdenum,
energy and emission allowance impacting
cash flow; fluctuations in exchange rates
affecting the global competitive environment in
stainless; and the risk of litigation or adverse
political action or changes in legislation and
environmental regulations affecting trade.
Operational risks
Key operational risks for Outokumpu include:
a major fire or machinery breakdown causing
business interruption; cyber security risks and
IT failure; risks related to supply chain, raw
material sourcing in high-risk countries and
certain critical supplier dependencies; and
investment and project implementation risks.
Operational risks also include inadequate or
failed internal processes, employee actions,
systems, or events such as natural catastro-
phes, and misconduct or crime. These risks are
often connected with production operations,
logistics, financial processes, major investment
projects, other projects or information
technology and, should they materialize, can
lead to personal injury, liability, loss of property,
interrupted operations, or environmental and
reputational impacts. Outokumpu’s operational
risks are partly covered by insurance. To
minimize the possible damage to property and
business interruption that could result from a
fire occurring at some of its major production
sites, Outokumpu has systematic fire safety
and loss prevention surveys in place.
Environmental and climate
change related risks
The main environmental business risks for
Outokumpu are related to emissions trading
schemes; new environmental and consumer
protection demands, including changes in
environmental legislation and the potential
impact on Outokumpu’s competitive position;
as well as the risk of increased electricity
prices and emissions costs due to the EU’s
and UK’s ambitious Emissions Trading Systems
(ETS).
The main environmental accident risks at
production sites relate to the use of acids, the
production of hazardous waste and toxic gases,
landfill activities, long-term contamination of
soil or groundwater, and the long-term effects
of hazardous pollutants. Outokumpu also has
some potential environmental liabilities and
risks at closed mines and production sites.
Outokumpu also evaluates its climate change
related risks, including main production
locations’ exposures on several threats. These
physical acute and chronic climate change
threats and risks include e.g. flood, sea
water level changes, exposures to hurricanes,
tornadoes and severe storms, extreme weather
conditions like lightning, rain or hail. The
transition risks to Outokumpu are driven by
changes to climate policies, which can have
adverse impact to Outokumpu’s operating
environment and financial position as by an
increased price of greenhouse gas emissions
and the linked rising electricity price. The
risk on costs of lower emissions technology
will become effective in the coming years.
More and more customers are looking on
sustainable products and we are working on
our vision to be customer’s first choice in
sustainable stainless steel. The risk of losing
customers and market share is assessed; but
the company’s low carbon profile stainless
steel also drives opportunities.
Safety and personnel-related risks
The main risks related to safety and personnel
are the risk of fatalities, serious injuries and
continued COVID-19 pandemic to Outokumpu’s
own employees and contractors, which would
also have a significant impact on the safety
culture and the company’s reputation as an
employer; the loss of key individuals or other
employees who have specific knowledge of, or
relationships with, trade customers in markets
in which Outokumpu operates; and the risk of
being unable to attract, retain, motivate, train,
and develop qualified employees at all levels,
which could have a material adverse effect on
Outokumpu’s business, financial condition, and
operational results.
Risks related to compliance, crime
and reputational harm
Outokumpu operates globally and its activities
span multiple jurisdictions and complex
regulatory frameworks at a time of increased
enforcement activity and enforcement
initiatives globally in areas such as competition
law, anti-corruption and bribery, anti-money
laundering, data protection (including EU GDPR
compliance); and trade restrictions, including
sanctions. Outokumpu also faces the risk of
fraud by its employees, external theft and
crime, losses of critical research and develop-
ment data, misconduct, as well as violations by
its sales intermediaries or other third parties or
at its joint ventures and other companies.
Social responsibility related risks
Outokumpu aims to actively identify risks
and uncertainties related to its exposures in
social responsibility, including human rights
related topics. This applies to Outokumpu’s
own operations globally including supply chain
and other business partners. In late 2021, the
human rights risk assessment was conducted
in accordance with the United Nations Guiding
Principles on Business and Human Rights
(UNGP) and most salient human rights issues
were identified. Outokumpu takes seriously all
identified human rights risks, labor practice
violations and related threats as it insists on
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 12 / 87
full transparency and compliance on human
rights topics.
Financial risks
Key financial risks for Outokumpu are: changes
in the prices of nickel, iron, molybdenum,
energy and emission allowance; currency
developments affecting the euro, the US dollar,
the Swedish krona, and the British pound;
interest rate changes connected with the
euro, the Swedish krona and the US dollar;
changes in levels of credit margins applied for
Outokumpu; risk related to prices of equities
and fixed-income securities; country and
counterparty risk related to customers and
other business partners, including financial
institutions; risks related to liquidity and
refinancing; breach of financial covenants or
other terms and conditions leading to default;
and changes in fair value of equity investments
in energy production. The financial risks listed
above and related risk mitigation activities
are described in further detail in note 5 to the
consolidated financial statements.
Short-term risks and uncertainties
Outokumpu continues to focus on mitigating its
exposure to risks which present uncertainties
to its business and operations, including but
not limited to: impacts from the continued
COVID-19 pandemic; increases and volatility
in energy prices; cyber security risks and
IT failures; the risk of business interruption
at Outokumpu’s production and distribution
locations; delays or failures in Outokumpu’s
supply chain, such as impacts from the global
supply chain challenges and including risk
in overall price and availability of critical raw
materials and supplies; the shortage of spare
parts and logistical challenges; dependencies
on certain critical suppliers; raw material
sourcing in high-risk countries; changes in
the prices of ferrochrome, nickel, electrical
power, and CO
2
emission allowances; currency
developments affecting the euro, US dollar,
Swedish krona, and pound sterling; the
realization of credit losses from customer
receivables; negative impacts on the amount of
defined pension benefit assets and liabilities;
changes in interest margins applicable to
Outokumpu; risks related to the fair value of
shareholdings, such as the investment in the
Fennovoima project as well as general project
and investment implementation risks, including
the ongoing project at the Kemi mine.
Possible further adverse changes in the global
political and economic environment and their
impact on demand for stainless steel may all
have an impact on Outokumpu’s business
and access to financial markets, including
COVID-19 related risks, uncertainty surrounding
the sustainability of US economic growth, the
global inflation outlook, geopolitical tensions
related to Ukraine, the risk of unfair trade
practices by third countries and ineffective
trade defence measures by the EU against
them as well as the environmental-social
governance risk.
Significant legal proceedings
Claim in Spain related to the
divested copper companies
Outokumpu divested all of its copper business
in 2003–2008. One of the divested companies,
domiciled in Spain, later faced bankruptcy.
The administrator of the bankruptcy estate
filed a claim against Outokumpu Oyj and two
other non-Outokumpu companies for recovery
of payments made by the bankrupt company
in connection with the divestment. In 2014,
the court of first instance in Spain accepted
the claim of EUR 20 million brought against
Outokumpu and the two other companies. In
2018, the Court of Appeal ruled the case in
favor of Outokumpu. Finally, in March 2021,
the Spanish Supreme Court ruled the case in
favor of Outokumpu and released the company
from all claims and liabilities. All legal cases
against Outokumpu related to the recovery
have now been closed.
Dispute over payment of
wages in the US
A class of plaintiffs, consisting of 152 former
and 126 current Outokumpu Calvert mill
employees, has brough suit against Outokumpu
in U.S. federal court with allegations of failure
to pay full wages for regular work and overtime
work they performed. In November 2021, the
court entered a default judgment against Outo-
kumpu with respect to liability as a sanction for
alleged misconduct during the discovery phase
of the legal proceeding. The process to finally
determine the damages is pending in the court.
Outokumpu does not consider the potential
financial impact of the case material for the
Group as a whole.
Shares and share capital
On December 31, 2021, Outokumpu Oyj’s
share capital was EUR 311 million, and the
total number of shares was 456,874,448.
At the end of the year, Outokumpu held
4,302,471 treasury shares. The adjusted
average number of shares outstanding in 2021
was 438,871,175.
Principal shareholders and share price
development is presented in the Stakeholder
engagement section in the Annual report.
Management shareholdings and
share based incentive programs
On December 31, 2021, the members of the
Board of Directors and the members of the
Outokumpu Leadership Team (OLT) altogether
held 921,817 shares, or 0.20% of the total
number of shares.
Outokumpu has established share-based
incentive programs for the OLT members,
selected managers and key employees.
which include a Performance Share Plan and
Restricted Share Pool for key employees. In
2021, after deductions for applicable taxes, a
total of 69,765 shares were delivered to the
participants of the programs based on the
conditions of the programs. Outokumpu used
its treasury shares for the reward payments.
The Performance Share Plan and the Restricted
Share Pool Program are currently ongoing for
the periods 2020–2022 and 2021–2023, and
their continuation for the period 2022–2024
was approved by the Board of Directors in
December 2021. The Performance Share Plan
for all three periods focuses on earning criteria
that measures Outokumpu’s profitability
and the efficiency with which its capital is
employed. More details on the share-based
incentive programs can be found in the note
3.4 in the consolidated financial statements.
The members of OLT and Board of Directors
are introduced in the Corporate Governance
Statement included in the Annual report and at
Outokumpu website: https://www.outokumpu.
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 13 / 87
com/en/investors/governance. Their share-
holding is also presented in the Corporate
Governance Statement and remuneration in
the note 3.2 in the consolidated financial
statements. Remuneration report is also
included in the Annual report.
Corporate governance
Outokumpu’s Corporate Governance Statement
can be found on the Outokumpu website:
https://www.outokumpu.com/en/investors/
governance
Annual General Meeting
Outokumpu’s Annual General Meeting 2021
was held on March 31, 2021, at the compa-
ny’s head office in Helsinki, Finland, under
special arrangements due to the COVID-19
pandemic. The Annual General Meeting
supported all the Board of Directors’ and the
Shareholders’ Nomination Board’s proposals
and approved the company’s remuneration
report in an advisory vote. The Annual General
Meeting approved the financial statements and
discharged the management of the company
from liability for the financial year 2020. The
Annual General Meeting also approved the
proposals of the Shareholders’ Nomination
Board regarding the members of the Board of
Directors and their remuneration.
The Annual General Meeting decided that no
dividend will be paid for the financial year that
ended on December 31, 2020 and authorized
the Board of Directors to repurchase the
company’s own shares and to decide on the
issuance of shares as well as special rights
entitling to shares.
The Annual General Meeting decided
in accordance with the proposal by the
Nomination Board that the Board of Directors
consists of 8 members. The Annual General
Meeting re-elected the current members of the
Board of Directors Kati ter Horst, Kari Jordan,
Eeva Sipilä, Vesa-Pekka Takala, Pierre Vareille
and Julia Woodhouse and elected Heinz Jörg
Fuhrmann and Päivi Luostarinen as new
members for the term of office ending at the
end of the next Annual General Meeting. Kari
Jordan was re-elected as the Chairman and
Eeva Sipilä re-elected as the Vice Chairman of
the Board of Directors.
Changes in the Outokumpu
Leadership Team
In June, Outokumpu appointed Tamara Weinert
as President of business area Americas. She
had been the Acting President of the business
area and a member of Outokumpu Leadership
Team since October 2020.
Nomination Board
Outokumpu’s Shareholders’ Nomination
Board consists of the representatives of the
four largest shareholders registered in the
shareholder register of the company following
Nasdaq Helsinki’s last trading day in August.
The Nomination Board has been established to
annually prepare proposals on the composition
of the Board of Directors and director remuner-
ation for the Annual General Meeting.
On August 31, 2021 the four largest
shareholders of Outokumpu were Solidium Oy,
Ilmarinen Mutual Pension Insurance Company,
Varma Mutual Pension Insurance Company
and The Social Insurance Institution of Finland.
The shareholders appointed the following
representatives to the Nomination Board: Antti
Mäkinen, Managing Director at SolidiumOy,
Jouko Pölönen, President and CEO at Ilmarinen
Mutual Pension Insurance Company, Pekka
Pajamo, CFO at Varma Mutual Pension
Insurance Company, and Outi Antila, Director
General at The Social Insurance Institution of
Finland. In addition, Kari Jordan, Chairman of
the Board of Directors of Outokumpu, acts as
an expert member of the Nomination Board.
The Nomination Board submitted its proposals
to Outokumpu’s Board of Directors on
December2, 2021.
Board of Directors’ proposal
for profit distribution
According to Outokumpu’s dividend policy, the
dividend pay-out ratio throughout a business
cycle shall be in a range of 30–50% of the
Group’s net income. According to the parent
company’s financial statements on December
31, 2021 distributable funds totaled EUR
2,560 million, of which retained earnings were
EUR 228 million.
The Board of Directors proposes to the Annual
General Meeting to be held on March 31,
2022 that a dividend of EUR 0.15 per share
will be paid for year 2021.
Outlook for Q1 2022
Group stainless steel deliveries in the first
quarter are expected to increase compared to
the fourth quarter.
The European ferrochrome benchmark price
remained stable at USD 1.80/lb for the first
quarter. Higher stainless steel prices are
reflected in the already received orders and
more than offset the increase in energy and
consumable prices. COVID-19 remains a risk
and could potentially impact operations and
logistics.
Adjusted EBITDA in the first quarter of 2022
is expected to be on a similar or higher level
compared to the fourth quarter.
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 14 / 87
2021 2020 2019
1)
2018 2017
Scope of activity
Sales
€ million 7,709 5,639 6,403 6,872 6,356
– change in sales % 36.7 –11.9 –6.8 8.1 11.7
– exports from and sales outside
Finland, of total sales * % 96.6 96.3 95.9 96.7 96.5
Capital employed on Dec 31 * € million 3,744 3,543 3,904 4,086 3,929
Capital expenditure
2)
*
€ million 175 180 193 218 174
– in relation to sales % 2.3 3.2 3.0 3.2 2.7
Depreciation and amortization € million 259 243 230 204 216
Impairments
€ million 45 3 3 12 1
Research and development costs € million 14 21 17 15 13
– in relation to sales % 0.2 0.4 0.3 0.2 0.2
Personnel on Dec 31
3)
FTE 9,096 9,602 10,078 10,118 9,748
– average for the year FTE 9,372 10,000 10,329 10,100 9,994
Personnel on Dec 31 headcount 9,395 9,915 10,390 10,449 10,141
Profitability
Adjusted EBITDA * € million 1,021 250 263 485 631
– in relation to sales % 13.2 4.4 4.1 7.1 9.9
EBITDA * € million 1,009 191 266 496 663
EBIT * € million 705 –55 33 280 445
– in relation to sales % 9.1 –1.0 0.5 4.1 7.0
Result before taxes € million 640 –151 –41 175 327
– in relation to sales % 8.3 –2.7 –0.6 2.5 5.1
Net result for the financial year € million 553 –116 –75 130 392
– in relation to sales % 7.2 –2.1 –1.2 1.9 6.2
Return on equity *
% 20.1 –4.7 –2.8 4.8 15.4
Return on capital employed * % 18.8 –1.4 0.8 7.0 11.3
2021 2020 2019
1)
2018 2017
Financing and financial position
Net debt *
€ million 408 1,028 1,155 1,241 1,091
– in relation to sales % 5.3 18.2 18.0 18.1 17.2
Net financial expenses * € million 80 98 80 107 127
– in relation to sales % 1.0 1.7 1.3 1.6 2.0
Interest expenses * € million 65 78 76 70 92
– in relation to sales % 0.8 1.4 1.2 1.0 1.5
Net debt to adjusted EBITDA * 0.4 4.1 4.4 2.6 1.7
Share capital € million 311 311 311 311 311
Total equity € million 3,120 2,360 2,562 2,750 2,721
Equity-to-assets ratio * % 48.3 40.8 42.5 45.9 46.3
Debt-to-equity ratio *
% 13.1 43.6 45.1 45.1 40.1
Net cash generated from
operating activities
€ million 597 322 371 214 328
Alternative performance measures are marked with *. For more information, please see Alternative Performance
Measures section.
1)
IFRS 16 – Leases has been adopted on January 1, 2019 using the modified retrospective approach.
Comparative information has not been restated.
2)
Capital expenditure definition changed from accrual-based to cash-based capital expenditure in 2020. Figures
for 2019 and 2018 have been restated accordingly. Figures for 2017 have not been restated.
3)
In 2021, Outokumpu changed its main personnel amount measure from headcount to full-time equivalent
personnel.
Group key figures
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 15 / 87
Alternative performance measures
Certain financial key figures and ratios
presented in Outokumpu’s Annual Report
are not measures of financial performance,
financial position or cash flows under IFRS
and are therefore considered as alternative
performance measures. These measures are
not defined by IFRS and therefore may not be
directly comparable with financial measures
and ratios used by other companies, including
those in the same industry. The reason for
presenting these measures is that either
they are statutory requirements applicable
to the Annual Report of the Group or the
management believes that these measures
provide meaningful supplemental information
on the underlying business performance
or financial position of the Group. These
financial measures should not be considered in
isolation from, or as a substitute for, financial
information presented in compliance with IFRS.
Alternative performance measures are marked
with * in the Group key figures table.
Key figure
Definition of the key figure or
source in the consolidated financial
statements 2021 2020
Exports from and sales outside Finland
Exports from and sales outside Finland is an indicator of the international nature of the Group’s business.
Sales Consolidated statement of income
€ million 7,709 5,639
Sales by destination to Finland Note 2.2 Revenue
€ million 259 208
Exports from and sales outside
Finland
Sales – Sales by destination to
Finland € million 7,450 5,431
– exports from and sales outside
Finland, of total sales
Comparison to sales
% 96.6 96.3
Capital employed
Capital employed is a measure for the amount of capital invested in Group’s operations.
Capital employed is the sum of:
Total equity Consolidated statement of
financial position € million 3,120 2,360
Net debt Defined later in this section
€ million 408 1,028
Defined benefit and other long-term
employee benefit obligations
Consolidated statement of
financial position € million 309 329
Net interest rate derivative liabilities Note 5.4 Derivative instruments
€ million – –6
Net accrued interest expenses Note 4.5 Trade and other
receivables and payables € million 6 11
Less:
Defined benefit plan assets Consolidated statement of
financial position € million – 64
Equity investments at fair value
through other comprehensive
income
Consolidated statement of
financial position
€ million 24 48
Investments at fair value through
profit or loss
Consolidated statement of
financial position € million 28 26
Investments in associated
companies
Consolidated statement of
financial position € million 43 38
Capital employed on Dec 31
€ million 3,744 3,543
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 16 / 87
Key figure
Definition of the key figure or
source in the consolidated financial
statements 2021 2020
Operating capital
Operating capital is a measure for the amount of capital invested in Group’s operations. It is used as a
measure for the business areas’ net assets.
Capital employed on Dec 31 Defined earlier in this section
€ million 3,744 3,543
Net deferred tax asset on Dec 31 Note 2.1 Operating segments
€ million 221 257
Operating capital on Dec 31 Capital employed – Net deferred
tax asset € million 3,523 3,286
Capital expenditure
Capital expenditure indicates the investment in assets to generate future cash flows for the Group.
Capital expenditure Purchases of property, plant and
equipment and intangible assets,
other than emission allowances;
investments in equity at fair value
through other comprehensive
income and associated companies,
and acquisitions of businesses € million 175 180
– in relation to sales Comparison to sales
% 2.3 3.2
Adjusted EBITDA, EBITDA, and EBIT
Adjusted EBITDA is Outokumpu’s main performance indicator in financial reporting. The adjustments to
EBITDA relate to material income and expense items of unusual nature, and their purpose is to improve
comparability of financial performance between reporting periods. EBITDA and EBIT are also measures of
financial performance of the Group.
EBIT Consolidated statement of income
€ million 705 –55
– in relation to sales Comparison to sales
% 9.1 –1.0
Depreciation and amortization Note 2.3 Cost of sales and selling
and general administrative expenses € million 259 243
Impairments Note 2.4 Other operating income
and expenses € million 45 3
EBITDA EBIT + depreciation and
amortization + impairments € million 1,009 191
Adjustments to EBITDA Note 2.1 Operating segment
€ million –12 –59
Adjusted EBITDA EBITDA – Adjustments to EBITDA
€ million 1,021 250
– in relation to sales Comparison to sales
% 13.2 4.4
Key figure
Definition of the key figure or
source in the consolidated financial
statements 2021 2020
Return on equity
Return on equity is an indicator of the value the Group generates to the capital the shareholders have
invested in the Group.
Total equity on Dec 31 of previous
year
Consolidated statement of
financial position € million 2,360 2,562
Total equity on March 31
€ million 2,455 2,605
Total equity on June 30
€ million 2,809 2,525
Total equity on Sept 30
€ million 3,040 2,449
Total equity on Dec 31 Consolidated statement of
financial position € million 3,120 2,360
Total equity (4-quarter average) Average of the opening and 4
quarter-end values € million 2,757 2,500
Net result for the financial year Consolidated statement of income
€ million 553 –116
Return on equity Net result for the financial year /
Total equity (4-quarter average) % 20.1 –4.7
Return on capital employed
Return on capital employed is a measure for the value the Group generates to the capital invested in its
operations.
Capital employed on Dec 31 of
previous year
Defined earlier in this section
€ million 3,543 3,904
Capital employed on March 31
€ million 3,701 4,006
Capital employed on June 30
€ million 3,851 3,939
Capital employed on Sept 30
€ million 3,906 3,707
Capital employed on Dec 31 Defined earlier in this section
€ million 3,744 3,543
Capital employed (4-quarter
average)
Average of the opening and 4
quarter-end values € million 3,749 3,820
EBIT Consolidated statement of income € million 705 –55
Return on capital employed EBIT / Capital Employed (4-quarter
average) % 18.8 –1.4
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 17 / 87
Key figure
Definition of the key figure or
source in the consolidated financial
statements 2021 2020
Net debt
Net debt is a measure for the level of debt financing in the Group. The reduction of net debt is a key priority
for the Group.
Non-current debt Consolidated statement of
financial position € million 597 1,153
Current debt Consolidated statement of
financial position € million 112 251
Cash and cash equivalents Consolidated statement of
financial position € million 300 376
Net debt Non-current + current debt
– cash and cash equivalents € million 408 1,028
– in relation to sales Comparison to sales
% 5.3 18.2
Net financial expenses and interest expenses
Net financial expenses and interest expenses are measures for the cost of Group’s financing.
Net financial expenses Total financial income and
expenses in the Consolidated
statement of income € million 80 98
– in relation to sales Comparison to sales
% 1.0 1.7
Interest expenses Consolidated statement of income
€ million 65 78
– in relation to sales Comparison to sales
% 0.8 1.4
Net debt to Adjusted EBITDA
Net debt to Adjusted EBITDA is an indicator of the Group’s indebtedness.
Net debt Defined earlier in this section
€ million 408 1,028
Adjusted EBITDA Defined earlier in this section
€ million 1,021 250
Net debt to Adjusted EBITDA Net debt / Adjusted EBITDA
0.4 4.1
Key figure
Definition of the key figure or
source in the consolidated financial
statements 2021 2020
Equity-to-assets ratio
Equity-to-assets ratio shows the proportion the Group’s assets financed with equity. The equity-to-assets
ratio indicates the financial risk level of the Group.
Total equity Consolidated statement of
financial position € million 3,120 2,360
Total assets Consolidated statement of
financial position € million 6,482 5,797
Advances received Note 4.5 Trade and other
receivables and payables € million 27 7
Equity-to-assets ratio Total equity / (Total assets –
advances received) % 48.3 40.8
Debt-to-equity ratio
Debt-to-equity ratio or gearing is an indicator of the financial risk level and the indebtedness of the Group.
Net debt Defined earlier in this section
€ million 408 1,028
Total equity Consolidated statement of
financial position € million 3,120 2,360
Debt-to-equity ratio Net debt / Total equity
% 13.1 43.6
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 18 / 87
Share-related key figures
2021 2020 2019 2018 2017
Earnings per share
1)
2)
€ 1.26 –0.28 –0.18 0.32 0.95
Diluted earnings per share
1)
2)
€ 1.17 –0.28 –0.18 0.32 0.90
Cash flow per share
2)
€ 1.36 0.78 0.90 0.52 0.79
Equity per share
1)
3)
€ 6.89 5.70 6.19 6.70 6.59
Dividend per share € 0.15
4)
– – 0.15 0.25
Dividend payout ratio
1)
% 12.3 – – 47.4 26.3
Dividend yield % 2.7 – – 4.7 3.2
Price/earnings ratio
1)
4.37 neg. neg. 10.00 8.15
Development of share price
Average trading price € 4.96 2.66 3.01 5.39 8.11
Lowest trading price € 3.36 2.08 2.23 3.18 6.61
Highest trading price € 6.01 4.44 4.04 8.26 10.05
Trading price at the end of the period € 5.50 3.22 2.81 3.20 7.74
Change during the period % 70.8 14.8 –12.2 –58.7 –9.0
Change in the OMX Helsinki index during the period % 18.3 10.1 13.4 –8.0 6.4
Market capitalization at the end of the period
5)
€ million 2,489 1,327 1,155 1,312 3,194
Development in trading volume
Trading volume
6)
1,000 shares 880,092 1,100,628 884,254 826,636 1,021,607
In relation to weighted average number of shares
2)
% 200.5 265.9 215.0 201.1 247.7
Adjusted average number of shares
2)
5)
438,871,175 413,907,618 411,198,002 411,065,622 412,363,204
Diluted average number of shares
2)
5)
479,163,509 437,336,296 446,209,235 447,181,306 450,247,639
Number of shares at the end of the period
5)
452,571,977 412,002,212 411,774,715 410,563,719 412,671,549
1)
IFRS 16 – Leases has been adopted on January 1,
2019 using the modified retrospective approach.
Comparative information has not been restated.
2)
Reported based on share-issue-adjusted average
number of shares. Comparative information for
2020 is presented accordingly. Information for
2019–2017 has not been restated.
3)
2020 and 2019 calculated based on the share-
issue-adjusted number of shares. 2018 and 2017
have not been restated.
4)
The Board of Directors’ proposal to the Annual
General Meeting.
5)
Excluding treasury shares.
6)
Includes only Nasdaq Helsinki trading.
