(Updates with shares from first paragraph.)
Oct. 20 (Bloomberg) -- Outokumpu Oyj, a Finnish maker of stainless steel, plans to cut 1,300 jobs as excess capacity and weaker demand hurt profits. The shares jumped.
Outokumpu is targeting 100 million euros ($137 million) of cost cuts by the end of 2012 and a reduction in working capital of 250 million euros by the summer of 2013, the Espoo, Finland- based company said today in a statement.
“To compete successfully in the global market, we need to reduce costs drastically and simplify the way we manage the company,” Chief Executive Officer Mika Seitovirta said in the statement. “European market fundamentals have changed substantially in recent years.”
Outokumpu rose as much as 11 percent to 5.70 euros, the most since May last year. The shares traded 8.2 percent higher at 10:06 a.m. in Helsinki.
Outokumpu’s third-quarter net loss widened to 134 million euros from 56 million euros in the same period last year. The mean estimate of 10 analysts surveyed by Bloomberg was for a net loss of 92.1 million euros.
Europe’s sovereign-debt crisis and lower metal prices hurt demand for stainless steel, leading expected delivery volumes to fall this quarter below third-quarter levels, Outokumpu said. As many as 600 job cuts will be in Sweden and 300 in Finland, Outokumpu said.
“Demand has not yet fully recovered following the previous financial crisis,” Seitovirta said. “The stainless industry is facing significant overcapacity, and imports into Europe have increased.”
--With assistance from Diana ben-Aaron in Helsinki. Editors: Stephen Cunningham, Alastair Reed
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