February 3, 2009 / 11:55 AM / 11 years ago

UPDATE 2-Loss-making Outokumpu sees grim Q1, to cut jobs

* Q4 operating loss deeper than expected

* Sees significant Q1 loss

* To cut 250 jobs, temporarily lay off 2,000

* Shares down 5.4 percent

(Releads with result, adds details, share price)

By Brett Young

HELSINKI, Feb 3 (Reuters) - Finnish stainless steel maker Outokumpu Oyj (OUT1V.HE) reported a deeper-than-expected fourth-quarter loss on Tuesday, hit by weak demand and inventory writedowns, and warned losses would continue in early 2009.

Outokumpu shares fell 5.4 percent to 7.90 euros by 1147 GMT, not far from their January low of 7.72 euros and underperforming a weak DJ Stoxx Basic Resources index .SXPP which lost 2 percent.

“The deepening of the global financial crisis has a clear impact on stainless steel demand, and Outokumpu expects stainless markets to remain very weak in the first quarter of 2009,” Chief Executive Juha Rantanen said in a statement.

The group said as a result it would make a significant operating loss in the quarter.

Outokumpu reported an October-December operating loss of 271 million euros ($348.5 million), missing all forecasts in a Reuters poll where the average expectation was for a loss of 195 million.

The company said it had raw material inventory-related losses of 185 million euros in the quarter, with its underlying result some 69 million in the red.

Stainless steel companies have been hammered in recent months by weak demand and sinking prices for the metal’s key ingredient nickel, which have shredded the book value of inventories.

The company said due to the weak demand it would cut 250 jobs and temporarily lay off 2,000, seeking to save 100 million euros. It said its order intake was only half of what it had the capacity to produce.

Outokumpu proposed a 2008 dividend of 0.50 euros per share, versus expectations of 0.58 euros in the poll. (Editing by David Holmes)

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