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 19 / 87
Earnings per share =
Net result for the financial year attributable to the equity holders
Adjusted average number of shares during the period
Cash flow per share =
Net cash generated from operating activities
Adjusted average number of shares during the period
Equity per share =
Equity attributable to the equity holders
Adjusted number of shares at the end of the period
Dividend per share =
Dividend for the financial year
Adjusted number of shares at the end of the period
Dividend payout ratio =
Dividend for the financial year
× 100
Net result for the financial year attributable to the equity holders
Dividend yield =
Dividend per share
× 100
Adjusted trading price at the end of the period
Price/earnings ratio (P/E) =
Adjusted trading price at the end of the period
Earnings per share
Average trading price =
EUR amount traded during the period
Adjusted number of shares traded during the period
Market capitalization at end of the period =
Number of shares at the end of the period ×
Trading price at the end of the period
Trading volume =
Number of shares traded during the period, and in relation to
the weighted average number of shares during the period
Definitions of share-related key figures
Review by the Board of Directors
Outokumpu Annual report 2021 | Review by the Board of Directors 20 / 87
Non-financial indicators
Environmental indicators 2021 2020 2019 2018 2017
Scope 1, 2 and 3 (direct and indirect) CO
2
emission intensity,
tonnes per tonne of stainless steel 1.60 1.55 1.61 1.72 1.84
Energy intensity, GJ per tonne stainless steel 9.9 11.0 10.9 10.1 9.3
Use rate of slag, including slag from ferrochrome production, % 78.6 77.1 90.8 89.9 91.1
Total landfill waste intensity, tonnes per tonne stainless steel 0.517 0.590 0.500 0.472 0.361
Recycled material content, % 90.1 92.5 89.6 88.6 87.0
Social indicators 2021 2020 2019 2018 2017
Diversity
Employees
male, % 84 84 85 85 86
female, % 16 16 15 15 14
Managers
1)
male, % 84 84 84 n/a n/a
female, % 16 16 16 n/a n/a
Board of Directors
male, % 50 50 57 67 71
female, % 50 50 43 33 29
Safety
Total recordable injury frequency rate, per million working hours 2.0 2.4 3.2 4.1 4.4
1)
Manager diversity data is not available for 2018 or 2017.
Review by the Board of Directors
Consolidated
financialstatements, IFRS
Parent company
financial statements, FAS
Consolidated statement of income ....................... 22
Consolidated statement of comprehensive income .... 22
Consolidated statement of financial position ........... 23
Consolidated statement of cash flows ................... 24
Consolidated statement of changes in equity ........... 25
Notes to the consolidated financial statements ........ 26
1. Basis of reporting ........................................ 27
1.1 Corporate information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1.2 Basis of preparation .............................. 28
2. Business result .......................................... 30
2.1 Operating segments .............................. 30
2.2 Revenue ........................................... 33
2.3 Cost of sales and selling, general and
administrative expenses .......................... 34
2.4 Other operating income and expenses ........... 34
2.5 Financial income and expenses .................. 35
2.6 Income taxes ...................................... 36
2.7 Earnings per share ................................ 39
3. Employee benefits ....................................... 40
3.1 Employee benefit expenses ...................... 40
3.2 Employee benefits for key management ......... 41
3.3 Employee benefit obligations ..................... 42
3.4 Share-based payments ........................... 45
4. Operating assets and liabilities ........................ 47
4.1 Intangible assets and property, plant and
equipment ........................................ 47
4.2 Leases ............................................ 52
4.3 Goodwill impairment test ......................... 54
4.4 Inventories ........................................ 55
4.5 Trade and other receivable and payables ........ 56
4.6 Provisions ......................................... 57
5. Capital structure and financial risk management .... 59
5.1 Net debt and capital management ............... 60
5.2 Equity ............................................. 63
5.3 Financial risk management and insurances ...... 64
5.4 Derivative instruments ............................ 67
5.5 Financial assets and liabilities .................... 69
5.6 Equity investments at fair value through other
comprehensive income ........................... 72
5.7 Commitments and contingent liabilities .......... 73
6. Other notes ............................................... 74
6.1 Disputes and litigations ........................... 74
6.2 Related parties .................................... 74
6.3 Subsidiaries ....................................... 75
6.4 Associated companies ............................ 76
6.5 New IFRS standards .............................. 76
Income statement of the parent company ............... 77
Balance sheet of the parent company ................... 78
Cash flow statement of the parent company ............ 79
Statement of changes in equity
of the parent company ..................................... 80
Commitments and contingent liabilities
of the parent company ..................................... 80
21 / 87Outokumpu Annual report 2021 | Financial statements
Financial statements
22 / 87Outokumpu Annual report 2021 | Financial statements
Consolidated statementof
income
Consolidated statement of
comprehensive income
€ million Note 2021 2020
Sales 2.2 7,709 5,639
Cost of sales 2.3 –6,732 –5,403
Gross margin 977 236
Other operating income 2.4 49 22
Selling and marketing expenses
2.3 –67 –68
Administrative expenses 2.3 –185 –196
Research and development expenses
2.3 –14 –21
Other operating expenses 2.4 –55 –28
EBIT
705 –55
Share of results in associated companies 6.4 15 2
Financial income and expenses
2.5
Interest income and other financial income 7 3
Interest expenses –65 –78
Market price gains and losses –3 –10
Other financial expenses
–19 –13
Total financial income and expenses –80 –98
Result before taxes 640 –151
Income taxes 2.6 –87 34
Net result for the financial year 553 –116
Earnings per share attributable to the equity holders of the Company 2.7
Earnings per share, € 1.26 –0.28
Diluted earnings per share, € 1.17 –0.28
Earnings per share figures are calculated based on the share-issue-adjusted weighted average number of shares.
Comparative information is presented accordingly. Net result for the financial year is fully attributable to the
equity holders of the company.
€ million Note 2021 2020
Net result for the financial year 553 –116
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translating foreign operations
Change in exchange differences
92 –86
Cash flow hedges
1)
5.4
Fair value changes during the financial year –1 –8
Reclassification to profit or loss 27 –5
Income taxes
2.6 –6 0
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans
3.3
Changes during the financial year –72 –12
Income taxes 2.6 26 4
Equity investments at fair value through other comprehensive income 5.6
Fair value changes during the financial year –44 4
Share of other comprehensive income in associated companies 6.4 0 0
Other comprehensive income for the financial year, net of tax 22 –104
Total comprehensive income for the financial year 574 –221
1)
The presentation of fair value changes reclassified to inventory has been changed in 2021 from other
comprehensive income to movement in equity. Comparative information is presented accordingly.
Total comprehensive income for the financial year is fully attributable to the equity holders of the company.
Consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
23 / 87Outokumpu Annual report 2021 | Financial statements
Consolidated statement of financial position
€ million Note 2021 2020
ASSETS
Non-current assets
Intangible assets 4.1, 4.3 577 610
Property, plant and equipment 4.1, 4.2 2,573 2,631
Investments in associated companies 6.4 43 38
Equity investments at fair value through other comprehensive income 5.6 24 48
Derivative financial instruments 5.4 – 6
Deferred tax assets 2.6 222 264
Defined benefit plan assets 3.3 – 64
Trade and other receivables 4.5 5 1
3,444 3,663
Current assets
Inventories 4.4 1,892 1,177
Investments at fair value through profit or loss 28 26
Derivative financial instruments 5.4 31 17
Trade and other receivables 4.5 786 537
Cash and cash equivalents 5.1 300 376
3,038 2,134
TOTAL ASSETS 6,482 5,797
€ million Note 2021 2020
EQUITY AND LIABILITIES
Equity attributable to the equity holders of the Company
Share capital 311 311
Premium fund and other restricted reserves 717 717
Invested unrestricted equity reserve 2,308 2,103
Fair value reserves –96 –49
Retained earnings –120 –721
Total equity 5.2 3,120 2,360
Non-current liabilities
Non-current debt 5.1 597 1,153
Derivative financial instruments 5.4 2 –
Deferred tax liabilities 2.6 1 7
Employee benefit obligations 3.3 309 329
Provisions 4.6 63 84
Trade and other payables 4.5 23 45
994 1,618
Current liabilities
Current debt 5.1 112 251
Derivative financial instruments 5.4 40 32
Provisions 4.6 29 31
Current tax liabilities 21 6
Trade and other payables 4.5 2,166 1,500
2,368 1,820
TOTAL EQUITY AND LIABILITIES 6,482 5,797
Consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
24 / 87Outokumpu Annual report 2021 | Financial statements
Consolidated statement of cash flows
€ million Note 2021 2020
Cash flow from operating activities
Net result for the financial year 553 –116
Adjustments for
Depreciation, amortization and impairments 2.3, 2.4, 4.1 304 246
Net expenses on provisions and employee benefit obligations 21 59
Gains/losses on sale of non-current assets
2.4
–19 –6
Net interest income and expense 2.5 58 71
Income taxes 2.6 87 –34
Other non-cash adjustments 0 3
450 339
Change in net working capital
Change in trade and other receivables –241 –37
Change in inventories –684 237
Change in trade and other payables 660 47
–266 247
Provisions and employee benefit obligations paid –80 –71
Interest and dividends received 10 2
Interest paid –63 –69
Income taxes paid –7 –10
Net cash from operating activities 597 322
€ million Note 2021 2020
Cash flow from investing activities
Equity investments at fair value through other comprehensive income 5.6 –19 –13
Purchases of property, plant and equipment 4.1 –145 –146
Purchases of intangible assets
4.1 –11 –20
Proceeds from sale of property, plant and equipment
4.1 24 15
Other investing cash flow 2 –10
Net cash from investing activities –149 –175
Cash flow before financing activities
448 147
Cash flow from financing activities
Directed share issue 5.2 205 –
Borrowings of non-current debt 5.1 63 496
Repayments of non-current debt 5.1 –587 –688
Change in current debt 5.1 –174 130
Repayments of lease liabilities 4.2 –32 –33
Net cash from financing activities –525 –94
Net change in cash and cash equivalents –77 53
Cash and cash equivalents at the beginning of the financial year
376 325
Net change in cash and cash equivalents –77 53
Foreign exchange rate effect on cash and cash equivalents
2 –1
Cash and cash equivalents at the end of the financial year 5.1 300 376
Consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
25 / 87Outokumpu Annual report 2021 | Financial statements
Consolidated statement of changes in equity
€ million Note Share capital
Premium
fund
Other
restricted
reserves
Invested
unrestricted
equity
reserve
Fair value
reserve
from equity
investments
Fair value
reserve from
derivatives
1)
Cumulative
translation
differences
Remeasure-
ments of
defined
benefit plans
Treasury
shares
Other
retained
earnings Total equity
Equity on Jan 1, 2020 311 714 3 2,103 –49 6 –27 –116 –33 –350 2,562
Net result for the financial year – – – – – – – – – –116 –116
Other comprehensive income – – – – 4 –13 –86 –8 – 0 –104
Total comprehensive income for the financial year – – – – 4 –13 –86 –8 – –117 –221
Transactions with equity holders of the Company
Contributions and distributions
Convertible bond 5.1 – – – – – – – – – 14 14
Share-based payments 3.4 – – – – – – – – 2 –1 1
Fair value transfer to inventory 5.4 – – – – – 4 – – – – 4
Equity on Dec 31, 2020 311 714 3 2,103 –45 –4 –113 –124 –31 –454 2,360
Net result for the financial year – – – – – – – – – 553 553
Other comprehensive income – – – – –44 20 92 –46 – 0 22
Total comprehensive income for the financial year – – – – –44 20 92 –46 – 553 574
Transactions with equity holders of the Company
Contributions and distributions
Directed share issue 5.2 – – – 205 – – – – – – 205
Share-based payments 3.4 – – – – – – – – 1 3 4
Fair value transfer to inventory 5.4 – – – – – –23 – – – – –23
Other – – – – – – – 1 – –1 –
Equity on Dec 31, 2021 311 714 3 2,308 –89 –7 –22 –169 –30 101 3,120
1)
The presentation of fair value changes reclassified to inventory has been changed in 2021 from other comprehensive income to movement in equity. Comparative information is presented accordingly.
Equity is fully attributable to the equity holders of the company. See note 5.2 for more information on equity.
Consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
26 / 87Outokumpu Annual report 2021 | Financial statements
Outokumpu has renewed its financial state-
ments in 2021, and presents the notes to the
consolidated financial statements as grouped
in the following six sections:
Notes to the consolidated financial statements
The basis of preparation, accounting principles
and management judgements applicable to
the entire consolidated financial statements
are presented in the Basis of reporting section,
but the accounting principles, management
judgements, and risks related to each
disclosure item are presented in the related
note. The table outlines the notes structure
and indicates which notes include accounting
principle, management judgement and risk
information, and the following icons are used
to indicate these topics within the notes.
Accounting principles
Management judgements
Risk information
1. Basis of reporting
2. Business result
3. Employee benefits
4. Operating assets and liabilities
5. Capital structure and financial risk management
6. Other notes
Note
1. Basis of reporting
1.1 Corporate information
1.2 Basis of preparation
2. Business result
2.1 Operating segments
2.2 Revenue
2.3 Cost of sales and selling, general and administrative expenses
2.4 Other operating income and expenses
2.5 Financial income and expenses
2.6 Income taxes
2.7 Earnings per share
3. Employee benefits
3.1 Employee benefit expenses
3.2 Employee benefits for key management
3.3 Employee benefit obligations
3.4 Share-based payments
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
4.2 Leases
4.3 Goodwill impairment test
4.4 Inventories
4.5 Trade and other receivables and payables
4.6 Provisions
5. Capital structure and financial risk management
5.1 Net debt and capital management
5.2 Equity
5.3 Financial risk management and insurances
5.4 Derivative instruments
5.5 Financial assets and liabilities
5.6 Equity investments at fair value through other comprehensive income
5.7 Commitments and contingent liabilities
6. Other notes
6.1 Disputes and litigations
6.2 Related parties
6.3 Subsidiaries
6.4 Associated companies
6.5 New IFRS standards
Consolidated financial statements
27 / 87Outokumpu Annual report 2021 | Financial statements
1. Basis of reporting .................................... 27
1.1 Corporate information ................................ 27
1.2 Basis of preparation .................................. 28
This notes section covers the company information, general
basis of preparation as well as accounting principles
that are applicable to the entire consolidated financial
statements.
1. Basis of reporting
1.1 Corporate information
Outokumpu Oyj is a Finnish public limited
liability company organized under the laws
of Finland and domiciled in Helsinki, Finland.
The company has been listed on the Nasdaq
Helsinki since 1988.
Outokumpu is the global leader in stainless
steel. The foundation of Outokumpu’s business
is its ability to tailor stainless steel into any
form and for almost any purpose. Stainless
steel is sustainable, durable and designed to
last forever. The Group’s customers use it to
create civilization’s basic structures and its
most famous landmarks as well as products for
households and various industries. Outokumpu
employs some 9,000 professionals in more
than 30 countries.
Outokumpu’s consolidated financial statements
according to ESEF regulations are published in
XHTML format at www.outokumpu.com/reports.
Financial statements presented in other reports
and formats, such as in the Annual report PDF
or print, do not constitute as reports according
to the ESEF regulations.
In its meeting on February 8, 2022, the Board
of Directors of Outokumpu Oyj approved the
publishing of these consolidated financial
statements. According to the Finnish Limited
Liability Companies Act, shareholders have the
right to approve or reject the financial state-
ments in the Annual General Meeting held after
the publication of the financial statements. The
Annual General Meeting also has the right to
decide to amend the financial statements.
Corporate information
Company name Outokumpu Oyj
Legal form Public limited liability company
Country of incorporation Finland
Domicile and principal place of business Helsinki, Finland
Company address P.O. Box 245, 00181 Helsinki, Finland
Ultimate parent company Outokumpu Oyj
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
28 / 87Outokumpu Annual report 2021 | Financial statements
1.2 Basis of preparation
These consolidated financial statements
of Outokumpu have been prepared on
going concern basis for the financial year
2021 covering the period from January 1 to
December 31, 2021.
The consolidated financial statements have
been prepared in accordance with International
Financial Reporting Standards (IFRSs) as
adopted by the European Union including the
IAS and IFRS standards as well as the SIC and
IFRIC interpretations in force on December 31,
2021. The consolidated financial statements
also comply with the regulations of Finnish
accounting and company legislation comple-
menting the IFRSs.
The consolidated financial statements are
presented in millions of euros and have been
prepared under the historical cost convention,
unless otherwise stated in the accounting prin-
ciples. All figures presented have been rounded,
and consequently the sum of individual figures
may deviate from the presented aggregate
figure. Key figures have been calculated using
exact figures.
Risk information
Managing COVID-19 pandemic
Safety is a key priority at Outokumpu and
protecting the health and safety of the
employees in the global COVID-19 pandemic
continued in 2021.
The effects of the pandemic were twofold.
Outokumpu had various safety measures in
its sites and offices, while the rebound from
the 2020 slowdown showed as increased
deliveries and improved performance. The
financial impacts of COVID-19 related mainly
to the market rebound, and its impact on
prices, order books and utilization rates were
stronger than estimated. On the other hand,
various restrictions have been in place, as the
company has continued to do its utmost to
safeguard the employees – working remotely,
following social distancing as well as limiting
traveling, face-to-face meetings, and visitor
access to only the absolutely business critical
instances.
Towards the end of 2021, the COVID-19
pandemic moved on to a point where the crisis
was no longer steered centrally at the Group
level. Instead, the situation is now managed at
the local level within the company guidelines
and local country rules. Nevertheless, the
COVID-19 pandemic still remains a risk going
forward.
Management judgements
The preparation of the financial statements in
accordance with IFRSs requires management
to make judgements, estimates and
assumptions that affect the reported amounts
of assets and liabilities and the disclosure of
contingent assets and contingent liabilities
at the reporting date, as well as the reported
amounts of income and expenses during the
reporting period.
The management estimates and judgements
are continuously evaluated and they are based
on prior experience and other factors, such as
future expectations assumed to be reasonable
considering the circumstances. Although these
estimates are based on management’s best
knowledge of the circumstances at the end of
the reporting period, actual results may differ
from the estimates and the assumptions.
The table in the beginning of the notes to the
consolidated financial statements outlines
the notes that include material management
judgements.
Accounting principles
Principles of consolidation
The consolidated financial statements include
the parent company Outokumpu Oyj and all
subsidiaries controlled by Outokumpu Oyj
either directly or indirectly. The Group controls
an entity when it is exposed to, or has rights
to, variable returns from its involvement with
the entity and has the ability to affect those
returns through its power over the entity.
The financial statements of subsidiaries
are included in the consolidated financial
statements from the date on which control
commences until the date on which control
ceases. Changes in the parent company’s
ownership interest in a subsidiary are
accounted for as equity transactions if
the parent company retains control of the
subsidiary.
All intra-group transactions, receivables,
liabilities and unrealized margins, as well as
distribution of profits within the Group, are
eliminated in the preparation of consolidated
financial statements.
Foreign currency transactions
Transactions of each subsidiary included in
the consolidated financial statements are
measured using the currency that best reflects
the economic substance of the underlying
events and circumstances relevant to that
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
29 / 87Outokumpu Annual report 2021 | Financial statements
subsidiary (“the functional currency”). The
functional currency is mainly the subsidiary’s
local currency except for subsidiaries in Mexico
and Argentina who use the US dollar as their
functional currency.
The consolidated financial statements are
presented in euros which is the functional
and presentation currency of the parent
company. Group companies’ foreign currency
transactions are translated into local functional
currencies using the exchange rates prevailing
at the dates of the transactions. Receivables
and liabilities in foreign currencies are
translated into functional currencies at the
exchange rates prevailing at the end of the
reporting period.
Foreign exchange differences arising from
interest -bearing assets and liabilities and
related derivatives are recognized in financial
income and expenses in the consolidated
statement of income. Foreign exchange
differences arising in respect of other financial
instruments are included in EBIT under sales,
purchases or other operating income and
expenses. The accumulated exchange differ-
ences arisen from hedges of net investments
in foreign operations are recognized in equity.
For those subsidiaries whose functional and
presentation currency is not the euro, the
items in the statements of income and
comprehensive income, and in the statement
of cash flows are translated into euro using the
average exchange rates of the reporting period.
The assets and liabilities in the statement
of financial position are translated using the
exchange rates prevailing at the reporting date.
The translation differences arising from the use
of different exchange rates explained above
are recognized in the Group’s equity through
other comprehensive income.
Any goodwill arising on acquisitions of foreign
operations and any fair value adjustments to
the carrying amounts of assets and liabilities
arising on acquisitions of those foreign
operations are treated as assets and liabilities
of those foreign operations. They are translated
into euro using the exchange rates prevailing
at the reporting date. When a foreign operation
is sold, or is otherwise partially or completely
disposed of, the translation differences
accumulated in equity are reclassified in profit
or loss as part of the gain or loss on the sale.
Adoption of new and amended
IFRS standards
As of January 1, 2021, Outokumpu has applied
the following new and amended standards,
interpretations and decisions.
• Amendments to IFRS 9, IAS 39, IFRS
7, IFRS 4 and IFRS 16 – Interest Rate
Benchmark Reform, Phase 2 (effective for
financial years beginning on or after January
1, 2021): The amendments address issues
arising during the interest rate benchmark
reform, including the replacement of one
benchmark rate with an alternative one.
The amendments cover: (1) accounting
for changes in the basis for determining
contractual cash flows as a result of IBOR
reform; (2) additional temporary exceptions
to applying specific hedge accounting
requirements to avoid failure of hedge
relationships solely due to IBOR reform; and
(3) additional IFRS 7 disclosures related
to IBOR reform. The amendments have
been take into account in Outokumpu’s
loan documentation. The amendments also
impact the market information applied in
the valuation of the derivative instruments’
interest component as of beginning of 2022.
The amendments did not have material
impact on Outokumpu’s consolidated
financial statements.
• IFRIC agenda decision Configuration
or Customisation Costs in a Cloud
Computing Arrangement (IAS 38) in April
2021: The agenda decision gives guidelines
on the accounting treatment of the costs
related to implementing software as a
service (SaaS), including evaluation whether
an intangible asset can be identified, and, if
not, timing of the recognition of the related
operating expense. The agenda decision did
not have material impact on Outokumpu’s
consolidated financial statements for 2021.
However, depending on the future decisions
on entering into software as service
arrangements, the agenda decision can
impact the recognition of intangible assets
as well as the timing and presentation of
IT-related costs compared circumstances
where such cost would arise from non-SaaS
arrangements.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
30 / 87Outokumpu Annual report 2021 | Financial statements
202120191817
–0.4
–0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
202120191817
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
202120191817
0
200
400
600
800
1,000
1,200
2. Business result ....................................... 30
2.1 Operating segments .................................. 30
2.2 Revenue .............................................. 33
2.3 Cost of sales and selling, general and
administrative expenses .............................. 34
2.4 Other operating income and expenses ................ 34
2.5 Financial income and expenses ....................... 35
2.6 Income taxes ......................................... 36
2.7 Earnings per share ................................... 39
The market environment was exceptionally strong in 2021.
This was reflected in favorable volume development and
higher realized stainless steel prices. Together with benefits
from the strategy execution, adjusted EBITDA reached its
highest level in recent history. Net result and earnings per
share were also at an excellent level.
2.1 Operating segments
Outokumpu’s business is divided into four
business areas which are Europe, the Americas,
Ferrochrome and Long Products. The business
areas have responsibility for commercials,
supply chain management and operations and
they are Outokumpu’s operating segments
under IFRS.
In addition to the business area structure,
Group Functions cover Legal and compliance,
Health and safety, Raw material procurement,
Finance and IR, General procurement, Strategy,
Transformation office, HR, Group commu-
nications, Global business services, R&D,
Technology, Sustainability and Group IT.
Europe consists of both coil and plate opera-
tions in Europe. The high-volume and tailored
standard stainless steel grades are primarily
used for example in architecture, building
and construction, transportation, catering
and appliances, chemical, petrochemical
and energy sectors, as well as other process
industries. The production facilities are located
in Finland, Germany and Sweden. The business
area has an extensive service center and sales
network across Europe, Middle East, Africa and
APAC region.
Americas produces standard austenitic and
ferritic grades as well as tailored products. Its
largest customer segments are automotive and
transport, consumer appliances, oil and gas,
chemical and petrochemical industries, food
and beverage processing, as well as building
and construction industry. The business area
has production units in the US and Mexico, as
well as a service center in Argentina.
Ferrochrome produces charge grade of
ferrochrome. The business area has a chrome
mine in Kemi, Finland and ferrochrome
smelters in Tornio, Finland.
Long Products are used in a wide range of
applications such as springs, wires, surgical
equipment, automotive parts and construction.
The manufacturing is concentrated in the
2. Business result
Sales, € million
Earnings per share, €
Adjusted EBITDA,
€ million
Earnings per share
EUR 1.26
Adjusted EBITDA
EUR 1,021 million
Net result
EUR 553 million
Sales
EUR 7.7 billion
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
31 / 87Outokumpu Annual report 2021 | Financial statements
Reconciliation
2021
€ million Europe Americas Ferrochrome
Long
Products
Operating
segments
total
Other
operations
Eliminations
Group
External sales 4,531 1,896 185 620 7,233 477 – 7,709
Inter-segment sales 69 51 418 189 727 307 –1,034 –
Sales 4,600 1,947 604 810 7,960 784 –1,034 7,709
Adjusted EBITDA 485 297 246 47 1,076 –26 –29 1,021
Adjustments to EBITDA
Litigation provisions – –15 – – –15 – – –15
Environmental provisions – – – – – –10 – –10
Gain on disposal of property 12 – – – 12 – – 12
EBITDA 498 283 246 47 1,074 –35 –29 1,009
Depreciation and amortization –141 –59 –44 –11 –255 –3 –1 –259
Impairments –10 –3 –13 – –27 –18 – –45
EBIT 346 220 189 36 792 –57 –30 705
Assets in operating capital 3,126 1,359 996 410 5,892 325 –358 5,859
Other assets 401
Deferred tax assets 222
Total assets 6,482
Liabilities in operating capital 1,402 480 173 253 2,309 348 –320 2,336
Other liabilities 1,025
Deferred tax liabilities 1
Total liabilities 3,362
Operating capital 1,724 879 823 157 3,583 –23 –38 3,523
Net deferred tax asset 221
Capital employed 3,744
integrated sites in the UK, Sweden and the
US. Outokumpu concluded a strategic review
of Long Products in 2020 and as a result,
initiated a turnaround program for the Long
Products business.
Other operations consist of activities outside
the four operating segments, as well as
industrial holdings. Such business development
and Corporate Management expenses that are
not allocated to the business areas are also
reported under Other operations. Sales of Other
operations consist of sales of electricity to the
Group’s production facilities in Finland and in
Sweden, nickel procured under the Group’s
sourcing contract, and internal services.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
32 / 87Outokumpu Annual report 2021 | Financial statements
Reconciliation
2020
€ million Europe Americas Ferrochrome
Long
Products
Operating
segments
total
Other
operations
Eliminations
Group
External sales 3,485 1,194 151 415 5,245 394 – 5,639
Inter-segment sales 83 1 260 78 422 271 –693 –
Sales 3,568 1,195 411 493 5,667 665 –693 5,639
Adjusted EBITDA 142 55 91 –8 280 –29 0 250
Adjustments to EBITDA
Restructuring costs –47 –2 –1 –3 –53 –6 – –59
EBITDA 95 53 90 –11 227 –36 0 191
Depreciation and amortization –140 –54 –34 –10 –238 –4 0 –243
Impairments –2 –1 – – –3 0 – –3
EBIT –47 –1 56 –21 –14 –40 –1 –55
Assets in operating capital 2,610 1,097 931 255 4,894 292 –213 4,973
Other assets 561
Deferred tax assets 264
Total assets 5,797
Liabilities in operating capital 1,037 297 166 122 1,622 270 –205 1,687
Other liabilities 1,744
Deferred tax liabilities 7
Total liabilities 3,437
Operating capital 1,573 801 766 133 3,272 21 –8 3,286
Net deferred tax asset 257
Capital employed 3,543
Adjustments to EBITDA and EBIT
€ million 2021 2020
Litigation provisions –15 –
Environmental provisions –10 –
Gain on disposal of property 12 –
Restructuring costs – –59
Adjustments to EBITDA –12 –59
Impairment of Group’s ERP systems –18 –
Impairments in Ferrochrome business area –13 –
Impairments in lease agreements –10 –
Adjustments to EBIT –54 –59
In 2021, Outokumpu recognized increases in
litigation provisions of EUR 15 million and in
environmental provisions of EUR 10 million.
