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UPDATE 1-Finnish steelmaker Outokumpu to cut 1,000 jobs after profit halves

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HELSINKI, Nov 5 (Reuters) - Finnish stainless steel manufacturer Outokumpu’s on Thursday said it planned to cut 1,000 jobs and scrap its dividend for its 2019 financial year after reporting a big drop in third-quarter core operating profit.

Third-quarter adjusted earnings before interest, tax, depreciation and amortisation fell to 22 million euros ($25.95 million) from 45 million euros a year earlier, slightly above the 20.4 million euros expected by analysts in a company provided poll.

“The employee reductions are planned to be 270 in Finland, 250 in Germany and 190 in Sweden, with further reductions planned across the European and Americas based operations,” Outokumpu said in a statement.

The planned job cuts will take place mostly by the end of 2021 and would lead to a 10% reduction in the group’s total staff and cost savings of between 75 and 80 million euros.

The company said it aimed to have a headcount of below 9,000 during 2022.

Outokumpu’s shares were up about 1.6% following the announcement.

Chief Executive Heikki Malinen said in a statement that due to the global market uncertainty, the impacts of COVID-19 pandemic and market disruption from Asian imports, further measures were needed to improve the company’s overall performance, cost structure, operational efficiency and customer engagement.

The company, which had warned of a difficult third quarter, announced a new strategy to strengthen the business through margin improvement, cash flow management and deleveraging the balance sheet.

“The new financial targets, EUR 200 million EBITDA run-rate improvement and net debt to EBITDA of below 3.0x by the end of 2022, are fully based on self-help improvement actions,” the company said.

Outokumpu said it would increase raw material efficiency and operational cost savings, while limiting its annual capital expenditure to 180 million euros in 2021 and 2022 through maintenance optimisation and strict asset management.

$1 = 0.8479 euros Reporting by Anne Kauranen Editing by David Goodman and Jane Merriman

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