Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Q1 2013 Earnings Presentation
39 slides from Outokumpu Oyj's earnings presentation, Apr 25, 2013
Slide 1: The global leader in stainless steel – Interim Report Q1 2013
The global leader in stainless steel Interim Report Q1 2013 April 25, 2013 CEO Mika Seitovirta
Slide 2: Disclaimer
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 available to it on th
Slide 3: Today's attendees of Outokumpu
Today‘s attendees of Outokumpu Kari Tuutti Mika Seitovirta Esa Lager EVP – Marketing, CEO CFO Communications and IR 3 April 25, 2013
Slide 4: Outline
Outline 1. Q1 Outokumpu highlights 2. 2013 priorities 3. 2013 market outlook 4. Q2 outlook 4 April 25, 2013
Slide 5: Continued growth for stainless steel globally – Europe will decline in 2013
Continued growth for stainless steel globally– Europe will decline in 2013 +7% +19% +8% -3% +6% +4% +4% -1% +3% EMEA APAC AMERICAS +9% +4% +2% Orange = Change 2010-2011 Green = Change 2011-2012 TOTAL WORLD Blue = Forecast 2013 5 Data source: SMR, April 2013 April 25, 2013 Real demand for total stain
Slide 6: Highlights in Q1 2013
Highlights in Q1 2013 • Q1 2013 stainless steel deliveries grew by 9% Q4/12 Q1/12 EUR million Q1/13 to 703,000 tonnes compared to Q4 2012 comparable comparable • Reduced underlying EBIT losses despite Stainless steel 703 644 758 deliveries 1) challenging market environment Sales 2,221 2,067 2,648 •
Slide 7: Sales and deliveries by Business Areas
Sales and deliveries by Business Areas Q1 2013 External sales by BA 1) Q1 2013 External deliveries by BA 1,2) Group sales EUR 2.2 billion Group deliveries 703,000 tonnes EMEA 48% Americas 10% EMEA 55% Americas 15% APAC 10% HPSA 33% APAC 12% HPSA 18% 7 1) Split by BA are based on management estimates
Slide 8: EBITDA and EBIT by Business Areas
EBITDA and EBIT by Business Areas EBITDA excl. NRI per Business Area EBIT excl. NRI per Business Area EUR million EUR million 35 20 4 4 14 0 0 -2 -12 -28 -27 -38 -44 -58 -59 -55 EMEA Americas APAC HPSA EMEA Americas APAC HPSA Q4/12 Q1/13 8 April 25, 2013
Slide 9: Operating cash flow driven by Calvert ramp-up
Operating cash flow driven by Calvert ramp-up Q1/13 EUR million Net cash from operating activities -46 Net cash from investing activities -186 Net cash from financing activities 295 Net change in cash and cash equivalents 63 • Negative operating cash flow of EUR 46 million mainly due to net working
Slide 10: Capital structure
Capital structure Q1/13 Q4/12 EUR million comparable Net interest-bearing debt 2,891 2,620 Equity 2,799 2,952 Equity-to-assets ratio, % 28.0 30.6 Debt-to-equity ratio (gearing), % 103.3 88.8 • Negative impact of EUR 17 million (Q4/12: EUR -28 million) for the EUR 37 million remaining 16% stake in Ta
Slide 11: Outline
Outline 1. Q1 Outokumpu highlights 2. 2013 priorities 3. 2013 market outlook 4. Q2 outlook 11 April 25, 2013
Slide 12: New Outokumpu Strategy Roadmap
New Outokumpu Strategy Roadmap Restructuring + Growth = Perfor- mance New Transform Ensure Full integration Deliver on Ramp-up Expand Leverage Develop efficiency company financial and new synergies US presence Ferrochrome HPSA APAC projects structure stability culture Mill closures P150 project New
Slide 13: Update synergy savings – EUR 16 million achieved in Q1 2013
Update synergy savings – Deliver on synergies EUR 16 million achieved in Q1 2013 Synergy savings over time (cumulative) 250 • We are on track to reach Max 200 for targeted annual Min 150 savings of EUR 50 million in 2013 100 50 • Krefeld melt shop ramp- 50 16 down proceeding on 0 plan, melt shop clo
Slide 14: Update: P150 and P300 programs
New efficiency Update: P150 and P300 programs projects P150 program P300 program • P150 is aiming an additional cost saving of • New program targeting a net working EUR 150 million on EBITDA level capital reduction of EUR 300 million to be • Full implementation and effective until end achieved throu
