Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — FY2016 Earnings Presentation
35 slides from Outokumpu Oyj's earnings presentation, Feb 2, 2017
Slide 1: Annual Accounts 2016
Annual Accounts 2016 CEO Roeland Baan CFO Chris de la Camp February 2, 2017
Slide 2: Today's attendees from Outokumpu
Today’s attendees from Outokumpu Roeland Baan Chris de la Camp Tommi Järvenpää CEO CFO Director Investor Relations 2
Slide 3: 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 4: Best value creator in stainless steel by 2020
Best value creator in stainless steel 1. Customers by 2020 through 2. Shareholders customer orientation 3. Employees and efficiency Time bound: Back to basics sense of urgency 4
Slide 5: Outokumpu returned to profitability in 2016
Outokumpu returned to profitability in 2016 Underlying EBIT, EUR million • Significant reduction in costs • Great progress in Americas 45 • Delivery volumes up • Profitability gradually improving • Q4 negatively impacted by cost of -88 -101 EUR 9 million related to supplier invoicing correction • NW
Slide 6: Profitability improved despite challenging markets
Profitability improved despite challenging markets European average base price, US average base price, USD/tonne Underlying EBIT, EUR million EUR/tonne 1,349 45 1,056 1,063 1,286 2015 2016 2015 2016 Nickel price, USD/tonne Ferrochrome price, USD/lb 11,808 1.07 0.96 9,600 -101 2015 2016 2015 2016 201
Slide 7: European base prices trending up
European base prices trending up European base prices1 (Germany), Third-country imports2 into Europe, EUR/tonne 1,000 tonnes 1,200 100 50 80 40 Import 1,150 penetration 60 30 increased to 40 20 25.6% in Q4 1,100 20 10 1,050 0 0 1,000 From rest of world From China 2013 2014 2015 2016 From rest of Asi
Slide 8: Antidumping action lead to increasing base prices in the US
Antidumping action lead to increasing base prices in the US US base prices1, Third-country imports2 into the US, USD/tonne 1,000 tonnes 1,450 40 40 Import penetration 1,400 30 30 increased to 25.5% in Q4 1,350 20 20 Imports from 10 10 1,300 China into the 0 0 US decreased 1,250 significantly 1,200 F
Slide 9: Ferrochrome prices recovered from historical lows
Ferrochrome prices recovered from historical lows Nickel price, Ferrochrome contract price, Q1/17 USD/tonne USD/lb benchmark 24,000 2.00 price went up to USD 1.65/lb 20,000 1.60 16,000 1.20 12,000 0.80 Average 8,000 ferrochrome 0.40 price was USD 4,000 0.96/lb in 0 0.00 2016 9
Slide 10: Key financials
Key financials Deliveries increased in 2016 primarily driven by Key figures Q4/16 Q3/16 2016 2015 significantly higher deliveries in the Americas Stainless steel deliveries, 1,000 tonnes 1 596 608 2,444 2,205 FY16 sales decreased by Sales, EUR million 1,506 1,419 5,690 6,384 11% as a result of lower
Slide 11: Net result impacted by deferred tax income
Net result impacted by deferred tax income Net result, EUR million • Income taxes for 2016 include deferred tax income of EUR 189 million 144 • They relate to previously unrecognized 86 deferred tax assets from losses in Finland and Sweden • Remaining unutilized tax loss carry forwards amount to EUR
Slide 12: Europe continued its strong performance
Europe continued its strong performance Deliveries, 1,000 tonnes Underlying EBIT, EUR million • Prices were under pressure in H1 but started to progressively increase in H2 1,661 1,578 1,625 191 • FY2016 weighted average base price in deliveries decreased by EUR 30/tonne • Costs reduced successfully
Slide 13: Americas is solidly on track to profitability
Americas is solidly on track to profitability Deliveries, 1,000 tonnes Underlying EBIT, EUR million • Significantly reduced import volumes from China as a result of preliminary 690 antidumping duties 572 533 • Reduced Chinese imports together with healthy underlying demand resulted in increased base
Slide 14: Americas is solidly on track to profitability
Americas is solidly on track to profitability Deliveries, 1,000 tonnes Underlying EBIT, EUR million • Significantly reduced import volumes from China as a result of preliminary 177 185 antidumping duties 161 167 -7 • Reduced Chinese imports together with healthy underlying demand resulted in -18 -24
Slide 15: Long Products' year was impacted by difficult markets
Long Products’ year was impacted by difficult markets Deliveries, 1,000 tonnes Underlying EBIT, EUR million • Prices under pressure as import volumes remained at high levels in both Europe 248 245 32 and the US 213 • Oil&Gas related investment activities remained subdued throughout the year 7 • Clea
Slide 16: Strong cash flow improvement in 2016