The environmental provisions relate to the
aftercare of closed mines in Finland. See note
6.1 for more information on litigations and
note 4.6 on provisions.
In 2021, Outokumpu divested properties
related to closed operations in Krefeld and
Bochum in Germany, resulting in a gain of EUR
12 million.
For more information on impairments in 2021,
see note 2.4.
In 2020, Outokumpu announced its new
strategy with the first-phase focus on de-risking
the company through deleveraging the balance
sheet. Actions include cost savings through
employee reductions, and the related restruc-
turing costs amounted to EUR 59 million.
Accounting principles
Outokumpu’s CEO, supported by the Lead-
ership Team, is the Group’s chief operating
decision maker. The segments are reviewed
regularly for the purpose of assessing perfor-
mance and allocating resources to segments.
The review is based on internal management
reporting on IFRS based financial information.
Adjusted EBITDA
Adjusted EBITDA is Outokumpu’s main
performance indicator in financial reporting,
and is also used to assess the segments’
performance. Adjusted EBITDA is defined as
EBIT before depreciation, amortization and
impairment charges, and excluding such mate-
rial income and expense items which affect
the comparability between periods due to their
unusual nature, size or incidence resulting from,
for example, Group-wide restructuring programs
or disposals of assets or businesses.
Adjusted EBITDA is an alternative performance
measure meaning that it is not an IFRS-defined
measure, so it is defined also in the Alternative
performance measures section within the
Review by the Board of Directors and recon-
ciled to the consolidated statement of income.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
33 / 87Outokumpu Annual report 2021 | Financial statements
2.2 Revenue
External sales by geographical destination
€ million Finland Other Europe North America APAC region Other countries Group
2021
Operating segment
Europe 244 3,933 79 227 49 4,531
Americas – 0 1,829 4 63 1,896
Ferrochrome 14 113 27 31 1 185
Long Products 1 366 211 41 0 620
Other operations – 476 – – – 476
259 4,890 2,146 302 112 7,709
2020
Operating segment
Europe 196 2,940 47 262 41 3,485
Americas – 0 1,144 5 45 1,194
Ferrochrome 10 66 2 73 0 151
Long Products 2 235 144 33 0 415
Other operations – 394 – – – 394
208 3,634 1,337 373 86 5,639
Accounting principles
Outokumpu generates revenue mainly from
sales of stainless steel and ferrochrome.
Outokumpu ships these goods to customers
under a variety of Incoterms, and considers
the physical possession as well as risks and
rewards related to the ownership of the goods
to be transferred accordingly. This also signifies
the transfer of control of the goods to the
customer.
Outokumpu’s performance obligations related
to sale of stainless steel and ferrochrome
are satisfied and revenue from contracts with
customers recognized at a point of time. Only
revenue from the performance obligation
related to transportation of the goods is
recognized over a period of time, and the
period under which the revenue is recognized
is relatively short. Moreover, the sales of goods
and the transportation service are invoiced
together from the customer, and consequently,
the timing of revenue recognition does not
affect the uncertainty associated with the
cash flows. Outokumpu acts as a principal with
regards to transportation of goods.
Outokumpu has bill-and-hold arrangements
with selected European customers. Under
these arrangements, based on a customer
request, Outokumpu holds the readily available
material at its own stock locations for the
customer for up to a period of three months
before the actual delivery of the material.
Outokumpu has transferred control of these
materials to the customer as Outokumpu
is not able to direct the material to another
customer, and consequently recognizes the
revenue for the material sales. The revenue
related to Outokumpu’s transportation service
performance obligation to deliver the material
is recognized over the time when the delivery
takes place.
In the end of 2021, the amount of revenue
recognized under the bill and hold arrange-
ments for products not delivered yet was
immaterial.
Stainless steel and ferrochrome sales prices
are mainly fixed before delivery, and volume
discounts estimated and accrued in the
revenue recognition are the only variable
component in pricing. In individual cases,
the sales price of ferrochrome is based on
the period of time when the customer uses
the purchased ferrochrome. The payment
terms vary from advance payment to 90
days payment term, and do not include any
significant financing component.
Outokumpu also sells nickel procured under
Group’s nickel sourcing agreement. These
sales are recognized to revenue when the title
to the material is transferred to the buyer.
Liabilities related to customer contracts are
presented in note 4.5.
Outokumpu does not have individual significant
customers as defined in IFRS 8.
Other operations’ nickel sales is reported under Other Europe instead of Other countries. Comparative information is presented accordingly.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
34 / 87Outokumpu Annual report 2021 | Financial statements
2.3 Cost of sales and selling, general and administrative expenses
€ million 2021 2020
Cost of sales –6,732 –5,403
Selling and marketing expenses –67 –68
Administrative expenses –185 –196
Research and development expenses –14 –21
–6,998 –5,688
Cost of sales and selling, general and administrative expenses by nature
€ million 2021 2020
Materials –4,220 –3,170
Supplies –574 –468
Energy –355 –253
Maintenance –173 –182
Freight
–276 –226
Employee benefits –711 –735
Depreciation and amortization
–259 –243
Other –430 –411
–6,998 –5,688
Depreciation and amortization by function
€ million
2021 2020
Cost of sales –250 –233
Selling and marketing expenses
–1 –2
Administrative expenses –7 –7
Research and development expenses –1 –1
–259 –243
Auditor fees
€ million 2021 2020
Audit
–2.3 –2.0
Audit-related services
–0.0 –0.0
Tax advisory –0.0 –0.0
Other services –0.3 –0.1
–2.7 –2.1
PricewaterhouseCoopers Oy has provided non-audit services to Outokumpu in total of EUR 0.3
million during 2021. These services comprised of sustainability reporting, ESG consulting and
other agreed upon procedures.
Accounting principles
Cost of sales
Cost of sales includes expenses related to
materials and supplies, energy, maintenance
and freight. Employee benefit expenses,
depreciation and amortization and other
expenses are included to the extent they relate
to operational activities.
Research and development costs
As a main rule, research and development
costs are expensed as incurred. If development
is expected to generate future economic
benefits for the Group, related costs are
capitalized as intangible assets and amortized
on a systematic basis over their useful lives.
Repairs and maintenance costs
Ordinary repairs and maintenance is carried out
to maintain operating conditions of the mills
and the equipment, and the related costs are
expensed as they are incurred.
The costs of major repairs and renovations
are included in the asset’s carrying amount as
capital expenditure when these activities are
expected to generate future economic benefits
for the Group, for example in form of a longer
useful life, a wider product range, a higher
output, or an improved quality, in excess of the
originally assessed standard performance level.
Depreciation and amortization methods
and useful lives of non-current assets
Depreciation and amortization methods as well
as estimates for useful lives of different types
of intangible asset and property, plant and
equipment items are described in the note 4.1.
2.4 Other operating income and expenses
Other operating income
€ million 2021 2020
Exchange gains and losses from foreign exchange derivatives 22 –
Market price gains and losses from commodity derivatives –12 –
Market price gains and losses from derivative financial instruments 11 –
Gains on sale of non-current assets 19 6
Other income items 19 16
49 22
Gains on sale of non-current assets in 2021 include EUR 12 million gains from disposal of
property in Germany. Other income items do not include any material government support (2020:
included EUR 5 million mainly related to COVID-19 support measures in various countries).
Comparative information for exchange as well as market price gains and losses is reported as
other operating expenses.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
35 / 87Outokumpu Annual report 2021 | Financial statements
Other operating expenses
€ million 2021 2020
Exchange gains and losses from foreign exchange derivatives
– –12
Market price gains and losses from commodity derivatives – 5
Market price gains and losses from derivative financial instruments – –7
Impairments in non-current assets –45 –3
Other expense items –10 –18
–55 –28
In 2021, Outokumpu recognized impairments
in non-current assets based on reviews of
individual assets for EUR 45 million. These
impairments include EUR 18 million relating
to the Group’s ERP systems, EUR 13 million
regarding mine properties and obsolete
machinery in Ferrochrome business area, EUR
10 million regarding lease agreements on land
and buildings in the business area Europe’s
operations in Germany, and EUR 4 million
regarding obsolescence of various assets in
the Group (2020: EUR 3 million related to
obsolescence of various assets).
Other expense items do not include any
material expenses on emission allowances
(2020: EUR 11 million). See notes 4.1 and 5.3
for more information on emission allowances
and related price risk.
Accounting principles
Other operating income and expenses include
items such as gains or losses from disposals of
non-current assets or businesses and gains or
losses from derivate financial instruments that
are not hedge accounted or do not relate to
the Group’s financing activities.
Other operating income also includes rental
and lease income, insurance compensations
and government and other grants and support.
Grants and other support are recognized as
income over the same periods as the costs
they are intended to compensate. Investment
grants related to purchases of non-current
assets are deducted from the cost of the asset
and recognized as income on a systematic
basis as a reduction in depreciation or
amortization over the useful life of the asset.
Other operating expenses include costs related
to emission allowances and impairment losses
related to non-current assets.
2.5 Financial income and expenses
€ million 2021 2020
Interest income 4 3
Other financial income 3 0
Interest and other financial income 7 3
Interest expenses
Debt at amortized cost –44 –56
Factoring –7 –6
Lease liabilities –11 –12
Employee benefit obligations –2 –3
Other –1 –1
Interest expenses –65 –78
Capitalized interests 3 3
Fees related to committed credit facilities –13 –11
Other fees –9 –5
Other financial expenses –19 –13
Exchange gains and losses
Derivatives 8 –4
Cash, loans and receivables –10 –8
Other market price gains and losses
Derivatives –5 1
Other 4 1
Market price gains and losses –3 –10
Total financial income and expenses –80 –98
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
36 / 87Outokumpu Annual report 2021 | Financial statements
Exchange gains and losses in the consolidated statement of income
€ million 2021 2020
In sales
9 –12
In purchases –33 30
In other operating income and expenses 22 –12
In financial income and expenses –2 –11
–4 –6
Exchange gains and losses include EUR 30
million of net exchange gain on derivative
financial instruments (2020: EUR 16 million
net exchange loss) of which a gain of EUR 22
million has been recognized in other operating
income and a gain of EUR 8 million in financial
income and expenses.
Accounting principles
Financial income includes mainly interest
income on defined benefit plans and exchange
and other market price gains on cash, debt
and loan receivables and derivatives related to
Group’s financing activities.
Financial expenses include mainly interest
expenses of borrowings, lease liabilities,
factoring, and defined benefit plans, commit-
ment and financial fees, capitalized interest
expenses and exchange and other market
price losses on cash, debt and loan receivables
and derivatives related to financing activities.
Exchange and other market price gains
and losses on operative items and related
derivative instruments are recognized in EBIT.
Exchange and other market price gains and
losses on financing items and related deriv-
ative instruments are recognized in financial
income and expenses.
2.6 Income taxes
Income taxes in the consolidated statement of income
€ million 2021 2020
Current taxes
–23 –4
Deferred taxes –64 39
–87 34
Reconciliation of effective tax rate
€ million 2021 2020
Result before taxes 640 –151
Income taxes at Finnish tax rate of 20% –128 30
Difference between Finnish and foreign tax rates –26 4
Non-deductible expenses and tax exempt income –2 –6
Current year result for which no deferred tax asset has been recognized 54 0
Changes in deferred tax recognition 4 –1
Taxes for prior years 1 4
Tax rate changes and other changes in tax laws 7 3
Associated companies 3 0
–87 34
Accumulated deferred taxes recognized in equity
€ million
2021 2020
Deferred tax on convertible bond equity component –2 –3
Net investment hedging –4 –4
Remeasurements of the net defined benefit liability 87 62
81 55
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
37 / 87Outokumpu Annual report 2021 | Financial statements
Deferred tax assets and liabilities
Jan1, 2021 Movements Dec31, 2021
€ million
Net deferred tax assets
(+) and liabilities (–)
Recognized in
profit or loss
Recognized in other
comprehensive income
or directly in equity
Translation
differences
Net deferred tax assets
(+) and liabilities (–)
Intangible assets 6 –2 – 1 5
Property, plant and equipment –190 –17 – –5 –211
Inventories –4 9 – 0 6
Net derivate financial assets
–2 3 0 0 1
Other financial assets
23 16 – 0 39
Employee benefit obligations 41 –24 24 0 41
Other financial liabilities 87 –52 – 3 38
Provisions –10 5 – 0 –5
Tax losses and tax credits 306 –1 – 3 307
Net deferred taxes assets 257 –64 24 3 221
Deferred tax assets 264 222
Deferred tax liabilities –7 –1
Jan1, 2020 Movements Dec31, 2020
€ million
Net deferred tax assets
(+) and liabilities (–)
Recognized in
profit or loss
Recognized in other
comprehensive income
or directly in equity
Translation
differences
Net deferred tax assets
(+) and liabilities (–)
Intangible assets 5 1 – 0 6
Property, plant and equipment –212 22 – 0 –190
Inventories –8 4 – 0 –4
Net derivate financial assets –3 1 – 0 –2
Other financial assets 13 9 – 0 23
Employee benefit obligations 40 –3 4 0 41
Other financial liabilities
106 –16 –3 0 87
Provisions –8 –2 – 0 –10
Tax losses and tax credits 283 22 – 1 306
Net deferred taxes assets 217 39 0 1 257
Deferred tax assets 229 264
Deferred tax liabilities –12 –7
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
38 / 87Outokumpu Annual report 2021 | Financial statements
Tax losses and related deferred tax assets
Tax losses
carried forward
Recognized
deferred tax assets
Unrecognized
deferred tax assets
€ million 2021 2020 2021 2020 2021 2020
Expire in less than 1 year 0 3 0 0 – –
Expire in 2–5 years 82 217 16 43 0 0
Expire later than in 5 years 1,601 1,883 119 62 308 375
Never expire 1,103 1,283 172 200 108 91
2,786 3,385 307 306 415 466
Tax losses by country
€ million 2021 2020
Finland
161 592
Germany 217 266
Sweden 291 374
The US 1,871 1,898
The UK 190 183
Other countries 55 73
2,786 3,385
Management judgements
Outokumpu operates and earns income in
numerous countries and is subject to changes
in tax laws in multiple jurisdictions. When
recognizing income tax liabilities, material
judgements and estimates need to be made
on tax uncertainties.
In deferred tax asset recognition, the
management assesses whether the realization
of future tax benefits is sufficiently probable
to support the recognition. This assessment
requires judgement regarding, for example,
realizable benefits from future taxable income,
available tax strategies, as well as other posi-
tive and negative factors. The recorded amount
of deferred tax assets could be reduced as
a result of changes in these estimates or in
tax regulations imposing restrictions on the
utilization of future tax benefits.
Accounting principles
Current and deferred income taxes are
determined on entity level to the extent an
entity is subject to income taxation. The
income taxes in the consolidated statement of
income include the Group companies’ current
income taxes based on taxable profit for the
period, tax adjustments for previous periods,
and the change in deferred income taxes. In
several countries (Finland, Germany, Italy, the
Netherlands, Sweden, the UK and the US)
Outokumpu companies are included in income
tax consolidation groups or group taxation
systems. The share of results in associated
companies is reported in the statement of
income based on the net result and thus
including the income tax effect.
Deferred income taxes are stated using the
balance sheet liability method to reflect the net
tax effects of temporary differences between
the assets and liabilities’ carrying amounts in
the financial statements and the corresponding
tax basis at the reporting date, as well as for
unused tax loss or credit carry forwards.
Deferred tax assets are recognized for all
deductible temporary differences to the
extent that it is probable that future taxable
profits will be available for utilization of these
differences. A valuation allowance is recog-
nized if the realization of the tax benefits is not
probable. The ability to recognize deferred tax
assets is reviewed at the end of each reporting
period.
Deferred tax liabilities are usually recognized
in the statement of financial position in full. As
an exception, deferred tax liabilities are not
recognized if they arise from initial recognition
of an asset or a liability in a transaction that is
not a business combination and that does not
affect the accounting nor taxable profit at the
time of the transaction.
Deferred taxes are calculated at the enacted
or substantially enacted tax rates that are
expected to apply by the end of the reporting
period. Generally, deferred tax is recognized to
the statement of income. However, if the taxes
are related to items of other comprehensive
income or to transactions or other events
recognized directly in equity, the related
income taxes are also recognized either in
other comprehensive income or directly in
equity, respectively.
As of December 31, 2021, the tax attributes
of the Outokumpu Group for which no deferred
tax asset has been recognized amount to
EUR 1,544 million (Dec 31, 2020: EUR 1,942
million). These tax attributes relate mainly to
Outokumpu’s operations in the US where the
losses have not been valued to the extent they
exceed the deferred tax liability in the US. The
accounting assessment for deferred taxes
does not support the recognition of a deferred
tax asset on losses during the first profitable
year, when the company has a history of
recent losses. Therefore, Outokumpu has not
recognized any deferred asset on these losses
in 2021 but will continue to evaluate the
possibility of recognition based on develop-
ment in taxable income in its US operations.
No deferred tax liabilities were recorded on
undistributed profits of foreign subsidiaries, as
such profits are not to be distributed in the
foreseeable future.
Verotukselliset tappiot ja niihin liittyvät laskennalliset verosaamiset
Käyttämättömät tappiot Kirjattu laskennallinen verosaaminen Kirjaamaton laskennallinen verosaaminen
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
39 / 87Outokumpu Annual report 2021 | Financial statements
2.7 Earnings per share
2021 2020
Net result attributable to the equity holders of the Company, € million 553 –116
Interest expenses on convertible bond, net of tax, € million 8 6
Adjusted net result attributable to the equity holders of the Company, € million 561 –110
Adjusted weighted average number of shares, in thousands 438,871 413,908
Adjusted diluted average number of shares, in thousands 479,164 437,336
Earnings per share, € 1.26 –0.28
Diluted earnings per share, € 1.17 –0.28
In May 2021, Outokumpu carried out an
issue of 40,500,000 new shares directed
to institutional investors. The new shares
were registered on May 12, 2021. Earnings
per share figures are calculated based on
the share-issue-adjusted weighted average
number of shares. Comparative information is
presented accordingly.
Accounting principles
Basic earnings per share is calculated
by dividing the net result attributable to
the equity holders of the company by the
adjusted weighted average number of shares
outstanding during the period, excluding shares
held by Outokumpu as treasury shares.
In a share issue, when shares are offered
at discount compared to market price, the
proportion of the issue representing the
discount is retrospectively adjusted to the
adjusted weighted number of shares.
Diluted earnings per share is calculated by
adjusting the weighted average number of
ordinary shares outstanding with the assump-
tion that convertible instruments are converted.
The profit or loss used in the calculation is
adjusted for the interest expense related to the
instrument and recognized in the period, net
of tax. In addition, the shares estimated to be
delivered based on the share-based incentive
programs are taken into account. However,
potential ordinary shares are only dilutive if the
adjustments decrease the earnings per share
ratio.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
40 / 87Outokumpu Annual report 2021 | Financial statements
202120191817
0
2,000
4,000
6,000
8,000
10,000
12,000
0
100
200
300
400
500
600
700
800
202120191817
Personnel reported as full time
equivalent number.
Outokumpu reduced its number of personnel by some 500
during 2021 towards the target of below 9,000, in line with
the strategy-related actions initiated in 2020. Employee
benefit expenses in 2021 were lower compared to the
previous year due to the decrease in number of personnel
and the redundancy costs recognized in 2020. On the other
hand, expenses related to short-term incentives increased
on the back of the strong performance in 2021.
3. Employee benefits ................................... 40
3.1 Employee benefit expenses ........................... 40
3.2 Employee benefits for key management .............. 41
3.3 Employee benefit obligations ......................... 42
3.4 Share-based payments ............................... 45
3.1 Employee benefit expenses
€ million 2021 2020
Wages and salaries –557 –547
Termination benefits –4 –56
Social security costs –88 –80
Post-employment and other long-term employee benefits
Defined benefit plans –3 –5
Defined contribution plans –46 –40
Other long-term employee benefits –1 –1
Share-based payments –4 –1
Other employee benefit expenses –8 –5
–711 –735
Profit-sharing bonuses recognized in 2021 based on the Finnish Personnel Funds Act amounted to
EUR 10 million (2020: no profit-sharing bonuses recognized).
In 2020, Outokumpu carried out employee negotiation processes in selected operating countries
to create cost savings targeted in the Group’s strategy. The restructuring costs were reported as
termination benefits in the above table and as adjustments to EBITDA (see note2.1).
3. Employee benefits
Personnel on
December 31
Employee benefit
expenses, € million
Total employee benefit expenses
EUR 711 million
Number of personnel at
the end of period
9,096
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
41 / 87Outokumpu Annual report 2021 | Financial statements
€ thousand 2021 2020
Short-term employee benefits 6,171 3,889
Termination benefits – 1,489
Post-employment benefits
1)
421 367
Share-based payments 1,048 205
Remuneration to the Board of Directors
781 658
8,421 6,608
1)
Contains only supplementary pensions.
Key management includes the members of the Outokumpu Leadership Team and the members of the parent
company Outokumpu Oyj’s Board of Directors.
Employee benefits for the CEO
Recognized in
profit or loss Remuneration paid
€ thousand 2021 2020 2021 2020
Salaries and short-term benefits
796 989 796 989
Short-term incentives
1,065 – – 276
Post-employment benefits 116 281 116 281
Share-based payments 278 4 – –
2,254 1,274 912 1,546
CEO Malinen participates in the Finnish TyEL pensions system, and the post-employment benefits have been
calculated based on the general TyEL contribution percentage of the employer. Employee benefits for the CEO in
2020 include Heikki Malinen as of May 16, 2020 and Roeland Baan until May 15, 2020.
Remuneration to Board of Directors
€ thousand 2021 2020
Chairman Kari Jordan 176 181
Vice Chairman Eeva Sipilä, as of May 28, 2020, member until May 27, 2020 104 108
Vice Chairman Heikki Malinen, until April 30, 2020
– 7
Member Heinz Jörg Fuhrmann, as of March 31, 2021 78 –
Member Kati ter Horst 84 88
Member Päivi Luostarinen, as of March 31, 2021 80 –
Member Vesa-Pekka Takala 83 88
Member Pierre Vareille 85 94
Member Julia Woodhouse 93 93
781 658
3.2 Employee benefits for key management
Remuneration of the CEO
The remuneration of the CEO consists of base
salary, benefits, annually determined short-
term incentives, and long-term share-based
incentive programs.
CEO’s base salary and the annual short-term
incentive earning opportunity (target level 50%
and the maximum level 100% of the gross
annual base salary) remained unchanged in
2021. The basis of the short-term incentives
for 2021 was the achievement of the
pre-defined strategic targets, which were
Outokumpu’s adjusted EBITDA (80% weight,
achieved above maximum level) and strategic
projects (20% weight, achieved at target level).
Observing the excellent business results, the
Board of Directors decided to reward the
CEO with short-term incentives exceeding the
maximum level described in the policy.
The CEO participates in the Performance Share
Plans (PSP) 2019–2021, 2020–2022, and
2021–2023. Outokumpu did not reach the
targets for PSP 2018–2020 or 2019–2021
and subsequently no rewards were paid.
The Performance Share Plans include a
strong share ownership recommendation: The
members of the Leadership Team, including
the CEO, are obliged to own Outokumpu shares
received under the company’s share-based
incentive programs corresponding to the value
of their annual gross base salary. Half of the
net shares received from the share-based
incentive programs must be used to fulfil this
requirement.
CEO has the right to retire at the age of 65
and he participates in the Finnish TyEL pension
system and there are no supplementary
pensions in place. The service contract of the
is valid until further notice. The CEO is entitled
to a severance payment of 12 months, and the
notice period is six months for both parties.
Remuneration of the Board of Directors
Outokumpu’s Annual General Meeting
approved the annual remuneration to the
members of the Board of Directors, of which
40% was paid in the company’s own shares
using treasury shares. The annual fee is paid
once a year and members of the Board are not
entitled to any other share-based rewards. In
addition to the annual remuneration, a meeting
fee is paid. The Board members are not eligible
for any pension schemes.
Accounting principles
Employee benefits for the key management
include the benefits to each Leadership Team
or Board of Directors member for the time they
hold these positions.
Employee benefits are presented based on
expenses recognized in profit or loss during
the year on accrual basis except for the CEO
whose remuneration is presented also based
on paid during the year.
Short-term incentives are recognized to profit
or loss during the period the relate to whereas
bonuses are typically paid out during the
following financial year. Expenses on share-
based payments are recognized to profit or
loss at the share price on the grant date of the
benefit and over the period when the benefit is
earned. Share-based benefits are reported as
paid when delivered and at the share price on
the delivery date.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
42 / 87Outokumpu Annual report 2021 | Financial statements
3.3 Employee benefit obligations
Outokumpu has several defined benefit and
defined contribution plans in various countries.
The most significant defined benefit plans are
in Germany and the UK, representing 37%
and 60% of the Group’s total defined benefit
obligation, respectively.
Funding requirements of the defined benefit
plans are generally based on the pension
fund’s actuarial measurement framework set
out in the funding policies and local regulation.
Germany
Outokumpu has several defined benefit plans
in Germany, of which major plans include a
management plan, open pension plans for
other staff, and other pension obligations,
which are nearly all closed for new entrants.
Bases to all pension obligations in Germany
are bargaining agreements and/or individual
contracts (management obligations). The
management plan and other pension obliga-
tions are based on annuity payments, whereas
plans for other employees are based on one
lump sum payment after retirement.
In addition, all the obligations in Germany
are embedded in the BetrAVG law. The law
contains rules for vested rights, pension
protection scheme and regulations for the
pension adjustments. In Germany, no funding
requirements exist, and the plans are funded
only for a small part with a CTA model
(Contractual Trust Arrangement) that was
introduced in 2019.
The UK
The AvestaPolarit Pension Scheme (the
“Scheme”) is registered under UK legislation
and is contracted out of the State Second
Pension. The Scheme is subject to the funding
requirements outlined in UK legislation. The
Scheme’s trustee is responsible for the
operation and governance of the Scheme,
including decisions regarding the Scheme’s
funding and investment strategy.
