Annual Report 2010 - Outokumpu

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Balance sheet and financing
Outokumpu's -2.1% return on capital employed in 2010 was a long way from the Group's target of 13.0%. Gearing at the
end of the year was 77.3%, higher than the maximum target level of 75%. Net cash generated from operating activities in
2010 totalled EUR -497 million (2009: EUR 201 million). This figure includes a EUR 476 million negative contribution
from the increase in working capital that resulted mainly from expanded inventory volumes, higher raw material prices
and an increase in account receivables. Capital expenditure in 2010 totalled EUR 161 million. Major investments in 2010
were the finalisation of a project to increase quarto plate production capacity at New Castle in the US, completion of a
new stainless steel bar and rebar facility at Sheffield in the UK, a new acid regeneration plant at the Avesta Works in
Sweden and the establishment of a service centre in Kunshan in China. Outokumpu also restarted the project to double
the Group's ferrochrome production capacity in Finland and a project to increase capabilities and production capacity in
stainless steel quarto plate production at Degerfors in Sweden.
At the end of 2010, the Group's equity-to-assets ratio was 42.2%. Net interest-bearing debt at the end of 2010 totalled
EUR 1 837 million (end of 2009: EUR 1 191 million) with most of the Group's debt maturities extending to the 2011–2014
period. Group cash and cash equivalents were EUR 150 million at the end of the year (2009: EUR 112 million), and
committed undrawn credit facilities totalled some EUR 1 billion. All in all, Outokumpu's liquidity position remained good
throughout 2010. The committed credit facilities include a three-year EUR 900 million revolving credit signed in June
2009. Intended for general corporate purposes, this committed credit facility replaced the comparable five-year EUR 1
billion facility signed in June 2005. The loan agreement includes a financial covenant based on gearing. At the end of
2010, the facility was fully undrawn. To improve the structure of the Group's debt portfolio, Outokumpu issued a EUR 250
million five-year domestic bond with an annual coupon of 5.125%. These funds will be used for general corporate
purposes.
Dividend
Outokumpu Annual Report 2010 – Outokumpu – Management discussion