Slide 15: Further headcount reduction announced to reduce fixed costs
Further headcount reduction announced to reduce fixed costs Personnel at the end of reporting period 1) 20,000 • Target is to reduce headcount by 2,500 between 2013-2017 18,000 -10% • Reduction in headcount in Q1 2013 mainly related to 16,000 reduced ownership in OSTP 14,000 tubular joint venture (~
Slide 16: P300: Target to reduce net working capital of EUR 300 million by end of 2014
P300: Target to reduce net working capital of EUR 300 million by the end of 2014 Cash flow from working capital change 300 • Approx. EUR 150 million to be 250 200 achieved during 2013 through 150 300 inventory reduction, accounts 100 150 receivable and accounts payable 50 management 0 -17 -50 Q1 201
Slide 17: Update: US ramp-up
Ramp-up Update: US ramp-up US presence • Ramp-up of Calvert on track: Production base in USA and Mexico • First melts done across a range of stainless grades and product sizes • Cold rolling ramp-up has shown a major increase in volume in Q1 2013 compared to Q4 2012 Calvert, Alabama • The BA America
Slide 18: Update: Ferrochrome operations
Expand Update: Ferrochrome operations Ferrochrome Outokumpu ferrochrome production • Unique low cost position as Europe’s only 600 ferrochrome producer with access to the only 500 known chromite reserves in the EU 400 (1,000 tonnes) • One of the lowest cost structures among all 300 ferrochrome produ
Slide 19: Update: Remedy divestment process
Update: Remedy divestment process • Outokumpu is committed to the divestiture of Inoxum’s integrated stainless mill in Terni, Italy as well as Outokumpu’s service center in Germany and Terninox service center in Italy. Remedy excludes the Tubificio di Terni unit (tubular business) • Remedy also incl
Slide 20: Outline
Outline 1. Q1 Outokumpu highlights 2. 2013 priorities 3. 2013 market outlook 4. Q2 outlook 20 April 25, 2013
Slide 21: Industrial production as the major driver for stainless growth
Industrial production as the major driver for stainless growth… Growth Economic Index 2005=100 Industrial Production 2013 - 2017 Growth Prospects 200 180 Fundamental APAC 160 140 120 +6% growth 100 2011 2013 2015 2017 140 Recovery from Americas 120 +4% economic crisis and continued 100 growth 2011 2
Slide 22: Growing stainless consumption mainly in APAC
… leads to growing stainless consumption mainly in APAC, and to some extent in Americas and EMEA [Total stainless real demand in 1,000 t] Ø Growth 38.0 37.1 2013-2017 35.5 33.6 32.1 30.8 30.2 27.8 +7% 25.8 26.6 24.6 23.2 20.7 22.0 20.0 APAC 18.5 3.8 +3% 3.7 3.8 Americas 3.2 3.4 3.4 3.5 2.7 6.5 7.0 6
Slide 23: Decrease in transaction prices
Decrease in transaction prices Average transaction prices for 2mm cold rolled 304 stainless steel sheet USD/t USD/t 2011 2012 Q1 13 Europe 3,998 3,304 3,283 USA 3,905 3,182 3,064 5,000 China 3,264 2,641 2,587 Europe-China 734 663 696 4,000 3,000 2,000 1,000 Jan Jan Jan 11 12 13 Transaction price Eur
Slide 24: Market to remain weak during H1 2013 – growth expected in H2 2013
Market to remain weak during H1 2013 – growth expected in H2 2013 EMEA stainless steel apparent consumption 1) Americas stainless steel apparent consumption 1) 1,000 tonnes 1,000 tonnes 2.000 1.000 2011 2012 2013f 2011 2012 2013f 1.900 950 1.800 900 1.700 850 1.600 800 1.500 750 1.400 700 1.300 650
Slide 25: Raw materials – last 6 months
Raw materials – last 6 months 19.000 Nickel1 1,3 Ferrochrome2 U U European contract price 18.000 1,2 S S European spot price Q2’2013 Apr 23 1.27 USD/lb D 15 085 USD/t D / 17.000 / 1,1 t l o 16.000 b 1,0 Apr 23 n 1.06 USD/lb 15.000 0,9 Sep Oct Nov Dec 2013 Feb Mar Apr Sep Oct Nov Dec 2013 Feb Mar Apr
Slide 26: Outline
Outline 1. Q1 Outokumpu highlights 2. 2013 priorities 3. 2013 market outlook 4. Q2 outlook 26 April 25, 2013