In December 2021, a GBP 390 million
buy-in contract was implemented. This buy-in
completes the Scheme’s de-risking process
which began with an initial buy-in in 2020,
when a GBP 110 million buy-in insurance
solution was implemented. The actuarial losses
in 2021 amounted to EUR 86 million, mainly
attributable to the buy-in arrangement.
A buy-in removes risks of investment, longevity,
interest rate changes and inflation for the
Scheme and is held as a Scheme asset. Until
a buy-out is secured, the Scheme ultimately
remains the responsibility of the Company.
However, as a result of the buy-in arrangement,
the risks related to the Scheme’s obligation
are now significantly reduced and mostly
covered by insurance. Outokumpu has agreed
with the trustees to hold cash in an escrow
account to provide for small mismatches in the
insurance coverage and liquidity to the scheme.
At year-end 2021, the escrow balance was
GBP 13 million.
The Scheme is triennially valued to ensure
sufficient funding. The latest actuarial valu-
ation was completed in 2021 and indicated
continued improvement in the Scheme’s
funding with a surplus of GBP 4 million. In
2021, Outokumpu made the final contribution
of GBP 3 million to cover the former deficit
identified in 2018 valuation (2020: GBP 6
million). These valuations are not based on the
same assumptions as the IFRS valuation. Due
to the buy-in solutions, no further contributions
are expected to be required as a result of the
triennial valuations.
Defined benefit cost in profit or loss and other comprehensive income
€ million 2021 2020
In employee benefit expenses in EBIT –3 –5
In financial income and expenses –1 –2
Defined benefit cost in profit or loss –4
–8
In other comprehensive income –72 –12
Total defined benefit cost –76 –19
Gross defined benefit obligations and plan assets
€ million 2021 2020
Present value of funded defined benefit obligations
778 781
Present value of unfunded defined benefit obligations 3 3
Fair value of plan assets –487 –534
Net defined benefit liability 294 250
Amounts recognized in the consolidated statement of financial position
€ million 2021 2020
Defined benefit liability 294 314
Defined benefit plan assets – –64
Net defined benefit liability 294 250
Defined benefit liability 294 314
Other long-term employee benefit liabilities 15 16
Employee benefit obligations in statement of financial position 309 329
Gross defined benefit obligations and plan assets are presented in the statement of financial position netted per
plan either as a liability or an asset depending on nature of the netted item.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
43 / 87Outokumpu Annual report 2021 | Financial statements
Movement in net defined benefit liability
2021 2020
€ million
Present
value of
obligation
Fair value
of plan
assets
Net
defined
benefit
liability
Present
value of
obligation
Fair value
of plan
assets
Net
defined
benefit
liability
Total on Jan 1 783 –534 249 786 –537 249
Current service cost 5 – 5 5 – 5
Past service cost –2 – –2 – – –
Interest expense/(income) 7 –7 1 12 –10 2
Remeasurements arising from
Return on plan assets – 72 72 – –32 –32
Demographic assumptions 14 – 14 –15 – –15
Financial assumptions –21 – –21 68 – 68
Experience adjustment 5 – 5 –9 – –9
Exchange differences 32 –34 –2 –25 28 2
Employer contributions – –28 –28 – –22 –22
Benefits paid –41 41 – –38 38 –
Settlements –2 2 0 –1 1 0
Total on Dec 31 781 –487 294 783 –534 250
Germany on Dec 31 292 –16 276 315 –13 302
The UK on Dec 31 470 –464 6 445 –509 –64
Significant actuarial assumptions
Germany The UK
Other
countries
Discount rate, % 2021 0.92 1.75 3.76
2020 0.72 1.25 2.41
Future salary 2021 – – 3.99
increase, % 2020 – – 3.95
Inflation rate, % 2021 – 3.30 –
2020 – 2.80 –
Future benefit 2021 1.70 3.15 1.36
increase, % 2020 1.70 2.75 1.37
Medical cost trend 2021 – – 5.80–6.10
rate, % 2020 – – 4.70
Life expectancy 2021 RT 2018 G
mortality tables
96% SAPS All Pensioner
Amounts tables with CMI
Core Projection Model
–2020
Standard
mortality tables
2020 RT 2018 G
mortality tables
96% SAPS All Pensioner
Amounts tables with CMI
Core Projection Model
–2019
Standard
mortality tables
Sensitivity analysis of significant actuarial assumptions
Change in
assumption Germany, % The UK, %
Other
countries, %
2021
Discount rate +/– 0.5% –6/+7 –9/+10 –4/+4
Future benefit increase +/– 0.5% +3/–3 +7/–7 +3/–3
Medical cost trend rate +/– 0.5% – – +1/–1
Future salary increase +/– 0.5% – – +3/–3
Life expectancy + 1 year +3 +3 +7
2020
Discount rate +/– 0.5% –6/+7 –9/+10 –4/+4
Future benefit increase +/– 0.5% +3/–3 +6/–6 +3/–3
Medical cost trend rate +/– 0.5% – – +1/–1
Future salary increase +/– 0.5% – – +3/–4
Life expectancy + 1 year +3 +3 +7
Sensitivity is presented for reasonably possible change at the reporting date in one of the principal assumptions,
while holding all other assumptions constant.
The weighted average duration of the overall
defined benefit obligation is 17.0 years.
In Germany and in the UK the weighted
average durations are 12.8 and 20.0 years,
respectively.
The expected contributions to be paid to the
defined benefit plans in 2022 are EUR 24
million and relate mainly to the German plans.
Allocation of plan assets
€ million 2021 2020
Cash and cash equivalents 5 –
Equity instruments – 33
Debt instruments – 150
Insurance policies 466 128
Other assets – 220
Total plan assets 471 531
Allocation of plan assets covers 96.7% of total
defined benefit plan assets. On December 31,
2021, 1% of the plan assets were invested
in quoted instruments (Dec 31, 2020: 76%).
The changes are related to the 2021 buy-in
contract in the UK where the scheme’s assets
now mostly comprise of insurance contracts.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
44 / 87Outokumpu Annual report 2021 | Financial statements
Risk information
Through its defined benefit plans, Outokumpu
is exposed to a number of risks, the most
significant of which are detailed below.
Asset volatility: The level of equity returns is a
key factor in the overall investment return. If
a plan holds significant proportion of equities,
which are expected to outperform corporate
bonds in the long-term, it might face higher
volatility and risk in the short-term. The
investment portfolio might also be subject to a
range of other risks typical of the assets held,
in particular credit risk on bonds and exposure
to the property market.
Change in bond yields: A decrease in corporate
bond yields will increase plan liabilities,
although this will be partially offset by an
increase in the value of the plan’s bond
holdings (if any). In a situation where the return
on plan assets is lower than the corporate
bond yields, a plan may face a shortfall which
might lead to increased contributions.
Inflation risk: Inflation rate is linked to both
future pension and salary increase, and higher
inflation will lead to higher liabilities.
Longevity: The majority of Outokumpu’s defined
benefit obligations are to provide benefits for
the life of the member, so increases in life
expectancy will result in an increase in the
plans’ liabilities.
The buy-in solutions implemented in the UK
in 2021 and 2020 significantly reduce the
earlier-mentioned risks for the Scheme, which
is mostly covered by insurance.
Management judgements
The present value of pension obligations is
subject to actuarial assumptions which are
used in calculating these obligations. These
assumptions include, among others, discount
rate, the annual rate of increase in future
compensation levels, inflation rate and
employee turnover rate. The assumptions are
proposed by external independent actuaries
separately for each defined benefit plan or
each country where Outokumpu has defined
benefit plan and approved by the management.
Accounting principles
The Group companies in different countries
have various post-employment benefit plans in
accordance with local conditions and practices.
The plans are classified as either defined
contribution plans or defined benefit plans.
The fixed contributions to defined contribution
plans are recognized as expense in the period
to which they relate. The Group has no legal or
constructive obligation to pay further contribu-
tions if the receiving party is not able to pay
the benefits in question. All such arrangements
that do not meet these requirements are
defined benefit plans.
Defined benefit plans are funded with
payments to the pension funds or insurance
companies. The present value of the defined
benefit obligations is determined separately
for each plan by using the projected unit
credit method. The liability recognized in the
statement of financial position is the defined
benefit obligation less the fair value of plan
assets at the closing date. When the fair
value of plan assets exceeds the value of the
obligation, the net amount is recognized as
defined benefit plan assets.
Current service costs, past service costs and
gains or losses on settlements are recognized
in functional costs above EBIT. Net interest
expense or income is recognized in financial
items under interest expense or interest
income. All remeasurements of the net defined
benefit liability (asset) are recognized directly
in other comprehensive income.
Buy-in contract in the UK does not result in
a settlement because Outokumpu remains
responsible for the benefit obligation. The
buy-in contract is effectively an investment
by which the plan can receive payments from
the insurer corresponding to the benefits
due to the participants, but ultimately the
primary obligation to pay benefits has not been
transferred.
For other long-term employee benefits, all
service costs and remeasurements are
recognized immediately in the statement of
income. Interest expenses are recognized in
financial items under interest expenses.
The significant actuarial assumptions are
presented separately for the most significant
countries, and for other countries a weighted
average of the assumptions is presented.
Other long-term employee benefits
Other long-term employee benefits mainly
relate to early retirement provisions in
Germany and long-service remunerations in
Finland. Under the German early retirement
agreements, employees work additional time
prior to retirement, which is subsequently
paid for in instalments after retirement. In
Finland, the employees are entitled to receive
a one-time indemnity every five years after 20
years of service.
Multi-employer defined benefit plans
ITP pension plans operated by Alecta in
Sweden and plans operated by Stichting
Bedrijfspensioenfonds voor de metaalindustrie
in the Netherlands are multi-employer defined
benefit pension plans. However, it has not
been possible to get sufficient information
for the calculation of obligations and assets
by employer from the plan operators, and
therefore these plans have been accounted for
as defined contribution plans in the consoli-
dated financial statements.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
45 / 87Outokumpu Annual report 2021 | Financial statements
3.4 Share-based payments
Share-based programs are part of the Group’s
incentive and commitment-building system for
key employees. The objectives are to reward
key personnel for good performance and
thereby support Outokumpu’s strategy, and to
direct management attention towards Outo-
kumpu’s profitability and shareholder value.
The Performance Share Plan (PSP) includes an
earning criterion and has maximum number of
participants for each plan of 150. It is part of
the regular compensation of top executives.
The Restricted Share pool (RSP) does not have
any specific earning criteria and it is used
for a limited number of employees, for key
recruitments, exceptional performance, high
potential, retention needs and other individual
specific situations.
For the financial year 2021, the share-based
payment expenses included in the employee
benefit expenses were EUR 4 million (2020:
EUR 1 million). The total estimated value of
the share-based payment plans is EUR 14
million on December 31, 2021. This value is
recognized as an expense in the statement of
income during the vesting periods.
Outstanding programs
During 2021, Outokumpu’s share based
payment programs included Performance
Share Plan (Plans 2019–2021, 2020–2022
and 2021–2023) and Restricted Share Pool
Program (Plans 2019–2021, 2020–2022 and
2021–2023).
In December 2021, the Board of Directors
approved the commencement of the
2022–2024 plans for the Performance Share
Plan and the Restricted Share Pool Program
from the beginning of 2022.
Vested programs
In 2021, the Performance Share Plan
2018–2020 ended, and as the targets were
not achieved, no shares were rewarded to
the participants. Regarding the Restricted
Share Pool Program plan 2018–2020, after
deductions for applicable taxes, in total
58,815 shares were delivered to 42 partic-
ipants based on the conditions of the plan.
From the Restricted Share Pool Program plan
2019–2021, after deductions for applicable
taxes, in total 10,950 shares were delivered to
one participant in December 2021.
In 2020, after deductions for applicable taxes,
in total of 49,147 shares were delivered to
the participants of the Restricted Share Pool
Program plan 2017–2019 and 178,350
shares were delivered to the participant of
the Matching Share Plan as the last reward
tranche of the plan. The matching share plan
ended in 2020.
Outokumpu used its treasury shares for all
share reward payments.
Share-based payment plan opportunity
Maximum number of shares
Dec 31, 2021 2022 2023 2024 Total
PSP 2019–2021
1,698,922 1,698,922
RSP 2019–2021 151,000 151,000
1,849,922 1,849,922
PSP 2020–2022 2,575,202 2,575,202
RSP 2020–2022 170,000 170,000
2,745,202 2,745,202
PSP 2021–2023 3,217,800 3,217,800
RSP 2021–2023 75,532 75,534 75,534 226,600
75,532 75,534 3,293,334 3,444,400
Total 1,925,454 2,820,736 3,293,334 8,039,524
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
46 / 87Outokumpu Annual report 2021 | Financial statements
The general terms and conditions of the outstanding share-based incentive programs
Performance Share Plan
Grant date Feb 20, 2019 March 9, 2020 March 15, 2021
Vesting period Jan 1, 2019–Dec 31, 2021 Jan 1, 2020–Dec 31, 2022 Jan 1, 2021–Dec 31, 2023
Number of participants 96 111 113
Share price at grant date, € 3.55 2.80 4.35
Exercised In shares and cash in 2022 In shares and cash in 2023 In shares and cash in 2024
Vesting conditions
Non-market Outokumpu’s return on operating capital
compared to a peer group
Outokumpu’s return on operating capital
compared to a peer group
Outokumpu’s return on capital employed
as an absolute measure
Other relevant conditions Continuation of employment until the shares are delivered,
a salary-based limit for the maximum benefits
Continuation of employment until the shares are delivered,
a salary-based limit for the maximum benefits
Continuation of employment until the shares are delivered,
a salary-based limit for the maximum benefits
Restricted Share Pool Program
Grant date April 18, 2019 March 9, 2020 March 15, 2021
Vesting period Jan 1, 2019–Dec 31, 2021 Jan 1, 2020–Dec 31, 2022 Jan 1, 2021–Dec 31, 2023
Number of participants 56 35 62
Share price at grant date, € 3.72 2.80 4.35
Exercised In shares and cash in 2022 In shares and cash in 2023 In shares and cash, in 3 installments in 2022, 2023 and 2024
Vesting conditions Continuation of employment until the shares are delivered, a salary-based limit for the maximum benefits
Management judgements
In valuing the share-based payment plans,
the management estimates the likelihood of
achieving the non-market performance criteria
and the number of participants remaining in
the plan when the vesting period ends.
The evaluation of the likelihood of achieving
the non-market performance criteria uses
mainly external financial forecasts but also
internal forecasts are used. The number of
participants remaining in plans at the end
of the vesting period is estimated based on
historical forfeit ratios of similar plans. Also
potential impacts from restructuring activities
carried out in the Group are considered in the
estimate.
Accounting principles
The share-based payments are settled net
of tax withholdings, and they are accounted
as fully equity-settled. The expense of the
programs recognized over vesting periods
is based on the grant date fair value and is
reported as employee benefit expenses within
the administrative expenses in profit or loss.
Applicable statistical models are used in valua-
tion, and the valuation is revised at the end of
each reporting period based on the likelihood
of achieving the non-market performance
criteria and the estimated retention rate of the
participants.
The salary-based maximum limits for the
pay-outs have been taken into account in the
valuation of the benefits.
Detailed information of the share-based
incentive programs can be found in
Outokumpu’s home page www.outokumpu.com.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
47 / 87Outokumpu Annual report 2021 | Financial statements
0
50
100
150
200
250
202120191817
202120191817
0
500
1,000
1,500
2,000
–5
0
5
10
15
20
202120191817
* Capital expenditure definition changed from accrual-based to cash-based
capital expenditure in 2020. Figures for 2019 and 2018 have been restated
accordingly. Figure for 2017 has not been restated.
4. Operating assets and liabilities .................... 47
4.1 Intangible assets and property, plant and equipment .. 47
4.2 Leases ............................................... 52
4.3 Goodwill impairment test ............................. 54
4.4 Inventories ........................................... 55
4.5 Trade and other receivables and payables ............. 56
4.6 Provisions ............................................ 57
In line with the strategic focus to de-leverage the company,
Outokumpu continued the tight capital expenditure
discipline also in 2021. The Group’s main capex project,
the Kemi mine expansion, is expected to be finalized with
approximately 6 months’ delay in 2022. Outokumpu’s
working capital increased in 2021, and approximately 60%
of the inventory increase came from metal prices. Return on
capital employed shows the strong overall performance in
2021.
4. Operating assets and liabilities
4.1 Intangible assets and property, plant and equipment
Intangible assets
2021
€ million Goodwill
Other
intangible
assets Total
Historical cost on Jan 1, 2021 485 377 862
Translation differences –2 1 –1
Additions – 10 10
Disposals –1 –24 –24
Reclassifications – 3 3
Historical cost on Dec 31, 2021 482 367 849
Accumulated amortization and impairment on Jan 1, 2021 –19 –232 –252
Translation differences
1 0 1
Amortization – –17 –17
Impairments
– –18 –18
Disposals 1 12 13
Accumulated amortization and impairment on Dec 31, 2021 –17 –255 –272
Carrying value on Dec 31, 2021 465 112 577
Carrying value on Jan 1, 2021 466 144 610
Impairments in other intangible assets relate mainly to the Group’s ERP systems.
Capital expenditure*,
€ million
Inventories, € million
Return on capital
employed, %
Return on capital employed
18.8%
Inventories
EUR 1,892 million
Capital expenditure
EUR 175 million
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
4.1
4.
48 / 87Outokumpu Annual report 2021 | Financial statements
2020
€ million Goodwill
Other
intangible
assets Total
Historical cost on Jan 1, 2020
487 361 848
Translation differences –2 0 –2
Additions – 17 17
Disposals – –4 –4
Reclassifications – 2 2
Historical cost on Dec 31, 2020 485 377 862
Accumulated amortization and impairment on Jan 1, 2020 –21 –220 –241
Translation differences
2 –1 1
Amortization
– –15 –15
Disposals – 3 3
Accumulated amortization and impairment on Dec 31, 2020 –19 –232 –252
Carrying value on Dec 31, 2020 466 144 610
Carrying value on Jan 1, 2020 466 141 607
Emission allowances
Outokumpu had six active sites operating under
EU’s Emissions Trading Scheme (EU ETS) in
2021. These include the production plants in
Tornio, Finland; Avesta, Degerfors, Fagersta and
Nyby in Sweden; as well as Krefeld together
with Dillenburg in Germany. Additionally, Outo-
kumpu’s site in Sheffield in the UK operates
under the UK Emission Trading Scheme (UK
ETS). There is no link between the EU ETS and
UK ETS and allowances in each ETS are not
transferrable nor convertible. All Outokumpu
sites met the compliance requirements on
time regarding the EU ETS Phase III.
The pre-verified carbon dioxide emissions under
EU ETS were approximately 1.0 million tonnes
in 2021 (2020: 1.0 million tonnes). For its
2021 emission allowance delivery, Outokumpu
will use allowances received for free, but also
allowances acquired from market in prior years,
the cost of which has been recognized as other
operating expenses.
The Group’s emission position is composed
of realized and forecasted carbon emissions
netted against confirmed and forecasted
emission allowances granted by governments.
All relevant Outokumpu sites applied for free
emission allowances for 2021–2030 trading
period according to the efficiency-based
benchmarks and historical activity, and the
allocations for the first half of the period have
been confirmed. These allocations combined
with the allowances held from prior period are
adequate to cover the forecasted needs of EU
emission allowances for the first half of the
trading phase (2021–2025).
The emission allowance price risk is presented
in the note 5.3 under Energy price risk.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
49 / 87Outokumpu Annual report 2021 | Financial statements
Property, plant and equipment
2021
€ million Land
Mine
properties Buildings
Machinery and
equipment
Other
tangible
assets
Advances
paid and
construction
work in
progress Total
Historical cost on Jan 1, 2021 123 112 1,283 4,668 137 330 6,654
Translation differences 2 – 15 62 0 2 80
Additions
4 17 2 36 9 99 167
Disposals –7 0 –37 –172 0 –1 –218
Reclassifications – 0 0 36 4 –44 –4
Other –5 – –4 –58 – – –66
Historical cost on Dec 31, 2021 117 130 1,259 4,575 149 384 6,614
Accumulated depreciation and
impairment on Jan 1, 2021 –16 –48 –766 –3,105 –86 –2 –4,023
Translation differences 0 – –3 –20 0 0 –22
Disposals – – 36 172 0 1 210
Depreciation –1 –12 –47 –176 –6 0 –242
Impairments –4 –10 –7 –7 0 0 –27
Other 4 – 4 56 – – –63
Accumulated depreciation and
impairment on Dec 31, 2021 –18 –70 –782 –3,079 –91 0 –4,041
Own property, plant and equipment 68 59 452 1,387 57 384 2,407
Right-of-use assets 31 – 25 109 0 – 166
Carrying value on Dec 31, 2021 99 59 477 1,496 58 384 2,573
Carrying value on Jan 1, 2021 107 64 517 1,563 51 328 2,631
Impairments in property, plant and equipment include mine properties and obsolete machinery in Ferrochrome business area, lease agreements on land and buildings in
the business area Europe’s operations in Germany and various obsolete machinery and equipment items in the Group.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
50 / 87Outokumpu Annual report 2021 | Financial statements
2020
€ million Land
Mine
properties Buildings
Machinery and
equipment
Other
tangible
assets
Advances
paid and
construction
work in
progress Total
Historical cost on Jan 1, 2020 128 72 1,286 4,691 135 294 6,606
Translation differences –2 – –12 –46 1 –3 –62
Additions
2 17 10 37 1 102 169
Disposals –4 – –10 –43 –1 – –58
Reclassifications – 23 8 31 1 –64 –2
Other 0 – 1 –2 – – 0
Historical cost on Dec 31, 2020 123 112 1,283 4,668 137 330 6,654
Accumulated depreciation and
impairment on Jan 1, 2020 –15 –39 –719 –2,983 –82 –2 –3,840
Translation differences
0 – 0 1 –1 0 1
Disposals – – 3 43 1 – 46
Depreciation –1 –9 –47 –165 –4 0 –227
Impairments – – –2 –1 – – –3
Accumulated depreciation and
impairment on Dec 31, 2020 –16 –48 –766 –3,105 –86 –2 –4,023
Own property, plant and equipment 70 64 481 1,457 51 327 2,450
Right-of-use assets 37 – 37 106 0 1 181
Carrying value on Dec 31, 2020 107 64 517 1,563 51 328 2,631
Carrying value on Jan 1, 2020 112 33 567 1,708 53 293 2,767
Capitalized interest expenses
During 2021, borrowing costs amounting to
EUR 3 million were capitalized on investment
projects under property, plant and equipment
and intangible assets (2020: EUR 3 million).
Total capitalized interests on December 31,
2021 were EUR 32 million (Dec 31, 2020:
EUR 31 million). The average capitalization
rate used in 2021 was 1.2%.
Intangible assets and property, plant
and equipment by geographical region
€ million 2021 2020
Finland
1,726 1,774
Other Europe 679 732
North America
733 723
APAC region
10 10
Other countries 2 2
3,150 3,241
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
51 / 87Outokumpu Annual report 2021 | Financial statements
Management judgements
Management estimates relating to useful lives
and recoverable amounts affect significantly
the intangible asset and property, plant
and equipment values in the consolidated
statement of financial position, and different
assumptions and assigned lives could have a
material impact on the reported amounts.
Carrying amounts of intangible asset and
property, plant and equipment items are
regularly reviewed for any evidence of
impairment. If any such evidence emerges,
the asset’s recoverable amount is assessed,
which requires estimation of future cash flows
attributable to the asset and related valuation
parameters.
Indications for changes in useful lives are
reviewed annually, and if changes to previous
estimates are identified, the useful lives are
revised accordingly. If an impairment loss is
recognized, the estimated useful life of the
asset is also reassessed.
Accounting principles
Intangible assets other than goodwill include
capitalized development costs, patents,
licenses and software. These assets comprise
mainly of acquired assets that typically have
definite useful lives. An intangible asset is
recognized if it is probable that the asset will
generate future economic benefits to the
company and the cost of the asset can be
measured reliably.
Property, plant and equipment consist mainly
of facilities, machinery and equipment used in
stainless steel and ferrochrome production.
Intangible assets and property, plant and
equipment are recognized initially at cost. Cost
comprises of the asset’s purchase price and all
costs directly attributable to bringing the asset
ready for its intended use. Government grants
received for investment purposes are deducted
from the asset’s cost. Intangible assets and
property, plant and equipment acquired in a
business combination are measured at fair
value at the acquisition date.
Borrowing costs (mainly interest costs) directly
attributable to the acquisition of an asset
are capitalized in the statement of financial
position as part of the asset’s carrying amount,
when it takes a substantial period of time to
get the asset ready for its intended use.
After initial recognition, intangible assets and
property, plant and equipment are measured at
cost less accumulated amortization, deprecia-
tion and impairment losses. Intangible assets
and property, plant and equipment, other than
land and mine properties, are amortized or
depreciated on a straight-line basis over their
expected useful lives. Assets tied to a certain
fixed period are amortized over the contract
term.
Amortization of intangible assets are based on
the following estimated useful lives:
Software up to 10 years
Capitalized development costs up to 10 years
Intangible rights up to 20 years
Depreciation of property, plant and equipment
items is based on the following estimated
useful lives:
Buildings 25–40 years
Heavy machinery 15–30 years
Light machinery and equipment 3–15 years
Land is not depreciated, except for leased
land, as the useful life of land is assumed
to be indefinite. Mine properties include
preparatory work to utilize an ore body or part
of it, such as shafts, ramps and ventilation and
are depreciated using the units-of-production
method based on the depletion of ore reserves
over their estimated useful lives. Other tangible
assets include items such as land improve-
ments, asset retirement obligations related
to landfill areas and infrastructure within the
facilities, such as roads and railroads.
Recognition of amortization or depreciation on
an asset is ceased when the item is classified
as held for sale.
If evidence regarding an impairment of an
asset is identified, the asset’s recoverable
amount is estimated as the higher of the fair
value less costs to sell or the value in use. If
the carrying amount of an asset exceeds its
recoverable amount, an impairment loss is
recognized. A previously recognized impairment
loss is reversed if there is a change in the
recoverable amount. However, the reversal
must not result in a higher carrying amount
than what it would have been if no prior
impairment loss had been recognized. Impair-
ment losses are presented as other operating
expenses in the consolidated statement of
income.
Gains or losses on disposals of property,
plant and equipment or intangible assets are
determined as the difference between the net
proceeds received and the carrying amount of
the asset. These gains or losses are presented
in other operating income or expenses.
Goodwill
Goodwill arises from business combinations
and is recognized at the acquisition date at the
amount excess of the consideration transferred
over the fair value of the identifiable assets
acquired, liabilities assumed and any
non-controlling interest and any previously
held equity interests in the acquiree. Goodwill
is not amortized but tested for impairment.
Goodwill is measured at cost less accumulated
impairment losses. Impairment losses on
goodwill cannot be subsequently reversed. See
note 4.3 for goodwill impairment testing.
