Outokumpu says uncertainty caused by Trump's tariffs to hit operations in Q2

By Jagoda Darlak

May 8 (Reuters) - Stainless steel maker Outokumpu OUT1V.HE expects global uncertainties related to U.S. President Donald Trump's tariffs to lead to a worsening market environment and impact its operations in the second quarter.

Shares of the Finnish group, which operates on both sides of the Atlantic, were down 4.5% at 1144 GMT on Thursday.

European steelmakers, already struggling with weak demand, high costs and competition from cheaper Chinese imports, now face the additional challenge of recently increased tariffs on their exports to the United States.

"Geopolitics and other significant uncertainties related to tariffs, might impact the global economy and consequently, Outokumpu's operating environment, deliveries, metal prices, and foreign exchange rates," the company said in a press release.

The "wait and see" mode prevails in its key European market despite an uptick in order intake at the beginning of the year, Outokumpu said.

"In Europe particularly ... we are at the moment still booking in June here," finance chief Marc-Simon Schaar told Reuters.

In the United States, where Outokumpu is the second largest stainless steel producer, the uncertain economic outlook with low consumer confidence and higher inflation expectations was weighing on demand.

But Schaar said Outokumpu had seen an uptick in the U.S. order book at the end of the first quarter and the start of the second, as customers favoured locally produced steel. Earlier in the quarter, import levels were still high as clients stocked up to get ahead of Trump's tariffs.

Outokumpu's stainless steel deliveries rose 11.4% quarter-on-quarter, despite being impacted by a strike in Finland. They are expected to be at least level or grow by up to 10% in the second quarter.

Schaar said the company was seeing higher volumes after the one-week strike, but not a real recovery in the market.

The industrial action had, as expected, a negative impact of about 15 million euros ($16.9 million) on the group's adjusted operating earnings before depreciation and amortisation (EBITDA), which rose to 49 million euros in the quarter, in line with market estimates.

The company sees second-quarter adjusted EBITDA "at a similar or higher level" than the prior three months.

($1 = 0.8855 euros)