Finnish metals group Outokumpu Oyj said Thursday it will lay off 1,300 workers worldwide to cut costs and improve profitability as its third-quarter net loss doubled to euro135 million ($186 million).
Hit by weakening demand, the world's second largest stainless steel maker said the job cuts and streamlining operations were aimed at saving $140 million by 2012. Most of the layoffs will be in Sweden and Finland.
Outokumpu said net loss in the third quarter last year was euro56 million. Revenue grew this year to euro1.2 billion from euro1 billion in the third quarter of 2010.
CEO Mika Seitovirta said demand "had not yet fully recovered following the previous financial crisis." The company faced uncertainty in the European market as distributors were hesitant to place orders.
"Since the global economic sentiment has worsened after the summer and the stainless markets consequently have weakened, it is of extreme importance for us to take actions to improve our financial performance in every part of the company," Seitovirta said. "In the current environment we will keep strong focus on continuing to improve our cash flow."
The company said weak demand means that delivery volumes will continue to fall in the current quarter with "somewhat lower" average base prices.
Planned cutbacks include reducing the number of production shifts, restructuring the organization and outsourcing some support functions and improving overall efficiency, Outokumpu said.
"In this situation, to compete successfully in the global market we need to reduce costs drastically, simplify the way we manage the company and establish clear accountabilities," Seitovirta said. "Reducing complexity and cutting the number of organizational layers will bring us closer to our customers."
Outokumpu stock closed up almost 2 percent at euro5.21 ($7.19) on the Helsinki Stock Exchange.
Based in Espoo near the Finnish capital, Outokumpu employs 8,400 people in more than 30 countries, with stainless steel plants in Finland, Sweden, Britain and the United States.
In recent years Outokumpu has increasingly divested other production in a move to reach a declared goal of becoming the world's No. 1 stainless steel maker.