Emission allowances
Emission allowances are reported as other
intangible assets. They are measured at
cost and initially recognized when control is
obtained. Allowances received free of charge
are recognized at nominal value, i.e. at zero
carrying amount. Emission allowances are
derecognized against the actual emissions, or
when the emission allowances are sold.
Emission allowance expense is recognized
when emission allowances received free of
charge do not cover the annual emissions
for the difference based on the cost of the
purchased allowances. In case the Group does
hold sufficient allowances to cover the actual
emissions, a provision is recognized at fair
value at the end of the reporting period. The
expenses are presented as other operating
expenses. Gains from the sale of allowances
are recognized as other operating income.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
52 / 87Outokumpu Annual report 2021 | Financial statements
Outokumpu leases land, buildings, and
machinery and equipment used in the Group’s
operations. Outokumpu has also entered into
service and supply contracts that contain lease
elements. Contracts include typically fixed
rental amounts, and for land and buildings,
rents are linked to an index.
The terms of new vehicle leases are typically
3 to 5 years, and lease terms for other
machinery and equipment range up to 15
years. Lease terms for land and buildings can
be significantly longer with remaining terms for
individual contracts on land of approximately
45–95 years.
Leases for machinery and equipment include
also contracts with variable lease payments
based on usage of the equipment. Machinery
and equipment are also hired with daily rates
for temporary use, in which case they are
reported as short-term leases.
Right-of-use assets
2021
€ million Land Buildings
Machinery and
equipment Advances paid Total
Historical cost on Jan 1, 2021 41 49 210 1 301
Additions 0 2 29 0 31
Other changes –5 –4 –56 –1 –65
Historical cost on Dec 31, 2021 36 47 183 0 266
Accumulated depreciation on Jan 1, 2021 –3 –13 –104 – –120
Depreciation and impairments –4 –13 –26 – –44
Other changes 4 4 57 – 66
Accumulated depreciation and impairment on Dec 31, 2021 –4 –22 –75 – –101
Carrying value on Dec 31, 2021 31 25 109 – 166
Carrying value on Jan 1, 2021
37 37 106 1 181
2020
€ million Land Buildings
Machinery and
equipment Advances paid Total
Historical cost on Jan 1, 2020 41 42 204 – 286
Additions
0 8 8 1 16
Other changes 0 0 –2 – –2
Historical cost on Dec 31, 2020 41 49 210 1 301
Accumulated depreciation on Jan 1, 2020 –2 –6 –77 – –85
Depreciation –1 –6 –27 – –34
Accumulated depreciation on Dec 31, 2020 –3 –13 –104 – –120
Carrying value on Dec 31, 2020 37 37 106 1 181
Carrying value on Jan 1, 2020 38 35 126 – 200
4.2 Leases Lease liabilities
€ million 2021 2020
Non-current 157 174
Current 32 18
189 192
Maturity analysis of lease liabilities is presented in
note 5.1.
Lease expenses
€ million 2021 2020
Depreciation –34 –34
Impairments –10 –
Interest expenses –11 –12
Expenses on short-term and
low-value leases –9 –11
–65 –56
Impairments are related to lease contracts of land
and buildings in Germany.
Lease cash flows
€ million 2021 2020
Repayments –32 –33
Interest paid –11 –12
–43 –45
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
53 / 87Outokumpu Annual report 2021 | Financial statements
Management judgements
Management judgement and estimates relate
mainly to incremental borrowing rates of the
Group companies, the probabilities of utilizing
extension options in lease contracts and lease
terms applied for contracts that are valid until
further notice, which impact the reported
amounts of lease liabilities and right-of-use
assets.
The incremental borrowing rates are defined as
part of the process to determine interest rates
for intra-group lending, in which Outokumpu
defines synthetic ratings for the subsidiaries.
The incremental borrowing rate takes into
account the currency, the maturity of the lease
liability, the credit risk of the lessee based on
the synthetic rating, and country risk.
The contracts with extension options are
reviewed regularly to evaluate the probability of
utilization based on information available.
Contracts that are valid until further notice
represent only a small amount of Group’s lease
contracts, as most contracts have a fixed term.
The lease terms for the contracts that are valid
until further notice are either defined based on
the Group’s mid-term planning cycle of 3 years
or treated as short-term depending of the type
of the asset.
The Group applies materiality in defining
low-value items for lease accounting purposes.
Accounting principles
Lease liabilities measured at the present value
of future lease payments are recognized to the
statement of financial position. In determining
the present value of the lease liabilities, the
fixed and index/rate-based lease payments are
discounted with the interest rate implicit to the
lease when available, or with the incremental
borrowing rate of the company.
Lease payments are divided into interest
expense and repayment of the lease liability.
Lease contracts may include options to extend
the contract term or purchase the leased
asset at the end of the lease term. An option
is considered in determining the lease liability
when it is highly probable that the option will
be used.
Right-of-use assets recognized to the
statement of financial position are measured
at the amount of lease liability and lease
payments made in advance, less accumulated
depreciation and impairments. Right-of-use
assets are depreciated on a straight-line basis
over the lease term, or over the expected
useful life of the asset in case the asset will
transfer to Outokumpu at the end of the lease
term or it is highly probable that a purchase
option will be used.
Lease liabilities are presented in non-current
and current debt and right-of-use assets are
presented in property, plant and equipment in
consolidated statement of financial position.
Lease liabilities or right-of-use assets relating
to short-term leases, leases of low value items,
or intangible assets are not recognized to
statement of financial position. Instead, related
payments, as well as variable lease payments,
are recognized as expense to the profit or loss.
Sale and lease-back
So-called sale and lease-back transactions by
the Group in 2019 or later (i.e. in accordance
with IFRS 16) do not typically meet the IFRS
15 criteria of a sale, as Outokumpu typically
retains the control of the asset. Consequently,
they do not meet the criteria of sale and
lease-back, either. The asset remains in
Outokumpu’s property, plant and equipment
at cost less accumulated depreciation and
impairments. The proceeds of the transaction
are recognized as other loans under non-cur-
rent or current debt.
Sale and lease-back transactions carried out
prior to 2019 have been treated according to
the accounting principles prevailing at the time.
Group as a lessor
Rental income received from property, plant
and equipment leased out by the Group under
operating leases is recognized on a straight-
line basis over the lease term. Rental income
is presented as other operating income.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
54 / 87Outokumpu Annual report 2021 | Financial statements
4.3 Goodwill impairment test
Goodwill and operating capital by operating segment
Goodwill Operating capital
€ million
2021 2020 2021 2020
Europe 342 343 1,724 1,573
Americas – – 879 801
Ferrochrome 114 114 823 766
Long Products 9 9 157 133
Other operations and intra-group items – – –60 13
465 466 3,523 3,286
Assumptions by operating segment
Europe Americas
Ferro-
chrome
Long
Products
2021
Weighted average costs of capital (WACC), pre-tax, % 8.3 10.4 8.4 9.3
Terminal growth rate, % 0.5 1.0 0.5 0.5
2020
Weighted average costs of capital (WACC), pre-tax, % 8.2 10.1 8.1 9.1
Terminal growth rate, % 0.5 1.0 0.5 0.5
Test results and sensitivities by operating segment
2021 Europe Americas
Ferro-
chrome
Long
Products
Headroom, € million 1,124 248 226 82
After-tax WACC increase leading to impairment, %-points 5.0 2.3 1.9 5.2
EBITDA decrease leading to impairment, % 27 15 15 27
Terminal growth rate of zero leading to impairment No No No No
Headroom is the amount by which the recoverable amount determined based on the value-in-use analysis
exceeds the segment’s operating capital amount.
Cash flow forecasts are discounted using
the weighted average pre-tax cost of capital
(WACC) as defined for Outokumpu. The
components of WACC are risk-free yield rate,
Outokumpu credit margin, market risk premium,
equity beta, and the Group target capital
structure.
Management believes in general that the
assumptions used in the value-in-use
calculations are conservative based on
current economic circumstances. Growth
rates assumed for stainless steel deliveries
are generally lower than independent analysts’
view on long-term market development.
Accounting principles
Goodwill is allocated to and tested for
impairment on operating segment level, which
correspond to the Group’s cash-generating
units (CGUs), and the lowest level goodwill is
monitored. Impairment test is carried out on
annual basis, or more frequently when there is
evidence of potential goodwill impairment.
In goodwill impairment testing, the recoverable
amounts are based on value in use determined
by discounted future net cash flows expected
to be generated by the cash-generating unit.
The discount rate used is a pre-tax rate that
reflects the current market view on the time
value of money and the CGU-specific risks.
An impairment loss is the amount by which
the carrying amount of the segment’s assets
exceeds its recoverable amount. Impairment
losses are recognized first on goodwill and after
that on other intangible and tangible assets.
In the consolidated statement of income
impairments are presented in other operating
expenses. Impairment losses related to
goodwill cannot be subsequently reversed.
Goodwill impairment testing
Goodwill impairment testing is carried out on
operating segment level, as they correspond to
the Group’s cash-generating units (CGUs) and
the goodwill allocation level.
The recoverable amounts of the cash-
generating units are based on value-in-use
calculations that are prepared using
discounted cash flow projections. These
projections are based on the Group’s strategy
approved by the management, and include
cash flow forecasts for 2022–2027 after which
the terminal value is calculated.
The carrying amount to which the recoverable
amount is compared, is the operating capital
of the segment, defined in the Alternative
performance measures section of the Review
by the Board of Directors.
As a result of the impairment test to Group’s
cash-generating units, no goodwill impairment
losses were recognized in 2021 nor 2020.
Management judgements
Key assumptions of the value-in-use calcula-
tions include the discount rate, the terminal
value growth rate, the average global growth
in end-use consumption of stainless steel and
base price development. Assumptions also
include estimates on delivery volume and
capital expenditure development, and cost
savings related to on-going strategy-implemen-
tation related initiatives.
As the recovery of the global economy from
the COVID-19 pandemic is still on going, the
estimates also include assumptions relating
to the timing and pace of the recovery, and
eventual stabilization of the economy and
stainless steel demand.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
55 / 87Outokumpu Annual report 2021 | Financial statements
Net realizable value write-downs of EUR 3 million were recognized in the profit or loss during 2021
(2020: reversal of write-downs of EUR 15 million).
In 2021, Outokumpu continued to apply cash flow hedge accounting for three selected nickel
hedging programs. More details on commodity price risk and hedge accounting are presented in
notes 5.3 and 5.4.
4.4 Inventories
€ million 2021 2020
Raw materials and consumables 524 387
Work in progress 875 419
Finished goods and merchandise 485 369
Advance payments 8 2
1,892 1,177
Management judgements
Management judgement and estimates are
applied in net realizable value (NRV) and
inventory obsolescence analysis.
NRV calculation requires estimates on sales
prices for products to be sold in the future to
the extent the prices are not known, which can
be a significant part of the future prices. Due
to fluctuations in nickel and other alloy prices,
which are the most important commodity price
risks for Outokumpu, the realized prices can
deviate significantly from the estimates used in
NRV calculations.
The alloy surcharge clause as well as daily fixed
pricing of stainless steel reduce the risk arising
from the time difference between raw material
purchase and product delivery. However, the
risk is still significant because the delivery
cycle in production is longer than the alloy
surcharge mechanism expects and the daily
fixed pricing can also deviate from this cycle
depending on the timing of the delivery.
Inventory obsolescence for stainless steel
products is estimated based on internal
guidelines of slow-moving inventory.
Accounting principles
Inventories are stated at the lower of cost and
net realizable value. These are defined with
different methodologies depending on the type
of inventory.
The cost of raw materials is determined as
monthly weighted average of the actual raw
material cost. The cost of self-produced
finished goods and work in progress comprises
of raw materials, direct labor, other direct
costs and related production and procurement
overheads. Cost of purchased products
includes all purchasing costs including direct
transportation, handling and other costs.
NRV is calculated as the estimated selling
price in the ordinary course of business, less
the estimated costs of completion and the
estimated costs attributable to the sale.
Obsolete stainless steel products are valued
at scrap value. Spare parts are carried as
inventory and their cost is recognized in profit
or loss as consumed.
Major spare parts are recognized in property,
plant and equipment when they are expected
to be used over more than one year.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
56 / 87Outokumpu Annual report 2021 | Financial statements
Trade and other receivables
€ million 2021 2020
Non-current
Non-current receivables and accruals 5 1
Current
Trade receivables 597 384
VAT receivable 68 44
Income tax receivable 21 23
Escrow deposits 15 –
Prepaid insurance expenses 10 10
Other accruals 66 35
Other receivables
9 41
786 537
Loss allowance on trade receivables
On Jan 1 5 7
Reduction in loss allowance 0 –1
On Dec 31 5 5
Age analysis of trade receivables
Not overdue 549 362
Past due 1–30 days 33 17
Past due 31–60 days
8 3
More than 60 days 8 2
597 384
Trade and other payables
€ million 2021 2020
Non-current
VAT payable – 18
Accruals 23 27
23 45
Current
Trade payables 1,802 1,225
Accrued employee-related expenses 109 73
Accrued interest expenses 6 11
VAT payable
119 86
Withholding tax and social security liabilities 21 21
Advance payments received 27 7
Other accruals 76 55
Other payables 7 22
2,166 1,500
Factored trade receivables
Outokumpu uses factoring to finance its
working capital. Under these arrangements,
Outokumpu has on December 31, 2021
derecognized trade receivables totaling
EUR 420 million (2020: EUR 269 million),
which represents fair value of the assets.
Net proceeds received amounted to EUR
412 million (2020: EUR 263 million). The
underlying assets have maturity of less than
one year.
The maximum amount of loss related to
derecognized assets is estimated to be EUR 12
million (2020: EUR 10 million). This estimate
is based on insurance policies and contractual
arrangements between factoring companies
and Outokumpu. The analysis does not include
impact of any operational risk related to
Outokumpu’s contractual responsibilities.
4.5 Trade and other receivables and payables
Non-current and current VAT payables on
December 31, 2021 include EUR 18 million
of VAT payments that were deferred for two
years in Finland in 2020 as part of the state
COVID-19 relief program (Dec 31, 2020: EUR
61 million).
Liabilities related to customer contracts
On December 31, 2021, accrued volume
discounts related to customer contracts
amounted to EUR 45 million (Dec 31, 2020:
EUR 34 million). These are reported as other
current accruals.
The liabilities related to the unperformed
transportation service were not material on
December 31, 2021, and these liabilities
as well as advance payments received are
expected to be recognized as revenue over the
following three months.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
57 / 87Outokumpu Annual report 2021 | Financial statements
Risk information
Credit risk
Outokumpu’s sales are covered by approved
credit limits or secured payment terms. Most
of the outstanding trade receivables have
been secured by trade credit insurances,
which typically cover some 92% of the insured
amount. Part of the credit risk related to trade
receivables is managed with letters of credit,
advance payments and guarantees.
On December 31, 2021, the maximum
exposure to credit risk of trade receivables was
EUR 597 million (2020: EUR 384 million). The
portion of unsecured receivables during 2021
has been approximately 7–9% of all trade
receivables. During 2021, credit limits have
remained available from the insurer and there
is no significant change in the insurance cover.
Outokumpu has frequently monitored credit
risk and the overdue situation and continued
its close co-operation with the insurers.
Outokumpu uses factoring, which transfers
most risks and rewards to the buyer of the
receivables. At the end of the year 2021, most
of the receivables were generated by a large
number of customers and there were only few
risk concentrations.
Country risk
Exposure to country risk is monitored and
reduced by having credit insurance that
provides cover against political risk on external
trade receivables. At year-end, main country
related exposures included for example
Argentina, due to Outokumpu’s local and
cross-border business activities in the country.
Accounting principles
Trade and other receivables and payables
include financial assets or liabilities measured
at amortized cost. After initial recognition,
they are measured at amortized cost by using
the effective interest rate method. Trade and
other receivables are valued less accumulated
impairments.
Factored trade receivables
Factored trade receivables have been
derecognized from the statement of financial
position when the related risks and rewards of
ownership have materially been transferred to
the counterparty of the factoring transaction.
Expected credit losses
Outokumpu applies simplified model in
assessing and recognizing loss allowance for
expected credit losses on trade receivables.
The calculation model is based on overdue
statistics and counterparty-specific credit
ratings linked with loss probabilities for
each rating. Loss allowances are recognized
in selling and marketing expenses in the
consolidated statement of income.
Liabilities related to customer contracts
Liabilities related to customer contracts
include accrued volume discounts, advance
payments received and liabilities related to
transportation service not yet performed.
Accrued volume discounts have been
recognized as reductions in revenue during the
financial year.
4.6 Provisions
2021
€ million
Environmental
provisions
Restructuring
provisions
Other
provisions Total
Provisions on Jan 1, 2021 48 62 5 115
Translation differences
0 0 1 1
Increases in provisions 20 2 21 42
Utilized during the financial year 0 –46 –1 –47
Unused amounts reversed –10 –8 –1 –19
Reclassifications – –3 1 –1
Provisions on Dec 31, 2021 57 8 26 91
2020
€ million
Environmental
provisions
Restructuring
provisions
Other
provisions Total
Provisions on Jan 1, 2020 48 56 5 110
Increases in provisions 3 50 2 54
Utilized during the financial year –2 –43 –1 –45
Unused amounts reversed –1 –1 –1 –4
Provisions on Dec 31, 2020 48 62 5 115
€ million 2021 2020
Non-current provisions 63 84
Current provisions 29 31
91 115
Environmental provisions
In 2021, Outokumpu recognized an increase
in environmental provisions of EUR 10 million
relating to the aftercare of closed mines in
Finland.
The majority of the environmental provisions
are for closing costs of production facilities
and landfill areas, removal of problem waste
and landscaping in facilities in Finland, the UK,
and Germany and aftercare of closed mines
in Finland. The outflow of economic benefits
related to environmental provisions is expected
to take place mainly over a period of more
than 10 years. Due to the nature of these
provisions, there are uncertainties regarding
both the amount and the timing of the outflow
of economic benefits.
Restructuring provisions
Restructuring provisions relate mainly to the
redundancies in selected countries as a result
of employee negotiations in 2020 to generate
cost savings. The cash outflows related to
these provisions took predominantly place in
2021.
Other provisions
Other provisions comprise for example provi-
sions for litigations, product and other claims
and are mainly current in nature. In 2021, the
increase in other provisions is mainly related to
litigation provisions.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
58 / 87Outokumpu Annual report 2021 | Financial statements
Management judgements
Provisions are based on management’s best
estimates at the end of the reporting period.
Regarding environmental provisions, the
management judgements and estimates relate
mainly to the timing and the scope of the
activities to be carried out as well as the cost
of such activities in the future. Environmental
expenditure related to dismantling an entire
production facility and restoring the area are
generally estimated when decision on a site
closure is made.
As actual outflows can differ from estimates
due to changes in law, regulations, public
expectations, technology, prices and conditions,
and can take place in many years in the future,
the provisions are regularly reviewed to take
such changes into account.
Regarding restructuring provisions, the
judgements and estimates mainly relate to the
amounts of termination benefits to employees.
Accounting principles
A provision is recognized when Outokumpu
has a present legal or constructive obligation
as a result of a past event, and it is probable
that an outflow of economic benefits will
be required to settle the obligation and the
amount can be reliably estimated. Provisions
relate mainly to environmental liabilities,
restructuring plans, onerous contracts
and litigations. Non-current provisions are
discounted to present value at the end of the
reporting period using risk-free discount rates.
Environmental expenditure arising from
restoring the conditions caused by past
operations are recognized as expenses when
they are incurred. Environmental provision is
recognized when the Group has an obligation
to decommission or remove a facility or equip-
ment, rehabilitate environmental damage, or
landscape and restore an area. The recognition
of environmental provisions is based on current
interpretation of the effective environmental
laws and regulations related to the Group.
When environmental expenditure will arise from
future asset retirement obligations, an item of
property, plant and equipment corresponding
to the amount of the provision is recognized,
and the cost will be depreciated over the
asset’s useful life. Subsequent adjustments
to the provision are deducted from or added
to the cost of the corresponding asset in a
symmetrical manner.
A restructuring provision is recognized when a
detailed restructuring plan has been prepared
and its implementation has been started or the
main parts of the plan have been communi-
cated to those, who are impacted by the plan.
Restructuring provision mainly comprise of
employee termination benefits.
Any potential compensation from a third party
is not included in the amount of the provision
but recognized as a separate asset when it is
virtually certain that the compensation will be
received.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
59 / 87Outokumpu Annual report 2021 | Financial statements
202120191817
0
200
400
600
800
1,000
1,200
1,400
0
1
2
3
4
5
202120191817
0
10
20
30
40
50
202120191817
5. Capital structure and financial risk management 59
5.1 Net debt and capital management .................... 60
5.2 Equity ................................................ 63
5.3 Financial risk management and insurances ........... 64
5.4 Derivative instruments ................................ 67
5.5 Financial assets and liabilities ........................ 69
5.6 Equity investments at fair value through
other comprehensive income ......................... 72
5.7 Commitments and contingent liabilities ............... 73
Outokumpu took decisive steps in de-leveraging in 2021 and
improved its credit rating from B3 to Ba3. Strong financial
performance together with the directed share issue resulted
in a significant reduction in net debt and improvement in key
ratios. Prepayment of loans, the voluntary redemption of the
2024 bond as well as improvements in the interest margins
led to a sizeable reduction in finance costs.
5. Capital structure and financial risk management
Capital structure
€ million
2021 2020
Total equity 3,120 2,360
Total debt 709 1,404
Total capitalization 3,828 3,764
Net debt 408 1,028
The capital structure is regularly monitored by
management through the company’s leverage
ratio. The debt-to-equity ratio and net debt to
adjusted EBITDA improved considerably during
2021 as a result of the good development in
profitability driven by the successful strategy
implementation and favorable market condi-
tions. In addition, strong cash flow allowed debt
reduction and had a positive impact on the
Group’s net debt.
The main objective of capital management
is to secure the ability to operate on a
going concern basis to enhance value to
shareholders and to optimize the cost of
capital. Outokumpu seeks to maintain access
to loan and capital markets at all times and
to preserve sufficient liquidity. The Board of
Directors reviews the Group’s capital structure
on a regular basis. Capital structure and
debt capacity are taken into account e.g. in
investment, dividend and debt decisions.
Equity is managed through dividend policy,
share buybacks and issuances of equity or
equity-linked securities. In 2021, Outokumpu
strengthened its balance sheet by launching
a directed equity issue with gross proceeds of
EUR 209 million targeted to a selected group
of institutional investors.
Tools to manage debt include raising new
debt in various forms, establishing financing
facilities, prepaying and cancelling loans,
notes and other financing facilities in order
to optimize the maturity structure of the debt
portfolio and to minimize finance costs.
In 2021, Outokumpu extended the maturity of
its main financing facilities and also prepaid a
considerable amount of its outstanding debt.
In 2021, the Moody’s corporate family rating
for Outokumpu improved from B3 to Ba3 with
a stable outlook.
Net debt, € million
Net debt to
adjusted EBITDA
Debt-to-equity ratio, %
Debt-to-equity ratio
13.1%
Net debt
EUR 408 million
Net debt to adjusted EBITDA
0.4
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
60 / 87Outokumpu Annual report 2021 | Financial statements
Net debt
€ million 2021 2020
Non-current
Bonds – 249
Convertible bonds 112 108
Loans from financial institutions 163 414
Pension loans 154 199
Lease liabilities
157 174
Other loans
12 8
597 1,153
Current
Loans from financial institutions 7 2
Pension loans 13 –
Lease liabilities
32 18
Commercial papers
58 231
Other loans 1 –
112 251
Cash and cash equivalents
Cash at bank and in hand 295 374
Short-term bank deposits and cash equivalents 5 2
300 376
Net debt 408 1,028
The average effective interest rate of cash and cash equivalents at the end of 2021 was 0%
(Dec31, 2020: 0%).
Net debt development
€ million 2021 2020
Net cash flow from operating activities 597 322
Net cash flow from investing activities –149 –175
Cash flow before financing activities 448 147
Directed share issue 205 –
Convertible bond equity portion – 17
Cash flow impact on net debt 653 164
Net debt on Jan 1
1,028 1,155
Cash flow impact on net debt –653 –164
Change in net debt, non-cash 34 37
Net debt on Dec 31 408 1,028
5.1 Net debt and capital management
The main focus in 2021 on debt management
was to fulfill the strategic target of de-risking
the company by deleveraging the balance
sheet in order to create shareholder value. The
strong cashflow together with the proceeds
from the directed equity issue in May 2021
enabled the company to decrease its net
debt to a level of EUR 408 million at the
year-end 2021. In addition to redeeming the
2024 Notes, a major part of the sustainability
linked term loan was prepaid. Furthermore,
the amount of commercial papers issued was
reduced significantly.
In April, Outokumpu utilized the first extension
option of the SEK 1,000 million secured
revolving credit facility, which is guaranteed by
the Swedish Export Credit Agency EKN, and the
facility was extended until end of May 2023.
In May, Outokumpu carried out a directed
share issue with gross proceeds of EUR 209
million and entered into a new EUR 24 million
pension loan with a 5-year maturity. In June,
Outokumpu agreed with its lenders to extend
the maturities of the EUR 120 million sustain-
ability linked term loan and EUR 532 million of
its EUR 574 million (EUR 42 million matures in
May 2022) syndicated revolving credit facility
until the end of May 2024. In December,
Outokumpu entered into a EUR 100 million
secured revolving working capital facility with
Finnvera Oyj. The 4-year facility, which is is
guaranteed by the European Guarantee Fund is
expected to be available for drawdown during
the first quarter of 2022. Furthermore, the EUR
120 million Kemi mine facility is fully drawn.
The revolving credit facility totaling EUR 574
million and the sustainability linked term loan,
the amount of which was reduced to EUR
50 million in December, are both secured
by a comprehensive security package, which
includes pledges on real estate in Tornio
and Calvert, pledges of the shares in certain
material subsidiaries and guarantees issued by
many material subsidiaries. Outokumpu and its
secured lenders have signed an intercreditor
agreement in 2014, when the security package
was originally created. The SEK 1,000 million
revolving credit facility and the EUR 100 million
revolving working capital facility from Finnvera
Oyj are secured by pledges on real estate in
Sweden and Germany respectively.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
61 / 87Outokumpu Annual report 2021 | Financial statements
Changes in non-current and current debt
2021
€ million Non-current debt
Current portion of
non-current debt
Non-current lease
liabilities
Current portion of
lease liabilities Current debt Total
On Jan 1 979 0 174 18 232 1,404
Financing cash flows –523 –1 – –32 –174 –730
Transfer to current debt –22 22 –46 46 – –
Other non-cash movements 6 – 29 – – 35
On Dec 31 440 21 157 32 58 709
2020
€ million Non-current debt
Current portion of
non-current debt
Non-current lease
liabilities
Current portion of
lease liabilities Current debt Total
On Jan 1
877 295 176 30 103 1,480
Financing cash flows 117 –296 – –33 130 –82
Transfer to current debt 0 0 –21 21 – –
Other non-cash movements –14 2 19 – 0 6
On Dec 31 979 0 174 18 232 1,404
Other non-cash movements in debt consist mainly of effective interest including accrued arrangement fees. Other non-cash movements in lease
liabilities consist of new lease agreements and changes in terms of existing agreements. The reconciliation of cash effective and non-cash move-
ments in cash and cash equivalents is presented in the consolidated statement of cash flows.
