Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Outokumpu Oyj New — Q2 2024 Earnings Presentation
32 slides from Outokumpu Oyj's earnings presentation, Aug 8, 2024
Slide 1: Outokumpu is ready to take full advantage of the next market upturn
Outokumpu is ready to take full advantage of the next market upturn Outokumpu Q2 2024 results Heikki Malinen, President & CEO Marc-Simon Schaar, CFO August 8, 2024
Slide 2: Disclaimer
2 August 8, 2024 Disclaimer This presentation contains, or may be deemed to contain, statements that are not historical facts but forward-looking statements. Such forward-looking statements are based on the current plans, estimates and expectations of Outokumpu’s management based on information avai
Slide 3: Good profitability improvement from the first quarter, driven by business area Europe
3 August 8, 2024 Good profitability improvement from the first quarter, driven by business area Europe Heikki Malinen, President & CEO
Slide 4: Gradual market recovery in Europe continued while the market environment in the Americas softened
4 August 8, 2024 Gradual market recovery in Europe continued while the market environment in the Americas softened • Market environment in Europe remains challenging despite continued gradual recovery since Q3 2023 Adjusted EBITDA totaled • Stainless steel deliveries increased from the previous EUR
Slide 5: We are the market leader in Europe, and accelerate actions to strengthen our position
5 August 8, 2024 We are the market leader in Europe, and accelerate actions to strengthen our position • Challenging market situation in Europe requires accelerated efforts to strengthen cost competitiveness • Targeting cost savings and optimization of the commodity stainless steel production in Tor
Slide 6: Stainless steel prices gradually strengthened in Europe during Q2 2024
6 August 8, 2024 Stainless steel prices gradually strengthened in Europe during Q2 2024 Transaction prices 304 stainless, USD/tonne* Nickel LME cash, USD/tonne June June Europe USA China Source: CRU Stainless Steel Flat Products Monitor June 2024 Nickel: London Metal Exchange (LME) Nickel Cash Offic
Slide 7: Operations normalized after the long political strike with a total negative impact of EUR 60 million
7 August 8, 2024 Operations normalized after the long political strike with a total negative impact of EUR 60 million in the first half of 2024 Deliveries, kt Adjusted EBITDA quarter-on-quarter comparison1, EUR million Lower realized Stainless steel deliveries prices for stainless increased by 5% st
Slide 8: High recycled material content supporting decarbonization
8 August 8, 2024 High recycled material content supporting decarbonization • Safety performance was strong in the second Safety performance, TRIFR quarter and improved from the previous year • Recycled material content remained all-time high of 95% • Energy efficiency initiatives delivering results
Slide 9: Smart capital allocation enables strong shareholder returns
9 August 8, 2024 Smart capital allocation enables strong shareholder returns Marc-Simon Schaar, CFO
Slide 10: Strong liquidity position and net debt remained low
10 February 8, 2024 Strong liquidity position and net debt remained low • Net debt EUR 97 million, increase driven by the EUR 110 million dividend payment and new leasing liabilities • Cash and cash equivalents EUR 340 million, total liquidity reserves EUR 1.1 billion • Annual capex frame EUR 220 mi
Slide 11: Strategy phase 1: initial improvement of EUR 200 million achieved ahead of schedule
11 August 8, 2024 Strategy phase 2 for years 2022–2025: initial improvement of EUR 200 million achieved ahead of schedule Commercial Initial EBITDA run-rate improvement • Focus on growing high-margin advanced materials business and a geographic expansion to the U.S. and APAC target (EUR 200 million)
Slide 12: Strategy phase 2: targeting further EUR 150 million profit improvements by the end of 2025
12 August 8, 2024 Strategy phase 2: targeting further EUR 150 million profit improvements by the end of 2025 Commercial EBITDA run-rate target increase • Commercialization of new products for advanced materials (EUR 150 million) portfolio and further expansion in U.S. and APAC • Green premium for lo
Slide 13: Good progress towards the EBITDA run-rate improvement target
13 August 8, 2024 Good progress towards the EBITDA run-rate improvement target Transformation journey • EUR 8 million EBITDA run-rate Phase 1 Phase 2 improvement reached in Q2 2024, EBITDA run-rate driven by actions in business area Europe and Americas improvement target: EUR 250 million • Successfu
Slide 14: Normalized adjusted EBITDA level remains at EUR 500–600 million with own profit improvement actions
14 August 8, 2024 Normalized adjusted EBITDA level remains at EUR 500–600 million with own profit improvement actions EUR million Potential recovery from the current exceptionally weak Not reflecting the full market environment Gross impact from inflation and EUR 241 million other headwinds (e.g. po
Slide 15: BA Europe
15 August 8, 2024 Europe’s stainless steel deliveries, 1,000 tonnes BA Europe Gradual market recovery continued while the negative impact from tight scrap market was offset through efficient procurement • Negative EUR 40 million impact in H1 2024 due to the political strike in Finland • Distributor
Slide 16: BA Americas
16 August 8, 2024 Americas’ stainless steel deliveries, 1,000 tonnes BA Americas Stainless steel deliveries increased while profitability was negatively impacted by tighter scrap market and temporary operational challenges • Negative EUR 10 million impact in H1 2024 due to the political strike in Fi