Slide 27: Business outlook – Second quarter 2013
Business outlook – Second quarter 2013 • Outokumpu reiterates its expectations of a soft first half year with improvements in underlying EBIT during the second half of 2013. • For the second quarter Outokumpu expects sequentially flat or slightly lower delivery volumes, weaker product mix and increa
Slide 28: Key targets largely unchanged
Key targets largely unchanged Stronger performance during the second half of 2013 expected, mainly due to progress Overall in ramp-ups of Calvert and FeCr. Capital expenditure is expected to decline to approximately EUR 350 million in 2013 Capex (FY 2012: approximately EUR 821 million). Synergy savi
Slide 29: Q&A
Q&A
Slide 30: Appendix
Appendix 30 April 25, 2013 KOKAoU
Slide 31: Outokumpu balance sheet
Outokumpu balance sheet Assets (MEUR) 31.3.13 31.12.12 • Goodwill is unchanged at EUR 469 million (including the Inoxum Non-current assets transaction goodwill of EUR 7 Intangible assets 630 629 million). Property, plant and equipment 3,694 3,697 • Assets held for sale and liabilities Other receivab
Slide 32: Outokumpu balance sheet
Outokumpu balance sheet Equity and liabilities (MEUR) 31.3.13 31.12.12 Total equity 2,799 2,952 • The total non-current interest Non-current liabilities bearing liabilities of EUR 3,019 million include the IB1) liabilities 3,019 2,974 ThyssenKrupp loan note of Deferred tax liabilities 89 90 EUR 1,24
Slide 33: Outokumpu global production overview Dec. 31, 2012
Outokumpu global production overview Dec. 31, 2012 - healthy balance between hot and cold with planned closures Thousand tonnes 5.000 4.500 1,400 Capacity reduction 4.000 Balance for 3.500 hot and cold 3.000 325 Plate & Long 2.500 Cold rolled 1) 2.000 Melting 2) 3,500 1.500 2,795 1.000 500 0 Melting
Slide 34: Overcapacity of melting capacity in stainless production
Overcapacity of melting capacity in stainless production– prior to planned Bochum melt shop closure (Dec. 31, 2012) EMEA Coil HPSA Americas Coil APAC Total Finland Germany 1) Sweden UK & USA Calvert Shanghai San Luis Potosí Melting 2) 4,300 1,600 800 500 500 9006 3,970 HR 1,600 800 700 870 3,120 CR
Slide 35: Balanced stainless production structure after planned Bochum melt shop closure
Balanced stainless production structure – after the planned Bochum melt shop closure (Dec. 31, 2012) EMEA Coil HPSA Americas Coil APAC Total Finland Germany 1) Sweden UK & USA Calvert Shanghai San Luis Potosí Melting 2) 3,500 1,600 500 500 9006 3,170 HR 1,600 700 870 3,120 CR 750 940 425 105 350 270
Slide 36: Balanced customer base across industries
Balanced customer base across industries Sales by customer segment Sales by end-customer segment Healthy balance between end-customer segments across both investment and consumer driven industries Other Consumer Distributors 12% goods & Medical 41% Heavy 17% industries 8% Automotive 9% Architecture,
Slide 37: FY 2012 Operative cost break-down
FY 2012 Operative cost break-down Split of total operative costs (Sales-EBIT) incl. one-offs and AST total costs 1) 17% 10% 4% 1% Personnel D&A Impairments Materials Other 68% 37 1) Unaudited management estimates. April 25, 2013
Slide 38: Broadest product portfolio across stainless steel
Broadest product portfolio across stainless steel Deliveries by product grade (mgt estimates 2011, excl. Terni) • New Outokumpu has a broad product portfolio to serve all customers 1) • Significantly higher share of ferritic grades High Performance leads into reduced sensitivity to Nickel Other Allo
Slide 39: Continued strong Ferritics capabilities for new Outokumpu in EMEA
Continued strong Ferritics capabilities for new Outokumpu in EMEA Ferritic competence today Ferritic options for the future Possible bottlenecks from closure of Bochum can be counterbalanced by Tornio and Krefeld/Benrath Melting today done at Terni, Tornio, Bochum • Melting will continue at Bochum.