Bonds
Outstanding amount
€ million Interest rate, % 2021 2020
2018 fixed rate bond maturing on June 18, 2024 4.125 – 250
The bonds maturing in June 2024 were voluntarily redeemed by Outokumpu in December 2021.
Convertible bonds
Outstanding amount
€ million Interest rate, % 2021 2020
2020 fixed rate bond maturing on July 9, 2025 5.000 125 125
The convertible bonds maturing in July 2025 can be converted into maximum of 38,191,261
ordinary shares in Outokumpu representing 8.4% of the outstanding shares at year end. The
conversion period commenced on August 19, 2020 and will end on June 25, 2025. The current
conversion price is set at EUR 3.273 per ordinary share. The conversion price is subject to
adjustments for any dividend in cash or in kind as well as customary anti-dilution adjustments,
pursuant to the terms and conditions of the bonds. On December 31, 2021, remaining part of the
equity component of the convertible bond amounted to EUR 12 million (Dec 31, 2020: EUR 16
million).
Risk information
Liquidity and refinancing risk
Outokumpu raises most of its funding centrally
and in co-ordination by the Treasury. The Group
seeks to reduce its liquidity and refinancing
risk by having sufficient amount of cash and
committed long-term credit lines available and
by maintaining a balanced debt maturity profile
with diversified sources of funding. Efficient
daily cash and liquidity management and the
use of instruments such as commercial papers
and currency swaps, also reduce the liquidity
risk.
Finance and liquidity plans are prepared and
reviewed regularly with a focus on forecasted
cash flows, projected funding requirements,
planned funding transactions and financial
covenant headroom. The adequacy of liquidity
reserves, the amounts of scheduled annual
repayments of non-current debt compared
to EBITDA as well as forecasted gearing
and leverage ratios are key measures being
considered.
Outokumpu is exposed to changes in credit
margins as the development of the leverage
ratio has an impact on the interest margin
definition in some of the Group’s loan agree-
ments and as such on its interest and other
financial expenses.
Accounting principles
Bonds, loans from financial institutions,
pension and other loans are recognized at
the settlement date and measured initially
at fair value net of direct transaction costs.
Subsequently they are carried at amortized
cost using the effective interest rate method.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
62 / 87Outokumpu Annual report 2021 | Financial statements
2021 2020
€ million 2022 2023 2024 2025 2026 2027– 2021 2022 2023 2024 2025 2026–
Bonds
– – – – – – – – – 250 – –
Convertible bonds – – – 125 – – – – – – 125 –
Loans from financial institutions 7 14 64 14 14 56 2 5 340 10 10 51
Pension loans 13 31 29 23 19 53 – 13 43 37 31 76
Other loans 1 1 1 1 1 7 0 0 0 0 0 6
Commercial papers 58 – – – – – 231 – – – – –
Interest payments on debt and
facility charges 25 21 16 10 4 8 56 50 36 20 10 22
Lease liabilities 32 18 16 14 14 97 18 17 15 15 14 113
Interest payments on lease liabilities 10 9 8 7 6 137 11 11 10 9 8 145
Trade and other payables 1,811 – – – – – 1,246 – – – – –
1,957 94 134 194 59 358 1,564 96 444 341 198 413
Contractual cash flows related to derivative instruments are presented in note 5.4.
Contractual cash flows
Credit facilities
2021 2020
€ million Maturity Total Utilized Available Total Utilized Available
Committed revolving credit facility May 2021 – – – 76 – 76
May 2022 42 – 42 42 – 42
May 2024 532 – 532 532 – 532
Committed Kemi mine investment facility Sept 2030
1)
– – – 120 86 34
Committed SEK 1,000 million revolving credit facility May 2023 98 – 98 100 – 100
Committed facilities total 672 – 672 870 86 784
Uncommitted Finnish commercial paper program N/A 800 58 742 800 231 569
1)
Facility raised in full in December 2021
Transaction costs are amortized over the
maturity of the borrowing using the effective
interest rate method. A financial liability (or
part of the liability) is derecognized when
the liability ceases to exist, that is, when the
obligation identified in a contract has been
fulfilled or cancelled or is no longer effective.
The fair value of non-current debt is
determined based on quoted prices for
listed instruments. For loans the fair value
is determined using the discounted cash
flow method based on yields at the reporting
date. The fair values of non-current debt are
presented in note 5.5.
Fees related to revolving credit facilities are
amortized over the expected facility term.
Convertible bonds
Convertible bonds are compound instruments
with components of the bonds classified
separately as financial liabilities and equity
in accordance with the substance of the
arrangement.
The liability component is recognized initially
at fair value of a similar liability. The equity
component is recognized initially at the
difference between the fair values of the full
bond and the liability component. Transaction
costs are allocated to the components in
proportion to their initial carrying amounts.
The fair value includes the value of conversion
rights.
Subsequently the liability component is
measured at amortized cost with the effective
interest method. At conversion or on expiry
the equity component is reclassified within
equity.
Lease liabilities
Accounting principles related to lease
liabilities are presented in note 4.2.
Cash and cash equivalents
Cash and cash equivalents comprise cash in
hand, deposits held at call with banks and
other highly liquid investments with original
maturities of three months or less. These are
readily convertible to a known amount of cash
with a low risk of any changes in the value.
Bank overdrafts are reported as current debt.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
63 / 87Outokumpu Annual report 2021 | Financial statements
5.2 Equity
Shares and related movements in equity
€ million
Number
of shares,
1,000
Share
capital
Premium
fund
Invested
unrestricted
equity reserve
Treasur y
shares Total
On Jan 1, 2020 411,775 311 714 2,103 –33 3,095
Shares delivered from the share-based payment programs 227 – – – 2 2
On Dec 31, 2020 412,002 311 714 2,103 –31 3,097
Shares delivered from the share-based payment programs 70 – – – 1 1
Directed share issue 40,500 – – 205 – 205
On Dec 31, 2021 452,572 311 714 2,308 –30 3,303
Treasury shares 4,302
Total number of shares on Dec 31, 2021 456,874
Accounting principles
Shares and share capital
According to the Articles of Association,
Outokumpu has one single class of shares and
all shares have equal voting rights at General
meetings. The shares do not have a nominal
value.
Premium fund
Premium fund includes proceeds from share
subscription and other contribution based on
the old Finnish Limited Liability Companies Act
for the part the contributions exceeded the
account equivalent value allocated to share
capital.
Other restricted reserves
Other restricted reserves include amounts
transferred from the distributable equity under
the Articles of Association or by a decision
of the General Meeting of Shareholders, and
Directed share issue
Based on the authorization granted by the
Annual General Meeting 2021, Outokumpu
issued 40,500,000 new shares directed to
institutional investors on May 10, 2021, in
deviation from the pre-emptive subscription
right of the shareholders. The main purpose of
the share issue was to accelerate Outokum-
pu’s de-leveraging by using the proceeds to
reduce gross debt.
The subscription price of the new shares
was EUR 5.15 per share, corresponding to a
discount of approximately 5.7% to the closing
price of the Company’s share on May 10,
2021. The gross proceeds of EUR 209 million
were recorded in their entirety to the invested
unrestricted equity reserve of Outokumpu Oyj.
In the consolidated financial statements, the
net proceeds are presented net of transaction
costs, the net proceeds amounting to EUR 205
million.
Dividend policy and distributable funds
According to Outokumpu’s dividend policy, the
dividend pay-out ratio throughout a business
cycle shall be in a range of 30–50% of the
Group’s net result.
On December 31, 2021, the distributable
funds of the parent company totaled EUR
2,560 million of which retained earnings
were EUR 228 million. The Board of Directors
proposes to the Annual General Meeting in
2022 to pay a dividend of EUR 0.15 per share
for the financial year 2021, a total of EUR 68
million. No dividend was paid for 2020.
other items based on the local regulations of
the Group companies.
Invested unrestricted equity reserve
Invested unrestricted equity reserve includes
the net proceeds from the rights issues in
2012 and 2014 and the directed share issue
in 2021.
Fair value reserves
Fair value reserves include movements in
the fair values of equity securities and hedge
accounted derivative instruments.
Retained earnings
Retained earnings include remeasurements of
defined benefit plans, treasury shares, cumula-
tive translation differences and other retained
earnings and losses.
Treasury shares
When the parent company or its subsidiaries
purchase the company’s own shares, the
consideration paid, including any attributable
transaction costs, net of taxes, is deducted
from the parent company’s equity as treasury
shares until the shares are cancelled. When
such shares are subsequently sold or reissued,
any consideration received is recognized
directly in equity.
Dividends
The dividend proposed by the Board of
Directors is not deducted from distributable
equity until approved by the Annual General
Meeting of Shareholders. For the time period
between the approval and the payment, the
dividend to be paid is presented in current
trade and other payables.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
64 / 87Outokumpu Annual report 2021 | Financial statements
5.3 Financial risk management
and insurances
The main objectives of financial risk manage-
ment are to reduce earnings volatility and to
secure sufficient liquidity to avoid financial
distress. Other objectives include the reduction
of cash flow volatility and the maintenance of
the debt-to-equity and leverage ratios within
set targets. The main objectives of insurance
management are to provide mitigation against
catastrophe risks and to reduce earnings
variation.
The Board of Directors has approved the
risk management policy, which defines
responsibilities, the process and other main
principles of risk management. The Board
of Directors oversees risk management on a
regular basis and the Chief Financial Officer
(CFO) is responsible for the implementation
and development of financial risk management.
The CFO leads relevant steering groups, such
as the Risk Management Steering Group for
enterprise risk management, the Financial Risk
Steering Group for financial risk management
and the Energy Risk Steering Group for energy
risk management.
Financial risks consist of market, country,
credit, liquidity and refinancing risks.
Outokumpu subsidiaries hedge their currency
and commodity price risk with Outokumpu
Oyj, which does most of the Group’s foreign
exchange and commodity derivative contracts
with banks and other financial institutions. The
Treasury function (“Treasury”) is responsible
for managing foreign exchange, metal, interest
rate, liquidity and refinancing as well as
emission allowance price risk. Credit controlling
has been mainly centralized to Global
Business Services, and Treasury coordinates
credit risk management. Customer credit
risk is presented in note 4.5. The CFO office
together with the relevant business areas are
responsible for managing the electricity and
fuel price risks.
Treasury sources all global insurances.
The most important insurance lines are
property damage and business interruption
(PDBI), liability, marine cargo and credit
risk. The captive insurance company Visenta
Försäkrings aktiebolag is contributing global
insurances by mainly participating in property
damage and business interruption (PDBI)
insurance line.
Exposure to financial risks is identified in
connection with the Group’s risk management
process. This approach aims to ensure that
any emerging risks are identified early and
that significant risks are described, quantified,
managed and communicated appropriately.
Sensitivity of financial instruments to market risks
Dec31, 2021 Dec31, 2020
€ million In profit or loss
In other
comprehensive income In profit or loss
In other
comprehensive income
+/–10% change in EUR/USD exchange rate +7/–8 – +3/–4 –
+/–10% change in EUR/SEK exchange rate –6/+7 – –2/+3 –
+/–10% change in nickel price in USD –3/+3 –10/+10 +0/–0 +5/–5
+/–1% parallel shift in interest rates –3/+4 – –9/+10 –
The sensitivity analyses apply to financial assets and liabilities only. Other assets and liabilities, including defined benefit pension plan assets and liabilities, as well
as off-balance sheet items such as sales and purchase orders, are not in the scope of these analyses. The calculations are net of tax. During the year the volatility for
nickel price has been in the range of 24–31%. With +/–30% change in dollar denominated price, the effect in profit or loss is about EUR –8/+8 million and in other
comprehensive income EUR –29/+29 million for nickel derivatives.
Risk information
Market risk
Outokumpu’s main market risks are foreign
exchange risk, interest rate risk, security price
risk as well as commodity price risk, namely in
metals, energy and emission allowances. The
price changes in the before mentioned risks
may have a significant impact on the Group’s
earnings (net result), cash flow and capital
structure. Due to the cyclical stainless steel
business, Outokumpu’s exposure to market
risks may change significantly from one period
to another. Consequently, its derivatives’
positions to mitigate its market risks change
due to the cyclical business environment.
Note 5.4 details the fair values and nominal
amounts of derivative instruments while the
sensitivity of financial instruments to market
risks is described in the below table.
The strategy for market risk management
is based on identifying, evaluating and
mitigating relevant risks in committed business
transactions and balance sheet items for each
of the market risk categories. Forecasted items
are included in the underlying risk position
in interest rate, energy price and emission
allowance price risk. The use of derivatives
to mitigate market risks may cause timing
differences between derivative gains or losses
and the earnings impact of the underlying
exposure. In order to reduce such timing
differences in earnings, hedge accounting has
been applied selectively as part of the metal
and foreign exchange hedging activities. Most
of the derivatives are short-term, however
interest rate hedges typically have a maturity in
excess of one year.
Foreign exchange rate risk
Outokumpu is exposed to foreign exchange risk
as its business and operations are global. The
risk arises from changes in exchange rates and
may have effects on earnings, cash flow and
balance sheet. The exposure consists mainly
of raw material procurement, sales of stainless
steel and ferrochrome production in foreign
currencies. Also the location of Outokumpu’s
global operations expose the Group to foreign
exchange rate risk. Outokumpu group compa-
nies are exposed to foreign exchange rate risk
arising from net cash flows in other than the
functional currency.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
65 / 87Outokumpu Annual report 2021 | Financial statements
The foreign exchange exposure consists of risks
associated with foreign currency cash flows
(transaction risk), translation risk and economic
risk, such as the change in competitiveness
resulting from changes in foreign exchange
rates. The transaction risk arises from
committed and forecasted transactions and
payments in currencies other than the func-
tional currency of the entity and from changes
in fair value of foreign currency denominated
items recognized on the balance sheet. The
fair value risk consists of foreign currency
denominated accounts receivables, accounts
payables, debt, cash, loan receivables and the
currency position from commodity derivatives.
Foreign exchange transaction risk relates
to firm commitments, e.g. price fixed sales
and purchase orders. The fair value risks are
hedged in principle in full in major currencies.
However, continuing an exception to the
hedging policy approved in 2019, the main
operating entity in Sweden hedged its fixed
price sales orders to a limited extent, and
did not hedge its fixed price purchase orders.
Forecasted and probable cash flows are not
typically hedged but can be hedged selectively.
Cash flow hedge accounting was selectively
applied to committed sales orderbook hedges
during 2021. The impact on the hedge
accounting program to the Group’s profit or
loss was immaterial.
Outokumpu’s largest foreign exchange
transaction risk exposures are in US dollars,
Swedish krona and British pound. A major part
of the Group’s sales is in euros and US dollars
and thus the local currency denominated
production costs in Sweden and the UK cause
foreign exchange risk. The main US dollar cash
flow risk origins from sales in the ferrochrome
operations as chromium is priced in US dollars.
Another significant US dollar cash flow risk is
included in sales margins due to the dollar-
linked stainless scrap purchase discounts.
Internal Swedish krona denominated financing
causes significant fair value foreign exchange
rate risk, which is hedged with forward
contracts and, if possible, with matching of
external debt. The Group’s fair value foreign
exchange position is presented in a more
detailed level in the table on the left side.
Translation risk consists of current net
investment in foreign entities and future
foreign currency denominated profits and
losses which eventually will have an impact
on Group’s net earnings and balance sheet
through consolidation. Outokumpu’s net
earnings and net investment translation risk
is mainly in US dollars, Swedish kronas and
British pounds. The equity translation risk is
not typically hedged, although according to
the financial risk policy this risk can be hedged
selectively. In 2021, there were no hedges
of net earnings or net investment exposures.
However, the effective portion of gains (EUR
17 million, net of tax) on earlier financial years’
net investment hedges is recognized in equity.
Interest rate risk
Changes in interest rates expose Outokumpu
to interest rate risk with effects on Group’s
net interest expense (i.e. cash flow risk) and
value of assets and liabilities (i.e. fair value
risk) arising from changes in interest rates.
The objective of the Group’s interest rate risk
management is to have a significant share of
net debt effectively with a short-term interest
rate as a reference rate. This approach is
applied to mitigate the risk of adverse business
conditions against net interest expenses as
low interest rates are typically associated with
such business conditions. Also this approach
may help to reduce the average interest rate
of debt. Approximately 39% (2020: 47%) of
Currency distribution and re-pricing of outstanding net debt
Dec31, 2021
€ million
Currency Net debt
1)
Derivatives
2)
Average rate, %
1)
Duration, year
3)
Rate sensitivity
4)
EUR 582 –120 5.4 5.2 1.5
SEK –23 262 –0.1 0.1 2.4
USD –85 –191 0.0 0.0 –2.8
Others –66 47 0.6 –0.3 –0.2
408 –2 1.0
Dec31, 2020
€ million
Currency Net debt
1)
Derivatives
2)
Average rate, %
1)
Duration, year
3)
Rate sensitivity
4)
EUR 1,204 –450 5.1 3.9 3.4
SEK –26 436 0.0 0.1 4.1
USD –94 18 0.0 –0.0 –0.8
Others –56 3 0.3 –0.0 –0.5
1,028 7 6.2
1)
Includes cash and cash equivalents and debt.
2)
Net derivative liabilities include nominal value of interest rate and currency forwards earmarked to net debt.
Currency forwards are not included in average rate calculation.
3)
Duration calculation includes both net debt and derivatives.
4)
The effect of one percentage point increase in interest rates to financial expenses over the following year.
Foreign exchange positions of EUR-based companies
Dec31, 2021 Dec31, 2020
€ million SEK USD GBP Other SEK USD GBP Other
Trade receivables and payables 38 –458 14 18 –6 –257 11 7
Loans and bank accounts
1)
269 –167 52 13 440 50 0 6
Derivatives –302 553 –106 –82 –438 179 –30 –27
Net position 6 –72 –40 –51 –4 –28 –19 –14
Foreign exchange positions of SEK-based companies
Dec31, 2021 Dec31, 2020
€ million EUR USD GBP Other EUR USD GBP Other
Trade receivables and payables 15 20 0 -4 67 –23 2 5
Loans and bank accounts
1)
13 7 1 7 9 9 1 1
Derivatives –120 –47 –21 –12 –122 –1 –12 –12
Net position –92 –21 –20 –9 –46 –15 –10 –5
1)
Includes cash and cash equivalents, loan receivables and debt.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
66 / 87Outokumpu Annual report 2021 | Financial statements
the Group’s debt has an interest period of less
than one year and the average interest rate of
non-current debt on December 31, 2021 was
4.7% (Dec 31, 2020: 4.9%).
The interest rate risk exposure is composed
of the Group’s net debt including all interest-
bearing assets and liabilities as well as
derivatives that hedge these items. Interest
rate derivatives, such as interest rate swaps,
are used to adjust the share of net debt effec-
tively repricing in different maturity buckets
to limits defined in the Group’s financial risk
policy. This cash flow risk exposure excludes
lease liabilities.
Euro, Swedish krona and US dollar have
a substantial contribution to the Group’s
interest rate risk exposure. The interest rate
risk exposure in Swedish krona and US dollar
primarily originates from cash balances and
foreign exchange derivatives. The interest rate
position is presented in more detail in the
table on the previous page.
Metal price risk
Commodity risk refers to the risk on Outo-
kumpu earnings, cash flow and balance sheet
arising from commodity prices, such as metals,
energy and emission allowances.
The Group’s most significant exposures in
metals price risk arise from chromium and
nickel, while other alloy metals with metal price
risk include for example iron and molybdenum.
Outokumpu is exposed to metal price risk for
example through purchase of raw materials
as well as sale of stainless steel end products
where the price of alloy metals is based on
market prices. The timing difference in such
commercial purchase and sale transactions
as well as inventory position expose the Group
to metal price risk alongside the Group’s
capability to pass on price changes in raw
materials to end-product prices. Market prices
are based on prices determined in regulated
markets, such as the London Metal Exchange
(LME). Also, derivatives contracts to mitigate
metal price risk are based on for example
LME prices. Chromium does not have an
established financial derivatives market and
consequently is not included in the scope of
the financial risk policy.
In addition to hedging with financial derivatives,
the metal price risk is also mitigated through
other measures such as pricing decisions. A
significant part of the Group’s stainless steel
sales contracts include an alloy surcharge
clause, with the aim of reducing the risk
arising from the timing difference between
alloy metal purchase and stainless steel
pricing and delivery. The share of Group
sales contracts including an alloy surcharge
clause increased in 2021 compared to the
previous year. Outokumpu’s underlying metal
position (in following alloy metals: nickel, iron
and molybdenum) consists of price fixed
purchase orders, inventories of alloy metal
containing materials and price fixed sales
orders. According to the financial risk policy,
the nickel price risk, excluding the risk related
to the base stock, must be hedged in full. Price
risk positions in iron and molybdenum can be
hedged selectively. Financial derivatives mainly
in nickel are used to manage impacts of metal
price changes on earnings, whereas efficient
working capital management helps to reduce
cash flow variations caused by metal price.
Outokumpu has continued to apply cash flow
hedge accounting programs on nickel hedging
in order to reduce the timing differences
between derivative gains or losses and the
earnings impact of the underlying exposure.
The hedge accounting covers a meaningful part
of the Group’s nickel derivatives hedges.
Energy and emission allowance price risk
Energy and consumables represent some
10–15% of Outokumpu’s costs. In 2021, global
electricity and gas prices increased mainly due
to the economic recovery. In Central Europe,
the main driver was the low level of gas
inventories towards the winter period as gas is
used also for electricity production. In Nordics,
the hydro balance was on a lower level than in
previous years supporting further development
of electricity prices. Energy and fuel markets
had an impact on higher emission allowance
prices.
Outokumpu manages energy price risk centrally
and mitigates the risks by following the Energy
Procurement policy. Energy price risk is hedged
with long-term agreements, fixed price supply
contracts and partial ownerships in power
utilities. The Energy Risk Steering Group
monitors and manages the hedging level for
each operating country. In 2021, Outokumpu
signed a 10-year power supply agreement for
renewable wind power. The size of the contract
covers almost entirely the electricity consump-
tion of Outokumpu’s Kemi mine. According
to the agreement, deliveries will begin in the
summer of 2023.
Outokumpu is exposed to changes in
emission allowance prices as the Group’s main
production sites in Europe are participating
in the EU Emissions Trading Scheme (EU
ETS) while the production site in the United
Kingdom is participating in the UK Emissions
Trading Scheme (UK ETS). The EU ETS and the
UK ETS markets are separate and emission
allowances are not transferable nor convertible.
All Outokumpu sites met the compliance
requirements on time regarding EU ETS Phase
III. The Group’s emission allowances positions
are composed of realized and forecasted
emissions netted against confirmed and
forecasted emission allowances granted by the
authorities. The prices of fuels and power as
well as decisions on the EU and UK ETS have
a significant impact on the price of emission
allowances. The current trading phase of the
EU ETS refers to the period 2021–2030. Outo-
kumpu forecasts to have adequate amount of
EU emission allowances until the end of this
decade. However, e.g. future decisions on EU
ETS including the Carbon Border Adjustment
Mechanism (CBAM), may have a significant
impact on this forecast.
Security price risk
Outokumpu has equity investments and fixed
income securities. On December 31, 2021,
the largest investments were in OSTP Holding
Oy (investment in associated company of EUR
26 million) and Voimaosakeyhtiö SF. For more
information on the investment in Voimaosake-
yhtiö SF refer to note 5.6.
The captive insurance company Visenta
Försäkringsaktiebolag has investments totaling
EUR 28 million in highly rated and liquid fixed
income securities as well as in fixed income
and equity funds in order to optimize return for
assets and to manage the risk prudently.
Country and counterparty credit risk
Treasury monitors credit risk related to financial
institutions. Outokumpu seeks to reduce these
risks by limiting the counterparties to banks
and other financial institutions with good
credit standing. For derivative transactions,
Outokumpu prefers to have the ISDA framework
agreements in place.
Exposure to country risk is monitored and
mitigated by having a credit insurance that
provides cover against political risk on external
account receivables. Other country related
exposures included for example Argentina
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
67 / 87Outokumpu Annual report 2021 | Financial statements
5.4 Derivative instruments
2021 2020 2021 2020
€ million
Positive
fair value
Negative
fair value
Net
fair value
Net
fair value
Nominal
amounts
Nominal
amounts
Currency and interest rate
derivatives
Currency forwards 12 –11 1 –12 2,510 1,273
Interest rate swaps – –2 –2 6 125 325
Tonnes Tonnes
Metal derivatives
Forward nickel contracts,
hedge accounted 9 –17 –8 –4 27,636 26,417
Forward nickel contracts 10 –11 –2 1 21,343 19,132
Forward scrap contracts 0 0 0 – 20,000 –
Total derivatives 31 –42 –11 –8
Less long-term derivatives
Interest rate swaps – –2 –2 6
Short-term derivatives 31 –40 –9 –15
Contractual cash flows
2021
€ million 2022 2023 2024 2025
Currency derivatives
Outflows
2,511 – – –
Inflows –2,510 – – –
Interest derivatives 0 0 0 0
1 0 0 0
2020
€ million 2021 2022 2023 2024
Currency derivatives
Outflows 1,267 – – –
Inflows –1,279 – – –
Interest derivatives –2 –2 –2 –1
–14 –2 –2 –1
due to Outokumpu’s local and cross-border
business activities there.
Insurances
The Group’s business activities are capital
intensive and key production processes are
tightly integrated and therefore interdependent
from one another. Property damage and
business interruption insurance, covering
e.g. fires, machinery breakdowns and natural
catastrophes, is the Group’s most important
insurance line and significant portion of
insurance premiums relate to this cover.
Business operations may cause significant
liability risks related e.g. to people, environ-
ment or Outokumpu’s products. Outokumpu
aims to mitigate the liability risk by relevant
risk management measures and by having
reasonable insurances in place. Other signifi-
cant insurance lines include e.g. marine cargo
and credit insurances.
There were no events leading to a significant
insurance claims during the reporting period.
The flooding of the river Volme in Germany
caused damages to property and business
interruption in Outokumpu’s site in Dahlerbrück.
However, the losses remained limited and the
incident did not lead into a major claim event
under the insurance program. In Kemi mine,
Finland, the incident related to a broken lift
guide rope was communicated to insurers and
the corresponding claim process is ongoing
with losses expected to remain limited.