Slide 17: BA Ferrochrome
17 August 8, 2024 Ferrochrome, 1,000 tonnes BA Ferrochrome Solid result despite decrease of production due to the temporary closure of one of the three ferrochrome furnaces due to a weak market demand • Negative EUR 10 million impact in H1 2024 due to the political strike in Finland • The ferrochrom
Slide 18: Outokumpu's position expected to strengthen within ferrochrome
18 August 8, 2024 Outokumpu's position expected to strengthen within ferrochrome • Imports into Europe expected to decrease due to CBAM and reduced capacity in South-Africa • Strong position within CBAM is due to our own ferrochrome production with ▪ 67% lower carbon footprint compared to the global
Slide 19: Active working capital management resulted in a positive cash flow
19 August 8, 2024 Active working capital management resulted in a positive cash flow Q2/24 cash flow Capex frame EUR 600 million for years 2023–2025 EUR million The typical seasonality was muted by 2024: EUR 220 million the impacts of the political strike and active working capital management 2023:
Slide 20: Preparing for the market upturn while keeping our financial position strong
20 August 8, 2024 Preparing for the market upturn while keeping our financial position strong Heikki Malinen, President & CEO
Slide 21: Opportunities and uncertainties
August 8, 2024 Opportunities and uncertainties Opportunities • Strong U.S. fiscal stimulus • Strengthening market recovery in Europe • Distributor inventories remain low, re-stocking? • Green transition investments on the horizon • Improved position within ferrochrome due to CBAM Uncertainties • U.S
Slide 22: Outlook for Q3 2024
22 August 8, 2024 Outlook for Q3 2024 Group stainless steel deliveries in the third quarter are expected to remain stable compared to the second quarter. Slow market recovery in Europe is expected to continue while the market environment for business area Americas is expected to remain soft. The scr
Slide 23: Focus on shareholder value
23 August 8, 2024 Focus on shareholder value • Efficient global asset base • Leader in sustainable stainless steel • Smart capital allocation • Strongest balance sheet in the industry • Long-term shareholder returns
Slide 24: Thank you! Questions & answers
24 August 8, 2024 Thank you! Questions & answers Our ambition in sustainability has been globally recognized
Slide 25: Political strike in Finland pushed down adjusted EBITDA by EUR 60 million in the first half of 2024
25 August 8, 2024 Political strike in Finland pushed down adjusted EBITDA by EUR 60 million in the first half of 2024 Key figures Q2 2024 Q2 2023 Q1 2024 2023 Sales EUR million 1,540 1,911 1,479 6,961 EBITDA EUR million 56 185 37 416 Q2 2024 financials Adjusted EBITDA EUR million 56 190 38 517 • Adj
Slide 26: BA Europe's adjusted EBITDA increased to EUR 28 million in Q2 2024
26 August 8, 2024 BA Europe’s adjusted EBITDA increased to EUR 28 million in Q2 2024 Adjusted EBITDA, EUR million Adjusted EBITDA quarter-on-quarter comparison1, EUR million Scrap market remained tight, but the negative impact was offset through Cost decreased mainly efficient procurement of raw due
Slide 27: BA Americas' adjusted EBITDA was EUR 21 million in Q2 2024
27 August 8, 2024 BA Americas’ adjusted EBITDA was EUR 21 million in Q2 2024 Adjusted EBITDA, EUR million Adjusted EBITDA quarter-on-quarter comparison1, EUR million Profitability was negatively impacted by lower realized prices for stainless steel and the effects from the tightened scrap market Tem
Slide 28: BA Ferrochrome's adjusted EBITDA was EUR 22 million in Q2 2024
28 August 8, 2024 BA Ferrochrome’s adjusted EBITDA was EUR 22 million in Q2 2024 Adjusted EBITDA, EUR million Adjusted EBITDA quarter-on-quarter comparison1, EUR million Higher fixed costs burdened profitability, but the negative impact was partly offset by lower variable costs 1) Indicative columns
Slide 29: Imports increased both in Europe and the U.S. in Q2 2024
29 August 8, 2024 Imports increased both in Europe and the U.S. in Q2 2024 Third-country cold rolled imports1 into Europe, Third-country cold rolled imports2 into the US, 1,000 tonnes 1,000 tonnes Import penetration Import penetration (in %) (in %) kt kt 30% 19% From rest of world From China From re
Slide 30: Outokumpu uniquely positioned to capture value from Carbon Border Adjustment Mechanism
30 August 8, 2024 Outokumpu uniquely positioned to capture value from Carbon Border Adjustment Mechanism – low carbon ferrochrome production a competitive asset for Outokumpu Outokumpu’s CO2 emissions (scopes 1, 2, 3) per tonne • The EU’s Carbon Border Adjustment Mechanism (CBAM) approved in April 2
Slide 31: Outokumpu committed in the decarbonization strategy aligned with 1.5 degrees
31 August 8, 2024 Outokumpu committed in the decarbonization strategy aligned with 1.5 degrees – circularity and innovation at the core 2016–2023 2023 results -27% High recycled material content, low-emission energy, energy efficiency and incremental 2023–2030 process improvements Replacing fossil
Slide 32: Up to 93% lower carbon footprint compared to the industry average
32 August 8, 2024 Strong partnerships with customers to drive the green transition forward in stainless steel industry Up to 93% lower carbon footprint compared to the industry average* *Global average CO₂ emissions (2023): 7 kilos of CO₂e per kg of stainless steel (based on data provided by CRU and