Annual Report 2010 - Outokumpu

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144 everyday life and not a specific risk to Outokumpu. On the other hand, environmental legislation has been one of the areas in EU regulatory activity which has developed most rapidly, and the rate at which new environment-related and ecology-related initiatives, directives and other regulations have been produced by the European Commission has been high in recent years. As there is the potential for radical changes in environmental legislation which cannot be predicted, the Group is exposed to impacts on its operations in the long-term and also to surprises for which we either cannot prepare or may have difficulty in adapting to efficiently in the short term in order to continue profitable businesses. Outokumpu attempts to mitigate such risks through the systematic management of environmental risks, through emissions trading, by launching environmental initiatives and by maintaining a proactive dialogue with stakeholders and parties involved in the framing of environmental legislation. Risk of a major fire or accident Most of Outokumpu's production facilities are located in extensive industrial zones and comprise a number of separate buildings and production lines. Production of stainless steel also involves the integration of production and logistics between facilities in Tornio and Kemi in Finland, Terneuzen in the Netherlands, Avesta in Sweden, Sheffield in the UK and other locations. Production is capital intensive and the majority of Outokumpu's operating capital is tied up in these facilities. Fire or serious mechanical machinery breakdown can lead to major damage to property and interruptions in production or have other indirect adverse effects on the Group's operations. Outokumpu monitors such risks by continuously evaluating Group production facilities and processes from a risk management perspective and by arranging regular fire-safety audits. Insurances cover a large proportion of the associated risks. Corporate security risks Risks to corporate security are identified through Outokumpu's Enterprise Risk Management process. Risks of this kind include events such as the loss of critical R&D information and major instances of fraud or misconduct and moral corruption, which here means frequent but relatively-minor losses and/or repeated instances of malpractice. The development of comprehensive corporate security within Outokumpu continued in 2010 with site security audits. Levels of security were subsequently improved to achieve better compliance with corporate security instructions. Groupwide instructions relating to security and fire safety procedures were reviewed in co-operation with the Outokumpu Security Working Group, consisting of personnel with safety and security responsibilities at Group sites. During 2010, Outokumpu implemented improvements in the vetting process. With the aim of creating a "One company" approach in purchasing, category management for security and fire safety was established in order to harmonise related Group practices. Financial risks Key financial risks for Outokumpu are: Changes in the nickel, molybdenum, electricity and fuel prices; Currency risks associated with the euro, the Swedish krona and the US dollar; Interest rate risks related to the Swedish krona and the euro; Risks related to certain equity and security prices; Risks associated with a specific loan receivable; Other credit risks; Limitations on financial flexibility, and the Risk of financial distress. Outokumpu Annual Report 2010 – Corporate Governance – Operational and financial risks
145 Both these financial risks and related risk management within the Group are described further in Note 19 to the consolidated financial statements. Outokumpu Annual Report 2010 – Corporate Governance – Operational and financial risks
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Annual Report 2010
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Table of contents Outokumpu - an in
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Group Executive Committee .........