Outokumpu’s captive insurance company,
Visenta Försäkringsaktiebolag (Visenta), is
registered in Sweden and can operate as a
direct insurer and reinsurer. Visenta has to
comply with capital adequacy requirements set
by the financial supervisory authority in Sweden
and European Insurance and Occupational
Pensions Authority (EIOPA). During the reporting
period Visenta was profitable and well capital-
ized to meet externally imposed requirements,
which are based on e.g. the Solvency II
framework. There were no significant changes
in the company’s assets during the year. On
December 31 the assets amounted to EUR 44
million.
Visenta continued its participation in Outo-
kumpu’s property and business interruption
insurance and also continued to provide
surety to cover certain potential environmental
liabilities in connection with the operations
in Kemi and Tornio. The business interruption
and property damage incident in Dahlerbrück,
Germany was reported to Visenta and it
might lead into claim compensation. However,
potential compensation is not estimated to be
material.
Outokumpu continued its systematic fire
safety and loss prevention surveys, focusing
on execution of the mitigating actions. As a
result of easing of travel restrictions, the audits
were continued on site starting the end of
third quarter and continued throughout fourth
quarter with further audits scheduled for 2022.
In addition, marine cargo risk audit program
was re-launched with audits taking place in
the fourth quarter and with further audits
scheduled for first half of 2022.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
68 / 87Outokumpu Annual report 2021 | Financial statements
Master netting agreements and similar arrangements
€ million 2021 2020
Derivative assets
Gross amounts of recognized financial assets in the statement of financial position 31 24
Related financial instruments that are not offset 28 15
3 8
Derivative liabilities
Gross amounts of recognized financial liabilities in the statement of
financialposition 42 32
Related financial instruments that are not offset 28 15
14 17
Hedge accounted cash flow hedges (nickel derivatives)
2021 2020
Fair value of nickel derivatives, € million –8 –4
Nominal amount of nickel derivatives, tonnes 27,636 26,417
Hedge ratio 1:1 1:1
Fair value reserve in other comprehensive income, € million –7 –4
Reclassified to sales in profit or loss, € million –27 –2
Reclassified to cost of sales in profit or loss, € million 29 7
Recognized in inventory, € million –4 –4
The nickel hedge accounting programs
implemented for the business area Americas
and the business area Europe cover a
meaningful part of the Group’s sales and
purchase contracts. Forwards, which corre-
spond to the pricing model of underlying, are
used as derivative instrument. Only the spot
component of nickel derivatives is under hedge
accounting, forward element is recognized in
profit or loss. The ineffectiveness is tested
regularly. Management estimates that possible
ineffectiveness can arise related to credit
risk or timing of transactions, but these are
estimated to be immaterial.
Accounting principles
Derivatives are initially recognized at fair value
on the trade date, when the Group enters into
a derivative contract, and are subsequently
measured at fair value.
The presentation of the gains or losses arising
from the fair value measurement depends
on the purpose of the derivative. The gains
or losses arising from fair value changes of
effective hedge-accounted derivative contracts
are presented in profit or loss congruent with
the hedged item. Changes in fair value of
derivative contracts, where hedge accounting
is not applied, are recognized in EBIT in other
operating income and expenses. Changes
in fair value of derivatives designated for
financing activities are presented within
financial income and expenses.
The fair value measurement is based on
quoted market prices and rates as well as
on discounted cash flows at the end of the
reporting period. Fair values of derivatives can
in certain cases be based on valuations of
external counterparties.
Hedge accounting
Outokumpu applies cash flow hedge accounting
on certain nickel derivatives. For each hedging
arrangement the relationship between the
hedging instrument and the hedged item,
the objectives of risk management and the
strategy of the hedging arrangement are
documented.
The effectiveness of the hedge relationship
is documented and assessed when hedging
is started and at least in the end of each
reporting period. Hedge effectiveness is
calculated and assessed between the changes
in the fair value or cash flows of the hedged
item attributable to the hedged risk and the
changes in the fair value or cash flows of
the hedging instrument to ensure that these
impacts offset one another. Hedge accounting
is discontinued if the requirements of hedge
accounting are no longer met.
Fair value changes of derivatives designated to
hedge forecasted cash flows are recognized in
other comprehensive income and presented
within the fair value reserve in equity to the
extent that the hedge is effective. Such fair
value changes accumulated in equity are
reclassified in profit or loss, and presented
in sales or cost of sales in the period when
the hedge accounted cash flows affect the
profit or loss. In the certain hedge accounted
transaction, the realized gains or losses of the
nickel derivatives are first reclassified from fair
value reserves in equity to the inventory for a
certain period and finally recognized in profit
or loss. The fair value changes related to the
ineffective portion of the hedging instrument
are recognized immediately in profit or loss.
Outokumpu enters into derivative transactions
with most counterparties under ISDA agree-
ments. In general, the amounts owed by each
counterparty on a single day in respect of all
transactions outstanding in the same currency
are aggregated into a single net amount that
is payable by one party to the other. In certain
circumstances, e.g. when a credit event such
as a default occurs, all outstanding trans-
actions under the agreement are terminated.
The termination value is assessed and only a
single amount is payable in settlement of all
transactions. ISDA agreements do not meet
the criteria for offsetting the balances in the
statement of financial position, but the right to
offset is enforceable only on the occurrence
of future credit events. The following table
sets out the carrying amounts of recognized
financial instruments that are subject to the
agreements described above.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
69 / 87Outokumpu Annual report 2021 | Financial statements
5.5 Financial assets and liabilities
Carrying values and fair values of financial assets and liabilities by measurement category
Measured at
2021
€ million Amortized cost
Fair value
through other
comprehensive
income
Fair value through
profit or loss
Carrying
amount Fair value
Fair value
hierarchy level
Non-current financial assets
Equity investments – 24 – 24 24 3
Trade and other receivables 4 – – 4
Current financial assets
Other investments – – 28 28 28 1
Trade and other receivables 597 – – 597
Hedge accounted derivatives
– – 9 9 9 2
Derivatives held for trading – – 22 22 22 2
Cash and cash equivalents 300 – – 300
902 24 60 985
Non-current financial liabilities
Non-current debt 597 – – 597 730 2
Derivatives held for trading – – 2 2 2 2
Current financial liabilities
Current debt 112 – – 112 112 2
Trade and other payables
1,811 – – 1,811
Hedge accounted derivatives
– – 17 17 17 2
Derivatives held for trading
– – 23 23 23 2
2,520 – 42 2,562
There were no transfers between levels 1, 2 and 3 during the years. A major part of equity investments at fair value through other comprehensive
income at hierarchy level 3 relates to investments in unlisted energy producing companies. The movement in the carrying amounts of these invest-
ments presented in note 5.6 represents also the reconciliation of level 3 changes.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
70 / 87Outokumpu Annual report 2021 | Financial statements
Measured at
2020
€ million Amortized cost
Fair value
through other
comprehensive
income
Fair value through
profit or loss Carrying amount Fair value
Fair value
hierarchy level
Non-current financial assets
Equity investments – 48 – 48 48 3
Trade and other receivables 1 – – 1
Derivatives held for trading – – 6 6 6 2
Current financial assets
Other investments – – 26 26 26 1
Trade and other receivables 385 – – 385
Hedge accounted derivatives – – 8 8 8 2
Derivatives held for trading – – 10 10 10 2
Cash and cash equivalents 376 – – 376
762 48 50 860
Non-current financial liabilities
Non-current debt 1,153 – – 1,153 1,208 2
Current financial liabilities
Current debt 251 – – 251 251 2
Trade and other payables 1,246 – – 1,246
Hedge accounted derivatives – – 11 11 11 2
Derivatives held for trading – – 21 21 21 2
2,650 – 32 2,682
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
71 / 87Outokumpu Annual report 2021 | Financial statements
Accounting principles
The Group’s financial assets and liabilities
are classified as items at fair value through
profit or loss, items at fair value through
other comprehensive income and items at
amortized cost. The classification is based on
Group’s business model for financial assets
and liabilities, and their contractual cash flow
characteristics.
If a financial asset is not measured at fair
value through profit or loss, significant
transaction costs are included in the initial
carrying amount of the asset. Financial assets
are derecognized when the Group loses the
rights to receive the contractual cash flows on
the financial asset or it transfers substantially
all the risks and rewards of ownership outside
the Group. Accounting principles related
to transaction costs and de-recognition of
borrowings are presented in note 5.1.
Financial assets and liabilities
measured at amortized cost
Financial assets measured at amortized
cost include trade and other receivables and
cash and cash equivalents. These assets are
measured initially at fair value. After initial
recognition, they are measured at amortized
cost by using the effective interest rate method
less accumulated impairments. The accounting
principles related to factored receivables and
expected credit losses are presented in note
4.5.
Financial liabilities measured at amortized
cost include the borrowing and trade and other
payables. See note 5.1 for further accounting
and fair valuation principles for borrowings and
note 4.5 for accounting principles for trade and
other payables.
Financial assets at fair value through
other comprehensive income
Financial assets at fair value through other
comprehensive income include equity
investments in listed and unlisted companies.
Accounting principles are presented in note
5.6.
Financial assets and liabilities at
fair value through profit or loss
Financial assets and liabilities at fair value
through profit or loss include derivative
instruments. Financial assets at fair value
through profit or loss include also investments
in debt instrument or money market funds held
for trading purposes and intended to be sold
within a short period of time. In some cases,
also equity investments can be classified in
this category.
These financial assets and liabilities are
recognized at the trade date at fair value
and subsequently remeasured at fair value
at the end of each reporting period. The fair
value measurement is based on quoted rates
and market prices as well as on appropriate
valuation methodologies and models.
Realized and unrealized gains and losses
arising from changes in fair values of non-
derivative financial assets are recognized in
market price gains and losses under financial
income and expenses in the reporting period in
which they are incurred. Accounting principles
related to derivatives are described in more
detail in note 5.4.
Measurement of fair values
Number of accounting policies and disclosures
require the measurement of fair values.
Financial assets and liabilities measured at
fair value are classified to fair value hierarchy
levels based on the source information and
inputs used in the fair valuation. In level one,
fair values are based on public quotations for
identical instruments. In level two, fair values
are based on market rates and prices and
discounted future cash flows. For assets and
liabilities in level three, there is no reliable
market source available and thus the fair value
measurement is not based on observable
market data. Therefore, the measurement
methods are chosen taking into account the
information available for the measurement and
the characteristics of the measured item.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
72 / 87Outokumpu Annual report 2021 | Financial statements
€ million 2021 2020
Carrying value on Jan 1 48 31
Additions 19 13
Fair value changes –44 4
Carrying value on Dec 31 24 48
Fair value reserve in equity
€ million 2021 2020
Fair value on Dec 31
24 48
Fair value at acquisition 113 93
Fair value reserve –89 –45
Equity investments at fair value through
other comprehensive income include unlisted
strategic holdings mainly in energy companies
in which Outokumpu does not have control,
joint control or significant influence.
These energy companies produce energy
to their shareholders on a cost-price basis
(Mankala principle) which is a widely used
business model among the Finnish energy
companies. Under the Mankala principle,
shareholders are entitled to receive energy in
proportion to the ownership, and each share-
holder is severally responsible for its respective
share of the costs of the energy company as
set out in the articles of association.
Fennovoima
Investments include a holding in Voimaosake-
yhtiö SF at fair value of EUR 0 million on
December 31, 2021 (Dec 31, 2020: EUR 27
million). The investment provides Outokumpu
with approximately 14% indirect stake in the
Fennovoima Oy nuclear power plant project.
Outokumpu has representation both in
Voimaosakeyhtiö SF (two Board members) and
in Fennovoima (one advisory Board member as
a Chairman of the Finance Committee). The
holding gives Outokumpu access to estimated
170 MW power capacity when the project is
completed. During year 2021, Outokumpu
invested EUR 19 million to Voimaosakeyhtiö
SF, and by the end of 2021, Outokumpu
had invested in total EUR 112 million (Dec
31, 2020: EUR 92 million) in the shares of
Voimaosakeyhtiö SF.
The decrease in fair value in 2021 is mainly
driven by estimated increase in the Fenno-
voima project risk.
5.6 Equity investments at fair value through other comprehensive income
Management judgements
Valuation model of energy companies is based
on discounted cash flow model. The main
parameters are the market and forecasted
long-term electricity prices, discount rate, infla-
tion rate, the estimated amount of electricity
to be received and estimated production costs.
Additional parameters for Voimaosakeyhtiö SF
valuation include e.g. the expected purchase
price of electricity under the Mankala principle,
cost of debt in Fennovoima Oy, expected
project completion date and the overall project
risk. The fair value of Voimaosakeyhtiö SF
shares is highly sensitive to the valuation
parameters and especially to long-term price
of electricity, Fennovoima’s capacity utilization
rate, discount rates for cash flows and the
terminal value, inflation rate, project comple-
tion date and the overall project risk.
Long-term prices for electricity have been
estimated by the management, and are
assumed to be at a higher level compared to
medium-term historical averages. The long
time period to complete the Fennovoima
project and to operate the plant affect the
reliability of such estimate, and reasonable
changes in the electricity price estimate or in
other valuation parameters can significantly
impact the fair value of the investment. The
overall project risk is considered by including
a separate project risk factor in the cash flow
discount rate. In general, the project risk is
considered high with the estimated completion
earliest in 2029, and the range of potential fair
values is wide.
Accounting principles
Equity investments at fair value through other
comprehensive income consists of investments
which are not held for trading, and which
the Group has irrevocably elected at initial
recognition to recognize in this category. These
are mainly strategic investments, so this
classification is considered relevant.
The investments and divestments are recog-
nized at the trade date. They are included in
non-current assets unless there is intention to
dispose of the investment within 12 months
from the reporting date.
The investments are measured at fair value,
and fair value changes are recognized through
other comprehensive income and presented
net of tax in fair value reserve in equity. The
valuation is based on quoted rates and market
prices at the end of the reporting period, as
well as on appropriate valuation techniques,
such as cash flow discounting. Observable
market data is used in the valuation when
available but also on entity-specific manage-
ment estimates are applied.
Dividends are recognized in profit or loss. When
equity investment is disposed, the accumu-
lated fair value changes are reclassified from
fair value reserve to retained earnings.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
73 / 87Outokumpu Annual report 2021 | Financial statements
5.7 Commitments and contingent liabilities
€ million 2021 2020
Mortgages and pledges on Dec 31
Mortgages 3,208 3,203
Other pledges 13 13
Guarantees on Dec 31
On behalf of subsidiaries for commercial and other commitments 27 29
On behalf of associated companies for financing – 2
Other commitments for financing on Dec 31 9 10
Mortgages relate mainly to securing the
Group’s financing. A major part of Outokumpu’s
borrowings are secured by mortgage over the
real property of the Group’s main production
plants. Mortgages include also the business
mortgage note to secure a loan for the Kemi
mine expansion project.
Outokumpu is liable for its associated company
Manga LNG Oy’s certain liabilities amounting
to EUR 21 million at the end of 2021 (2020:
EUR 24 million). In the above table, this liability
is reported as other pledges (Outokumpu’s
shares in Manga LNG Oy), as guarantees on
behalf of associated companies, and the part
exceeding the share pledge and guarantee as
other commitments for financing.
Outokumpu Oyj is, in relation to its share-
holding in Etelä-Pohjanmaan Voima Oy, liable
for the costs, commitments and liabilities
relating to electricity provided by Tornion Voima
Oy. These liabilities are reported under other
commitments for financing.
Outokumpu has a long-term energy supply
contract that includes a minimum purchase
quantity. There is uncertainty whether the
company will be able to utilize this minimum
purchase quantity in full by the end of 2029
or whether there will be additional cost to the
company from this contract.
Investment commitments
Outokumpu’s share of the Fennovoima invest-
ment is about EUR 250 million of which EUR
112 million has been paid by the end of the
reporting period. The remaining commitment
is expected to be paid during the preparation
and construction phases of the project before
the estimated completion earliest in 2029 with
capital expenditure expected to be some EUR
20 million annually in the coming years.
The Group’s other off-balance sheet investment
commitments totaled EUR 32 million on
December 31, 2021 (Dec 31, 2020: EUR 51
million).
Accounting principles
Unrecognized commitments are disclosed
when the Group has an obligation or a pledge
to assume a financial liability at a future date.
A contingent liability is a possible obligation
that arises from past events and the existence
of which will be confirmed by uncertain future
events that are not wholly within the control of
the entity. Obligations that are not considered
probable or where the amounts cannot be
reliably measured are also considered as
contingent liabilities. Contingent liabilities are
not recognized in the statement of financial
position but disclosed as off-balance sheet
commitments.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
74 / 87Outokumpu Annual report 2021 | Financial statements
6. Other notes ........................................... 74
6.1 Disputes and litigations .............................. 74
6.2 Related parties ....................................... 74
6.3 Subsidiaries .......................................... 75
6.4 Associated companies ................................ 76
6.5 New and amended IFRS standards .................... 76
6. Other notes
6.1 Disputes and litigations
Claim in Spain related to the
divested copper companies
Outokumpu divested all of its copper business in
2003–2008. One of the divested companies, domiciled
in Spain, later faced bankruptcy. The administrator of
the bankruptcy estate filed a claim against Outokumpu
Oyj and two other non-Outokumpu companies for
recovery of payments made by the bankrupt company
in connection with the divestment. In 2014, the court
of first instance in Spain accepted the claim of EUR
20 million brought against Outokumpu and the two
other companies. In 2018, the Court of Appeal ruled
the case in favor of Outokumpu. Finally, in March 2021,
the Spanish Supreme Court ruled the case in favor of
Outokumpu and released the company from all claims
and liabilities. All legal cases against Outokumpu
related to the recovery have now been closed.
Dispute over payment of wages in the US
A class of plaintiffs, consisting of 152 former and
126 current Outokumpu Calvert mill employees, has
brough suit against Outokumpu in U.S. federal court
with allegations of failure to pay full wages for regular
work and overtime work they performed. In November
2021, the court entered a default judgment against
Outokumpu with respect to liability as a sanction for
alleged misconduct during the discovery phase of the
legal proceeding. The process to finally determine the
damages is pending in the court. Outokumpu does
not consider the potential financial impact of the case
material for the Group as a whole.
6.2 Related parties
Outokumpu’s related parties include the key manage-
ment of the company and their close family members,
subsidiaries, associated companies and Solidium Oy.
Key management includes Leadership Team members
and members of the Board of Directors, and their
remuneration is presented in note 3.2. The principal
subsidiaries and associated companies are listed later
in this notes section.
Solidium Oy, a limited company fully owned by
the State of Finland, owned 15.5% of Outokumpu
on December 31, 2021. Solidium’s mission is to
strengthen and stabilize Finnish ownership in nationally
important companies and increase the value of its
holdings in the long run.
Transactions with related partied are carried out at
arms-length principles.
Transactions and balances
with related companies
€ million 2021 2020
Sales and other operating income 97 69
Purchases –51 –37
Dividend income 7 –
Trade and other receivables 36 21
Trade and other payables 4 3
This notes section covers the notes related to the Group structure, as
well as other notes that do not directly fall under any of the previous
notes sections.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
75 / 87Outokumpu Annual report 2021 | Financial statements
December 31, 2021 Country
Group
holding, %
Europe
Outokumpu AS Norway 100
Outokumpu B.V. The Netherlands 100
Outokumpu Distribution France S.A.S. France 100
Outokumpu Distribution Hungary Kft. Hungary
100
Outokumpu Distribution Polska Sp. z o.o. Poland
100
Outokumpu Europe Oy *
)
Finland 100
Outokumpu Ges.m.b.H. Austria 100
Outokumpu India Private Limited India 100
Outokumpu Management (Shanghai) Co., Ltd *
)
China 100
Outokumpu Middle East FZCO United Arab Emirates
100
Outokumpu Nirosta GmbH Germany 100
Outokumpu N.V. Belgium 100
Outokumpu Prefab AB Sweden 100
Outokumpu Press Plate AB Sweden 100
Outokumpu PSC Benelux B.V. The Netherlands
100
Outokumpu PSC Finland Oy Finland 100
Outokumpu (Pty) Ltd South Africa 100
Outokumpu S.A. Spain 100
Outokumpu (S.E.A.) Pte. Ltd Singapore 100
Outokumpu Shipping Oy Finland 100
Outokumpu S.r.l. Italy 100
Outokumpu Stainless AB Sweden 100
Outokumpu Stainless B.V. The Netherlands
100
Outokumpu Stainless Oy Finland 100
Outokumpu Stainless Pty. Ltd Australia 100
Outokumpu Stainless Steel (China) Co., Ltd China 100
Outokumpu Tornio Infrastructure Oy Finland 100
December 31, 2021 Country
Group
holding, %
Americas
Outokumpu Brasil Comércio de Metais Ltda Brazil 100
Outokumpu Fortinox S.A. Argentina 100
Outokumpu Mexinox Distribution S.A. de C.V. Mexico 100
Outokumpu Mexinox S.A. de C.V. Mexico
100
Outokumpu Stainless USA, LLC The US
100
ThyssenKrupp Mexinox CreateIT, S.A. de C.V. Mexico 100
Ferrochrome
Outokumpu Chrome Oy *
)
Finland 100
Long Products
Fagersta Stainless AB Sweden 100
Outokumpu Stainless Bar, LLC The US 100
Outokumpu Stainless Ltd The UK 100
Other operations
Outokumpu Americas, Inc. The US 100
Outokumpu Distribution Benelux B.V. The Netherlands 100
Outokumpu Holding Germany GmbH *
)
Germany 100
Outokumpu Holding Nederland B.V. *
)
The Netherlands
100
Outokumpu Mining Oy Finland 100
Outokumpu Stainless Holding GmbH Germany
100
Outokumpu Stainless UAB Lithuania
100
Québec Inc. Canada 100
Viscaria AB *
)
Sweden 100
Visenta Försäkrings AB Sweden 100
In addition, Outokumpu has branch offices in South Korea, Taiwan, Thailand, The UK and Vietnam.
This list does not include all holding companies or all dormant companies.
*
)
Shares and stock held by the parent company
6.3 Subsidiaries
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
76 / 87Outokumpu Annual report 2021 | Financial statements
6.4 Associated companies
Industry Domicile Ownership, %
Manga LNG Oy Energy Finland 45
OSTP Holding Oy Metals processing Finland 49
Rapid Power Oy Energy Finland 33
Summarized financial information on associated companies
€ million 2021 2020
Carrying value of investments in associated companies 43 38
Group’s share of total comprehensive income 15 2
Based on the impact on the Group’s consolidated financial statements, the investments in
associated companies are considered immaterial.
Accounting principles
Companies where Outokumpu generally holds
voting rights of 20–50% or in which Outokumpu
otherwise has significant influence, but not
control, are included in the consolidated
financial statements as associated companies,
and they are accounted for using the equity
method from the date significant influence was
obtained until it ceases.
The Group’s share of the associated company’s
net result for the period is separately disclosed
below EBIT in the consolidated statement
of income. Outokumpu’s share of changes
recognized in the associated company’s other
comprehensive income is recognized in the
Group’s other comprehensive income.
If Outokumpu’s share of the associated
company’s losses exceeds the carrying amount
of the investment, the investment is recognized
at zero value in the statement of financial
position and recognition of further losses is
discontinued, except to the extent that the
Group has incurred obligations in respect of
the associated company. The interest in an
associated company comprises the carrying
amount of the investment under the equity
method together with any long-term interest
that, in substance, forms a part of the net
investment in the associated company.
6.5 New IFRS standards
Adoption of new and amended
IFRS standards
Outokumpu has not yet applied the following
new and amended standards and interpre-
tations, but adopts them as of the effective
date or, if the date is other than the first day
of the financial year, from the beginning of
the subsequent financial year. These new and
amended standards or other not yet effective
amendments and interpretations are not
expected to have a material impact on Outo-
kumpu’s consolidated financial statements.
• IFRS 17 Insurance contracts (effective
for financial years beginning on or after
January 1, 2023): The standard requires a
current measurement model for insurance
liability with re-measured estimates at each
reporting date. The standard can impact the
financial reporting of Outokumpu’s captive
insurance company Visenta Försäkrings AB.
However, the company is not material to
Outokumpu as a whole, and the impacts are
not expected to be material for the Group.
• Amendments to IAS 1 Presentation of
financial statements – Classification of
Liabilities as Current or Non-current*
(effective for financial years beginning on or
after January 1, 2023): The amendments
clarify that liabilities are classified as either
current or non-current, depending on the
rights that exist at the end of the reporting
period, and that classification is unaffected
by the expectations of the entity or events
after the reporting date. The amendments
also clarify what IAS 1 means when it refers
to the settlement of a liability.
• Amendments to IAS 1 Presentation of
financial statements, IFRS Practice State-
ment 2 and IAS 8 Accounting Policies,
Changes in Accounting Estimates and
Errors – Disclosure of Accounting Policies
and Definition of Accounting Estimates*
(effective for financial years beginning on or
after January 1, 2023): The amendments
distinguish changes in accounting estimates
from changes in accounting policies and aim
to improve accounting policy disclosures.
• Amendments to IAS 12 Income taxes
– Deferred Tax related to Assets and
Liabilities arising from single transaction*
(effective for financial years beginning on
or after January 1, 2023): The amendment
clarifies the application of the recognition
exemption of deferred taxes on a single
transaction.
• Amendments to IAS 16 Property, Plant
and Equipment – Proceeds before
intended use (effective for financial years
beginning on or after January 1, 2022): The
amendment prohibits the deduction of any
proceeds from selling produced items from
the cost of a property, plant and equipment
item while preparing the asset for its
intended use. It also clarifies that testing the
functioning of an asset refers to technical
and physical performance of the asset, not
financial performance.
• Amendments to IAS 37 Provisions,
Contingent Liabilities and Contingent
Assets – Onerous Contracts (effective for
financial years beginning on or after January
1, 2022): The amendment clarifies that the
direct costs of fulfilling a contract include
both the incremental costs of fulfilling the
contract and an allocation of other costs
directly related to fulfilling contracts. Before
recognizing a separate provision for an
onerous contract, the entity recognizes any
impairment loss occurred on assets used in
fulfilling the contract.
*Not yet endorsed by the EU.
Notes to the consolidated financial statements
2.
1.
5.4
3.4
2.6
6.2
6.5
4.5
2.3
5.7
4.2
3.1
5.1
2.1
1.1
5.5
4.
2.7
6.3
4.6
2.4
6.
4.3
3.2
5.2
2.2
1.2
5.6
4.1
3.
5.
2.5
6.1
6.4
4.4
3.3
5.3
77 / 87Outokumpu Annual report 2021 | Financial statements
Parent company
financial statements
Income statement of
the parent company
€ million 2021 2020
Sales 783 664
Cost of sales –716 –565
Gross margin 67 99
Other operating income 27 0
Selling and marketing expenses –2 –10
Administrative expenses –103 –110
Other operating expenses –13 –8
EBIT –24 –29
Financial income and expenses –100 –58
Result before appropriations and taxes –124 –87
Appropriations
Group contribution 164 111
Income taxes 0 –
Result for the financial year
40 24
According to the Finnish accounting standards (FAS), the parent company financial statements
are presented in addition to the Group financial statements. The parent company’s financial
statements have been prepared in accordance with Finnish accounting standards. The parent
company Outokumpu Oyj’s income statement and balance sheet items are mainly internal and are
eliminated on the group level except for the external financing and treasury items which are mainly
centralized to the parent company.
