By Jagoda Darlak
(Reuters) -Finnish stainless steel maker Outokumpu reported a smaller than expected drop in first-quarter earnings on Tuesday and said a period of destocking by distributors seemed to be coming to an end, sending its shares up nearly 10%.
The company's adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 42% to 204 million euros ($225 million), exceeding analysts' estimate of 144.5 million euros in a company-provided poll.
The group said distributors continued destocking during the first quarter in Americas and Europe, which hit delivery volumes, but that the trend seemed to be coming to an end.
Outokumpu's stainless steel deliveries rose 12% to 505,000 tonnes from the prior quarter, but were down 17% year-on-year.
Chief Financial Officer Pia Aaltonen-Forsell told Reuters that, with destocking coming to an end, the company was continuing into the second quarter with a good operational run.
The company saw demand dip at the end of last year as the fallout from Europe's energy crisis put pressure on steel prices, but had said it would start recovering in early 2023.
Asked about demand, Aaltonen-Forsell said the group did not see a downward trend anymore, but also had not seen strong replenishment yet, describing market sentiment as "stable".
Stainless steel deliveries in the second quarter are expected to remain around first quarter levels, the group said.
It also forecast second-quarter adjusted EBITDA "similar or higher" than in the first.
Outokumpu completed a share buyback programme in March, and last month paid out a total dividend of 0.35 euro per share.
Aaltonen-Forsell said the group had a clear commitment to growing the dividend. On share buybacks, she said she couldn't comment on timing at the moment, but that they were now solidly in the group's toolbox.
"I don't see any reason why we would remove a good tool from our toolbox," she added.
($1 = 0.9084 euros)