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1 Outokumpu - an international stai
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3 CEO's review 2010 was characteris
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5 Next steps The managerial agenda
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7 Group key figures 2010 2009 2008
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9 Strategic themes Outokumpu's stra
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11 Excel in operations Safe working
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13 Management discussion of financi
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15 € million Operating profit Gen
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17 When the additional ferrochrome
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19 also resulted in a substantial i
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21 Group earnings per share totalle
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23 € million Stainless steel base
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25 Developing Outokumpu's corporate
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27 A significant proportion of Outo
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29 Market position In recent decade
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31 amount of stainless steel consum
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33 General Stainless - high-quality
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35 An efficient, integrated single-
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37 chromium ore was found to extend
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39 Long Products Sheffield The Shef
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41 Specialty Stainless key figures
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43 Special Coil and Plate Special C
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45 Outokumpu Stainless Tubular Prod
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47 Group level functions Outokumpu'
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49 Headquarters in Belgium Outokump
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51 Expansion of our service centre
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53 Supply Chain Management Procurem
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55 50% compared to 2009. The ferroc
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57 Research and development Product
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59 perfectly safe for use in equipm
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61 Stainless is optimal for sustain
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63 Environmental goals and results
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65 Results 2010 Sheffield melt shop
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67 Until the beginning of 2009, sla
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69 Material balance Materials used,
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71 Improving waste handling and pre
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73 Primary actions included in the
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75 Despite of protective actions ag
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77 Stainless steel in innovations a
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79 Emissions and effluents One of O
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81 ficiation and clarification basi
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83 Water - a natural resource for c
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85 Water withdrawal and discharges
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87 studies monitoring the prevailin
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89 Environmental investments furthe
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91 Outokumpu and stakeholders The s
Page 99 and 100: 93 Goals for 2011 Improve HR report
Page 101 and 102: 95 Personnel facts and figures Outo
Page 103 and 104: 97 The US 330 321 403 Others 33 33
Page 105 and 106: 99 Open communication Employee moti
Page 107 and 108: 101 Compensation and benefits Outok
Page 109 and 110: 103 Developing our people through c
Page 111 and 112: 105 Health and safety Health and sa
Page 113 and 114: 107 Everyone deserves a safe workin
Page 115 and 116: 109 We value our stakeholders' opin
Page 117 and 118: 111 Outokumpu and our customers - a
Page 119 and 120: 113 Current and future employees Bo
Page 121 and 122: 115 our home market Europe, resulte
Page 123 and 124: 117 Production employees are repres
Page 125 and 126: 119 Public sector support, sponsori
Page 127 and 128: 121 Regulatory framework Outokumpu
Page 129 and 130: 123 General Meeting of Shareholders
Page 131 and 132: 125 To make other proposals to Gene
Page 133 and 134: 127 Board committees The Board of D
Page 135 and 136: 129 The CEO and Deputy CEO The Chie
Page 137 and 138: 131 Group Corporate Management Outo
Page 139 and 140: 133 Vice Chairman of the Board, Soi
Page 141 and 142: 135 Key aspects of internal control
Page 143 and 144: 137 Controller meetings were organi
Page 145 and 146: 139 Risk management Outokumpu opera
Page 147 and 148: 141 Strategic and business risks St
Page 149: 143 Operational risks Operational r
Page 153 and 154: 147 Good level of environmental man
Page 155 and 156: 149 Climate change is taken serious
Page 157 and 158: 151 Ethics, corporate responsibilit
Page 159 and 160: 153 Internal audit monitors complia
Page 161 and 162: 155 Outokumpu Annual Report 2010 -
Page 163 and 164: 157 Solidium Oy 56 440 597 30.8 The
Page 165 and 166: 159 Board authorisations Board Auth
Page 167 and 168: 161 Shares subscribed with 2003B op
Page 169 and 170: 163 programme for the earnings peri
Page 171 and 172: 165 Information for shareholders An
Page 173 and 174: 167 Stock exchange releases 2010 2
Page 175 and 176: 169 Members of the Executive Commit
Page 177 and 178: 171 Responsibility: HR strategy and
Page 179 and 180: 173 Board member: Marzac Investment
Page 181 and 182: 175 Based on its own assessment, Ou
Page 183 and 184: 177 Risk management 4.10 Processes
Page 185 and 186: 179 8 EN15 Species with extinction
Page 187 and 188: 181 Human Rights Investment agreeme
Page 189 and 190: 183 Fines for non-compliance PR9* c
Page 191 and 192: 185 Measurement techniques Economic
Page 193 and 194: 187 Days lost due to strikes is cal
Page 195 and 196: 189 • Tested the completeness, ac
Page 197 and 198: 191 8% from 2009. The clearly highe
Page 199 and 200: 193 Profitability Earnings per shar
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195 During 2010, Outokumpu's net in
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197 Outokumpu's strategic prioritie
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199 Outokumpu is participating in t
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201 Outokumpu has been systematical
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203 completed in November 2010 and
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205 Short-term outlook Following th
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207 Opinion on the company's financ
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209 Diluted earnings per share, €
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211 Retained earnings 1 365 1 735 N
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213 Proceeds from sale of property,
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215 Key financial figures of the Gr
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217 Quarterly information Income st
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219 Share-related key figures 2010
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221 Definitions of key financial fi
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223 Income statement of the parent
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225 Share capital 311 309 Premium f
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227 Disposals of intangible assets
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Outokumpu is a global leader in sta
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