Parent company financial statements
78 / 87Outokumpu Annual report 2021 | Financial statements
Balance sheet of the parent company
€ million 2021 2020
ASSETS
Non-current assets
Intangible assets 103 130
Property, plant and equipment 2 2
Financial assets
Shares in Group companies 3,685 3,713
Loan receivables from Group companies 658 771
Shares in associated companies 13 15
Other shares and holdings
1 60
Other financial assets 3 6
4,360 4,565
Total non-current assets 4,465 4,698
Current assets
Current receivables
Loans receivable 294 221
Trade receivables
94 67
Prepaid expenses and accrued income 22 23
Other receivables 242 160
652 470
Cash and cash equivalents
257 332
Total current assets 909 801
TOTAL ASSETS 5,374 5,500
€ million 2021 2020
EQUITY AND LIABILITIES
Shareholders’ equity
Share capital 311 311
Premium fund 720 720
Invested unrestricted equity reserve 2,332 2,123
Retained earnings 188 164
Result for the financial year 40 24
3,592 3,343
Untaxed reserves
Accumulated depreciation difference 1 1
Liabilities
Non-current liabilities
Bonds – 250
Convertible bonds
125 125
Loans from financial institutions
50 330
Pension loans 154 143
Other non-current loans 2 1
330 849
Current liabilities
Group bank account liabilities 898 787
Other current loans 212 263
Pension loans 13 –
Trade payables
236 177
Accrued expenses and prepaid income 16 15
Other current liabilities 76 65
1,451 1,307
Total liabilities
1,781 2,156
TOTAL EQUITY AND LIABILITIES 5,374 5,500
Parent company financial statements
79 / 87Outokumpu Annual report 2021 | Financial statements
Cash flow statement of the parent company
€ million 2021 2020
Cash flow from operating activities
Result for the financial year 40 24
Adjustments for
Depreciation and amortization 14 12
Impairments 91 33
Gain/loss on sale of intangible assets, and property, plant and equipment –18 0
Interest income –37 –38
Dividend income –2 –
Interest expense 34 46
Change in provisions –1 1
Exchange gains and losses 6 2
Group contributions –164 –111
Other non-cash adjustments –8 8
–84 –47
Change in working capital
Change in trade and other receivables –30 0
Change in trade and other payables 66 –27
36 –27
Dividends received 2 –
Interest received 37 39
Interest paid –37 –45
2 –6
Net cash from operating activities –6 –55
€ million 2021 2020
Cash flow from investing activities
Investments in subsidiaries and other shares and holdings –19 –13
Purchases of intangible assets –14 –19
Proceeds from disposal of subsidiaries 28 108
Proceeds from disposal of other shares and holdings 2 –
Proceeds from sale of intangible assets 30 2
Change in other long-term receivables 105 21
Net cash from investing activities 132 99
Cash flow before financing activities 126 44
Cash flow from financing activities
Directed share issue 209 –
Borrowings of non-current debt 24 444
Repayments of non-current debt –530 –664
Change in current debt 50 85
Cash flow from group contribution 111 53
Other financing cash flow –64 97
Net cash from financing activities –201 16
Net change in cash and cash equivalents –75 60
Net change in cash and cash equivalents in the balance sheet –75 60
Parent company financial statements
80 / 87Outokumpu Annual report 2021 | Financial statements
€ million Share capital Premium fund
Invested
unrestricted equity
reserve Retained earnings Total equity
Equity on Jan 1, 2020 311 720 2,123 164 3,319
Result for the financial year – – – 24 24
Equity on Dec 31, 2020 311 720 2,123 188 3,343
Result for the financial year – – – 40 40
Directed share issue – – 209 – 209
Equity on Dec 31, 2021 311 720 2,332 228 3,592
Statement of changes in equity of the parent company
€ million 2021 2020
Other pledges on Dec 31 13 13
Guarantees on Dec 31
On behalf of subsidiaries
For financing 427 327
For other commitments 27 28
On behalf of associated companies
For financing – 2
Other commitments
for financing on Dec 31 9 10
Commitments and contingent liabilities of the parent company
A major part of Outokumpu’s borrowings are secured by
mortgage over the real property of Group’s main production
plants.
Outokumpu is liable for its associated company Manga LNG
Oy’s certain liabilities amounting to EUR 21 million at the end
of 2021 (2020: EUR 24 million). In the table, this liability is
reported as other pledges (Outokumpu’s shares in Manga LNG
Oy), as guarantees on behalf of associated companies, and
the part exceeding the share pledge and guarantee as other
commitments for financing.
Outokumpu Oyj is, in relation to its shareholding in Etelä-Pohjan-
maan Voima Oy, liable for the costs, commitments and liabillites
relating electricity provided by Tornion Voima Oy. These liabilities
are reported as other commitments for financing.
Outokumpu’s share of the Fennovoima investment is about EUR
250 million of which EUR 112 million has been paid by the end
of the reporting period. The remaining commitment is expected
to be paid during the preparation and construction phases of
the project before the estimated completion earliest in 2029
with capital expenditure expected to be some EUR 20 million
annually in the coming years.
In 2021, Outokumpu Oyj recognized an impairment of EUR
79 million (2020: EUR 33 million) to its shareholding in
Voimaosakeyhtiö SF providing ownership to Fennovoima Oy. In
the income statement, the impairment is recognized in financial
income and expenses. The impairment did not impact Outo-
kumpu Group’s consolidated statement of income under IFRS as
the shareholding is valued at fair value and the changes in fair
value are booked to equity through other comprehensive income.
Distributable funds on Dec 31
€ million 2021 2020
Retained earnings 188 164
Result for the financial year 40 24
Invested unrestricted equity reserve 2,332 2,123
Distributable funds on Dec 31 2,560 2,312
sivu tulee mukaan vain
julkaistaviin paketteihin, mutta
ei viralliseen tilinpäätökseen.
Parent company financial statements
81 / 87Outokumpu Annual report 2021 | Audit
To the Annual General Meeting of
Outokumpu Oyj
Report on the Audit of
the Financial Statements
Opinion
In our opinion
• the consolidated financial statements give
a true and fair view of the group’s financial
position and financial performance and
cash flows in accordance with International
Financial Reporting Standards (IFRS) as
adopted by the EU
• the financial statements give a true and
fair view of the parent company’s financial
performance and financial position in
accordance with the laws and regulations
governing the preparation of the financial
statements in Finland and comply with
statutory requirements.
Our opinion is consistent with the additional
report to the Audit Committee.
What we have audited
We have audited the financial statements
of Outokumpu Oyj (business identity code
0215254-2) for the year ended 31 December
2021. The financial statements comprise:
• the consolidated statement of income,
consolidated statement of comprehensive
income, consolidated statement of financial
position, consolidated statement of cash
flows, consolidated statement of changes
in equity and notes to the consolidated
financial statements, including accounting
principles for the consolidated financial
statements
• the parent company’s income statement,
balance sheet, cash flow statement and
notes to the parent company financial
statements.
Basis for Opinion
We conducted our audit in accordance with
good auditing practice in Finland. Our responsi-
bilities under good auditing practice are further
described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section
of our report.
We believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We are independent of the parent company
and of the group companies in accordance with
the ethical requirements that are applicable in
Finland and are relevant to our audit, and we
have fulfilled our other ethical responsibilities
in accordance with these requirements.
To the best of our knowledge and belief, the
non-audit services that we have provided to the
parent company and to the group companies
are in accordance with the applicable law
and regulations in Finland and we have not
provided non-audit services that are prohibited
under Article 5(1) of Regulation (EU) No
537/2014. The non-audit services that we
have provided are disclosed in note 2.3 to the
Financial Statements.
Our Audit Approach
Overview
Materiality
Audit Scope
Key Audit
Matters
• Overall group materiality: € 35 million (2020: € 35 million)
• The audit scope includes all significant companies, covering the vast
majority of sales, assets and liabilities.
• Valuation of goodwill
• Valuation of Property, Plant and Equipment
• Valuation of inventories
• System environment and internal controls
• Valuation of subsidiary shares in the parent company’s financial
statements
As part of designing our audit, we determined
materiality and assessed the risks of material
misstatement in the financial statements. In
particular, we considered where management
made subjective judgements; for example, in
respect of significant accounting estimates
that involved making assumptions and
considering future events that are inherently
uncertain.
Materiality
The scope of our audit was influenced by our
application of materiality. An audit is designed
to obtain reasonable assurance whether the
financial statements are free from material
misstatement. Misstatements may arise
due to fraud or error. They are considered
material if individually or in aggregate, they
could reasonably be expected to influence
the economic decisions of users taken on the
basis of the financial statements.
Based on our professional judgement, we
determined certain quantitative thresholds
for materiality, including the overall group
materiality for the consolidated financial
statements as set out in the table on the next
page. These, together with qualitative consid-
erations, helped us to determine the scope of
our audit and the nature, timing and extent of
our audit procedures and to evaluate the effect
of misstatements on the financial statements
as a whole.
Auditor’s Report (Translation of the Finnish Original)
Audit
82 / 87Outokumpu Annual report 2021 | Audit
Overall group materiality € 35 million (2020: € 35 million)
How we determined it 0.5% of sales 2021
Rationale for the materiality
benchmark applied
We chose sales as the benchmark because, in our view,
it is a stable and an important benchmark in the group’s
current situation, against which the performance of the
group is measured by users of the financial statements. As
the group’s profitability has not been stable, sales is also
a generally accepted benchmark. We chose 0.5% which
is within the range of acceptable quantitative materiality
thresholds in auditing standards.
How we tailored our group audit scope
We tailored the scope of our audit, taking
into account the structure of the Outokumpu
group, the accounting processes and controls,
and the industry in which the group operates.
The group audit scope was focused on the
manufacturing companies in Finland, Sweden,
Germany, USA, Mexico, the UK and Italy. We
obtained, through our audit procedures at
the aforementioned companies, combined
with additional procedures at the group level,
sufficient and appropriate evidence regarding
the financial information of the group as a
whole to provide a basis for our opinion on the
consolidated financial statements.
Key Audit Matters
Key audit matters are those matters that, in
our professional judgment, were of most signif-
icance in our audit of the financial statements
of the current period. These matters were
addressed in the context of our audit of the
financial statements as a whole, and in forming
our opinion thereon, and we do not provide a
separate opinion on these matters.
As in all of our audits, we also addressed
the risk of management override of internal
controls, including among other matters
consideration of whether there was evidence
of bias that represented a risk of material
misstatement due to fraud.
Key audit matter in the
audit of the group
How our audit addressed
the key audit matter
Valuation of goodwill
Refer to notes 4.1 and 4.3 in the consolidated
financial statements.
As at 31 December 2021 the group’s goodwill
balance amounted to € 465 million.
Goodwill is tested at least annually, irrespec-
tive of whether there is any indication of
impairment. In goodwill impairment testing,
the recoverable amounts are based on value
in use determined by discounted future net
cash flows expected to be generated by the
cash-generating unit.
Key assumptions of the value-in-use calcula-
tions include the discount rate, the terminal
value growth rate, the average global growth
in end-use consumption of stainless steel and
base price development.
Valuation of goodwill is a key audit matter due
to the size of the goodwill balance and the high
level of management judgement involved in the
estimation process.
Our audit of goodwill valuation focused on
management’s judgement and estimates used.
We assessed the appropriateness of these
through the following procedures:
• We tested the methodology applied in the
value in use calculation by comparing it to the
requirements of IAS 36, Impairment of Assets,
and we tested the mathematical accuracy of
the calculations.
• We evaluated the process by which the future
cash flow forecasts were drawn up, including
comparing them to medium term strategic
plans and forecasts approved by the Board
and testing the key underlying assumptions.
• We considered whether the sensitivity analysis
performed by management around key drivers
of the cash flow forecast was appropriate by
considering the likelihood of the movements of
these key assumptions.
• We compared the current year actual results to
those included as estimates in the prior year
impairment model to corroborate the reliability
of management’s estimates.
• The discount rates applied within the model
were assessed by PwC business valuation
specialists, including comparison to economic
and industry forecasts as appropriate.
We also considered the appropriateness of the
related disclosures provided in notes 4.1 and 4.3
in the group financial statements.
Audit
83 / 87Outokumpu Annual report 2021 | Audit
Key audit matter in the
audit of the group
How our audit addressed
the key audit matter
Valuation of Property, Plant
and Equipment
Refer to note 4.1 in the consolidated financial
statements.
As at 31 December 2021 the group’s Property,
Plant and Equipment (PPE) amounted to €
2,573 million, which is 40% of the total assets
and 82% of the total equity.
The group’s business is very capital intensive
and there is a risk that the carrying value of the
Property, Plant and Equipment is overstated.
The carrying value of Property, Plant and
Equipment is tested as part of the group
impairment testing based on the discounted
cash flow model.
Valuation of Property, Plant and Equipment is a
key audit matter due to the size of the balance
and the high level of management judgement
involved in the estimation process.
We assessed the appropriateness of the group’s
method and management’s judgement and
estimates in the impairment calculations for
Property, Plant and Equipment.
Our audit work also included testing the
operating effectiveness of controls in place to
ensure the existence and appropriate valuation
of Property, Plant and Equipment. Such controls
include e.g. the authorization of additions,
disposals and scrapings, and the reconciliation of
fixed assets registers to the accounting records.
In addition, we performed substantive audit
procedures including testing of assets acquired
in the year and depreciation of the fixed assets
mainly through analytical audit procedures.
Key audit matter in the
audit of the group
How our audit addressed
the key audit matter
Valuation of Inventories
Refer to note 4.4 in the consolidated financial
statements.
As at 31 December 2021 the group’s invento-
ries amounted to € 1,892 million.
Inventories are stated at the lower of cost
and net realizable value (NRV). Net realizable
value is the estimated selling price in the
ordinary course of business, less the estimated
costs of completion and the estimated costs
attributable to the sale.
The most important commodity price risk for
Outokumpu is caused by fluctuation in nickel
and other alloy prices. The alloy surcharge
clause as well as daily fixed pricing of stainless
steel reduce the risk arising from the time
difference between raw material purchase
and product delivery. However, the risk is
still relevant because the delivery cycle in
production is longer than the alloy surcharge
mechanism expects and the daily fixed pricing
can also deviate from this cycle depending
on the timing of the delivery. As the prices for
all products to be sold in the future are not
known, a significant part of the future prices
are estimated according to management’s
best knowledge in net realizable value (NRV)
calculations. Due to fluctuations in nickel
and other alloy prices, the realized prices can
deviate significantly from the estimates used in
NRV calculations.
Due to the high level of management judgment
and the significant carrying amounts and risks
relating to valuation, this is one of the key audit
matters.
Our audit work included testing controls in place
to ensure proper valuation and existence of
inventories.
In addition, our audit procedures included,
among other things, the following:
• We performed tests over the prices of raw
materials and verified items in the product
costing of work in progress.
• We performed tests over the NRV calculations
and the assumptions used.
• We assessed the adequacy of the obso-
lescence provision and the management
judgement used.
• We participated in the physical inventory
counting and performed independent test
counts to validate the existence of assets and
accuracy of the counting performed.
Audit
84 / 87Outokumpu Annual report 2021 | Audit
Key audit matter in the
audit of the group
How our audit addressed
the key audit matter
System environment and
internal controls
The group has a fragmented system environ-
ment. The fragmented system environment
introduces risks related to system access,
change management and data transfers
between the different systems, and we have
accordingly designated this as a key audit
matter.
The group is also implementing a new global IT
system, which was taken into use in one new
country in 2021. This introduces risks related
to temporary increased complexity as well as
the processes and data in the new system.
Our response to the risks related to the
fragmented system environment included both
testing of IT controls and tests of details.
We tested the group’s controls around access
and change management related to the key IT
systems. We also tested the group’s controls
around system interfaces and the transfer of
data between systems.
We noted certain weaknesses related to access
controls to certain key systems. We reported
those control weaknesses to the management
and performed tests of details to reduce the
related risks of material misstatement to an
acceptably low level.
We tested the group’s controls related to the
new IT system implementation. We also tested
the completeness and accuracy of data migra-
tions relevant for financial reporting.
Key audit matter in the audit
of the parent company
How our audit addressed
the key audit matter
Valuation of subsidiary shares in the
parent company’s financial statements
As at 31 December 2021 the value of
Outokumpu Oyj’s subsidiary shares amounted
to € 3,685 million in the parent company’s
financial statements prepared in accordance
with Finnish GAAP.
The valuation of subsidiary shares is tested as
part of the group impairment testing based on
the discounted cash flow model.
The valuation of subsidiary shares is a key audit
matter due to the significant carrying amounts
involved and the high level of management
judgement involved.
We assessed the appropriateness of the method
and management’s judgement and estimates
in the calculations through the following
procedures:
• We evaluated the process by which the future
cash flow forecasts were drawn up, including
comparing them to medium term strategic
plans and forecasts approved by the Board
and testing the key underlying assumptions.
• We considered whether the sensitivity analysis
performed by management around key drivers
of the cash flow forecast was appropriate by
considering the likelihood of the movements of
these key assumptions.
• We compared the current year actual results
included in the prior year impairment model
to corroborate the reliability of management’s
estimates.
• The discount rates applied within the model
were assessed by PwC business valuation
specialist, including comparison to economic
and industry forecasts as appropriate.
There are no significant risks of material misstatement referred to in Article 10(2c) of Regulation
(EU) No 537/2014 with respect to the consolidated financial statements or the parent company
financial statements.
Audit
85 / 87Outokumpu Annual report 2021 | Audit
Responsibilities of the
Board of Directors and the
Managing Director for the
Financial Statements
The Board of Directors and the Managing
Director are responsible for the preparation of
consolidated financial statements that give a
true and fair view in accordance with Interna-
tional Financial Reporting Standards (IFRS) as
adopted by the EU, and of financial statements
that give a true and fair view in accordance
with the laws and regulations governing the
preparation of financial statements in Finland
and comply with statutory requirements. The
Board of Directors and the Managing Director
are also responsible for such internal control
as they determine is necessary to enable the
preparation of financial statements that are
free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the
Board of Directors and the Managing Director
are responsible for assessing the parent
company’s and the group’s ability to continue
as a going concern, disclosing, as applicable,
matters relating to going concern and using
the going concern basis of accounting. The
financial statements are prepared using the
going concern basis of accounting unless there
is an intention to liquidate the parent company
or the group or to cease operations, or there is
no realistic alternative but to do so.
Auditor’s Responsibilities for the
Audit of the Financial Statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that
an audit conducted in accordance with good
auditing practice will always detect a material
misstatement when it exists. Misstatements
can arise from fraud or error and are consid-
ered material if, individually or in the aggregate,
they could reasonably be expected to influence
the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with good
auditing practice, we exercise professional
judgment and maintain professional skepticism
throughout the audit. We also:
• Identify and assess the risks of material
misstatement of the financial statements,
whether due to fraud or error, design and
perform audit procedures responsive to
those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a
material misstatement resulting from fraud
is higher than for one resulting from error,
as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or
the override of internal control.
• Obtain an understanding of internal control
relevant to the audit in order to design
audit procedures that are appropriate in the
circumstances, but not for the purpose of
expressing an opinion on the effectiveness of
the parent company’s or the group’s internal
control.
• Evaluate the appropriateness of accounting
policies used and the reasonableness of
accounting estimates and related disclosures
made by management.
• Conclude on the appropriateness of the
Board of Directors’ and the Managing
Director’s use of the going concern basis of
accounting and based on the audit evidence
obtained, whether a material uncertainty
exists related to events or conditions that
may cast significant doubt on the parent
company’s or the group’s ability to continue
as a going concern. If we conclude that a
material uncertainty exists, we are required
to draw attention in our auditor’s report
to the related disclosures in the financial
statements or, if such disclosures are
inadequate, to modify our opinion. Our
conclusions are based on the audit evidence
obtained up to the date of our auditor’s
report. However, future events or conditions
may cause the parent company or the group
to cease to continue as a going concern.
• Evaluate the overall presentation, structure
and content of the financial statements,
including the disclosures, and whether the
financial statements represent the underlying
transactions and events so that the financial
statements give a true and fair view.
• Obtain sufficient appropriate audit evidence
regarding the financial information of
the entities or business activities within
the group to express an opinion on the
consolidated financial statements. We are
responsible for the direction, supervision and
performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with
governance regarding, among other matters,
the planned scope and timing of the audit
and significant audit findings, including any
significant deficiencies in internal control that
we identify during our audit.
We also provide those charged with governance
with a statement that we have complied
with relevant ethical requirements regarding
independence, and to communicate with
them all relationships and other matters that
may reasonably be thought to bear on our
independence, and where applicable, related
safeguards.
From the matters communicated with those
charged with governance, we determine those
matters that were of most significance in the
audit of the financial statements of the current
period and are therefore the key audit matters.
We describe these matters in our auditor’s
report unless law or regulation precludes
public disclosure about the matter or when, in
extremely rare circumstances, we determine
that a matter should not be communicated in
our report because the adverse consequences
of doing so would reasonably be expected to
outweigh the public interest benefits of such
communication.
Audit
86 / 87Outokumpu Annual report 2021 | Audit
Other Reporting
Requirements
Appointment
We were first appointed as auditors by the
annual general meeting on 21 March 2017.
Our appointment represents a total period of
uninterrupted engagement of 5 years.
Other Information
The Board of Directors and the Managing
Director are responsible for the other
information. The other information comprises
the report of the Board of Directors and the
information included in the Annual Report, but
does not include the financial statements and
our auditor’s report thereon. We have obtained
the report of the Board of Directors prior to the
date of this auditor’s report and the Annual
Report is expected to be made available to us
after that date.
Our opinion on the financial statements does
not cover the other information.
In connection with our audit of the financial
statements, our responsibility is to read the
other information identified above and, in doing
so, consider whether the other information
is materially inconsistent with the financial
statements or our knowledge obtained in the
audit, or otherwise appears to be materially
misstated. With respect to the report of the
Board of Directors, our responsibility also
includes considering whether the report of
the Board of Directors has been prepared
in accordance with the applicable laws and
regulations.
In our opinion
• the information in the report of the Board of
Directors is consistent with the information
in the financial statements
• the report of the Board of Directors has been
prepared in accordance with the applicable
laws and regulations.
If, based on the work we have performed on
the other information that we obtained prior to
the date of this auditor’s report, we conclude
that there is a material misstatement of this
other information, we are required to report
that fact. We have nothing to report in this
regard.
Other statements based
on the decision by the
Annual General Meeting
The proposal by the Board of Directors
regarding the treatment of distributable funds
is in compliance with the Limited Liability
Companies Act. We support that the Board
of Directors of the parent company and the
President and CEO be discharged from liability
for the financial period audited by us.
Helsinki 8 February 2022
PricewaterhouseCoopers Oy
Authorised Public Accountants
Janne Rajalahti
Authorised Public Accountant (KHT)
Audit
87 / 87Outokumpu Annual report 2021 | Audit
Independent Auditor’s Reasonable Assurance Report on
Outokumpu Oyj’s ESEF Financial Statements
(Translation of the Finnish original)
To the Management of Outokumpu Oyj
We have been engaged by the Management
of Outokumpu Oyj (business identity
code 0215254-2) (hereinafter also “the
Company”) to perform a reasonable assurance
engagement on the Company’s consolidated
IFRS financial statements for the financial
year 1. 1.–31. 12. 2021 in European Single
Electronic Format (“ESEF financial state-
ments”), version Outokumpu-2021-12-31-fi.zip.
Management’s Responsibility for
the ESEF Financial Statements
The Management of Outokumpu Oyj is
responsible for preparing the ESEF financial
statements so that they comply with the
requirements as specified in the Commission
Delegated Regulation (EU) 2019/815 of
17 December 2018 (“ESEF requirements”).
This responsibility includes the design,
implementation and maintenance of internal
control relevant to the preparation of ESEF
financial statements that are free from material
noncompliance with the ESEF requirements,
whether due to fraud or error.
Our Independence and
Quality Control
We have complied with the independence and
other ethical requirements of the International
Code of Ethics for Professional Accountants
(including International Independence
Standards) issued by the International Ethics
Standards Board for Accountants (IESBA Code),
which is founded on fundamental principles of
integrity, objectivity, professional competence
and due care, confidentiality and professional
behavior.
Our firm applies International Standard on
Quality Control 1 and accordingly maintains
a comprehensive system of quality control
including documented policies and procedures
regarding compliance with ethical requirements,
professional standards and applicable legal
and regulatory requirements.
Our Responsibility
Our responsibility is to express an opinion
on the ESEF financial statements based on
the procedures we have performed and the
evidence we have obtained.
We conducted our reasonable assurance
engagement in accordance with the
International Standard on Assurance Engage-
ments (ISAE) 3000 (Revised) Assurance
Engagements Other than Audits or Reviews of
Historical Financial Information. That standard
requires that we plan and perform this
engagement to obtain reasonable assurance
about whether the ESEF financial statements
are free from material noncompliance with the
ESEF requirements.
A reasonable assurance engagement in
accordance with ISAE 3000 (Revised)
involves performing procedures to obtain
evidence about the ESEF financial statements
compliance with the ESEF requirements. The
procedures selected depend on the auditor’s
judgment, including the assessment of the
risks of material noncompliance of the ESEF
financial statements with the ESEF require-
ments, whether due to fraud or error. In making
those risk assessments, we considered internal
control relevant to the Company’s preparation
of the ESEF financial statements.
We believe that the evidence we have obtained
is sufficient and appropriate to provide a basis
for our opinion.
Opinion
In our opinion, Outokumpu Oyj’s ESEF financial
statements for the financial year ended
31. 12. 2021 comply, in all material respects,
with the ESEF requirements.
Our reasonable assurance report has been
prepared in accordance with the terms of our
engagement. We do not accept, or assume
responsibility to anyone else, except for
Outokumpu Oyj for our work, for this report, or
for the opinion that we have formed.
Helsinki, 4 March 2022
PricewaterhouseCoopers Oy
Authorised Public Accountants
Janne Rajalahti
Authorised Public Accountant (KHT)
Audit
Working towards a world that lasts forever
We believe in a world that is efficient, sustainable, and designed to last
forever. The world deserves innovations that can stand the test of time and
are ready to be born again at the end of their life cycle. Stainless steel is
vital in enabling a sustainable world with economic prosperity.
Outokumpu Oyj
Salmisaarenranta 11
FI-00180 Helsinki, Finland
Tel. +358 9 4211
[email protected]
www.outokumpu.com
@Outokumpu
Outokumpu Group
Outokumpu