Strong cash flow improvement in 2016 Net cash from operating activities, EUR million • Net working capital release of EUR 307 million in 2016 389 • FY16 financing costs of EUR 121 million, interest expenses at EUR 105 million • Capex (accounting) at EUR 164 million in 2016 • Overall liquidity reserv
Slide 17: Great achievements with debt reduction
Great achievements with debt reduction Net debt and gearing Debt maturity profile, EUR billion neg. 1.2 188% 8.5 8.2 0.8 93% 4.2 3.56 69% 51% 0.4 1.97 1.61 1.24 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022+ Net debt, EUR billion Net debt/underlying EBITDA Gearing Current debt Non-current debt
Slide 18: Adjusted EBITDA to become the main performance indicator
Adjusted EBITDA to become the main performance indicator Underlying figures EXCLUDE Raw material related inventory gains/losses and • Focus on cash generation metal derivative and net debt reduction gains/losses EBITDA the best metric • The new practice Adjusted figures implemented from Q1/17 DO N
Slide 19: Business and financial outlook for Q1/2017
Business and financial outlook for Q1/2017 • Stainless steel market is expected to be Outokumpu’s adjusted strong in Q1 with healthy underlying EBITDA is expected to demand in both Europe and the US be over EUR 250 • Q1 delivery volumes expected to be million in the first higher in Europe, and signi
Slide 20: Appendix
Appendix
Slide 21: Income statement
Income statement (MEUR) Jan-Dec 2016 Jan-Dec 2015 Sales 5,690 6,384 Cost of sales -5,298 -6,273 Gross margin 392 111 Other operating income 88 472 SG&A costs -331 -342 Other operating expenses -46 -13 EBIT 103 228 Share of results in associated companies and joint ventures 5 49 Financial income and
Slide 22: Balance sheet
Balance sheet Assets (MEUR) Dec 31, 2016 Dec 31, 2015 Equity and liabilities (MEUR) Dec 31, 2016 Dec 31, 2015 Non-current assets Total equity 2,416 2,329 Intangible assets 504 498 Non-current liabilities Property, plant and equipment 2,874 3,005 Non-current debt 987 1,249 Investments in associated O
Slide 23: Operative cost components
Operative cost components • Raw materials account for around 60% of the total operative costs of the Group • Energy and other consumables account for 10- 15% of the total operative costs • Personnel expenses 10-15% of the total operative costs • Other cost of sales includes e.g. freight, maintenance
Slide 24: Broadest product portfolio across stainless steel
Broadest product portfolio across stainless steel Deliveries by product grade in 2016 Outokumpu product forms Other Duplex 3% 4% Hot rolled Ferrochrome Slab Quarto plate black coil Ferritic Austenitic 19% (CrNi) 57% Hot and cold rolled Rolled and Precision strip Cast semis white coil forged billet A
Slide 25: Our strategic plan
Our strategic plan VISION 2020: To be the best value creator in stainless steel by 2020 through customer orientation and efficiency. The best value in the industry for customers, shareholders and employees through: High World Class Manufacturing Commercial Safety Performing Americas Supply Chain Exc
Slide 26: Improving performance
Improving performance Financial targets for 2020 EBIT ROCE Gearing EUR 500 million 12% <35% 26
Slide 27: Our must-win battles deliver EUR 500 million in 2020
Our must-win battles deliver EUR 500 million in 2020 Topline growth and cost efficiency based on self-help TOP LINE GROWTH • Increase volume through • Achieve 2-3% annual efficiency and productivity improvement debottlenecking 55% • Achieve 15% savings in • Richer mix through procurement improved ca
Slide 28: We focus on growth segments
We focus on growth segments Consumer goods, automotive, architecture, building and construction Distributors End-customers 17% Consumer goods & medical 15% Automotive Architecture, building & construction 45% 23% Chemical, petrochem. and energy 55% Metal processing & tubes 18% Heavy industries 18% 5
Slide 29: ~4% demand growth expected for 2017
~4% demand growth expected for 2017 Americas Europe APAC Global +5% +5% +5% +5% +3% +3% +3% +4% +4% +4% +4% +4% +2% +3% +1% +1% +2% +2% +2% +2% +2% +1% -3% -3% 15 16f 17f 18f 19f 20f 15 16f 17f 18f 19f 20f 15 16f 17f 18f 19f 20f 15 16f 17f 18f 19f 20f USA OTHER AMERICAS OTHER EMEA CHINA OTHER APAC +
Slide 30: Real demand expected to grow remarkably in Q1 of 2017 in EMEA and Americas
Real demand expected to grow remarkably in Q1 of 2017 in EMEA and Americas EMEA total stainless steel real demand1 Americas total stainless steel real demand1 1,000 tonnes 1,000 tonnes 1,950 +5% 1,000 1,900 950 +4% 1,850 900 850 1,800 800 1,750 750 1,700 700 1,650 650 1,600 600 1,550 550 1,500 500 Q
Slide 31: Low capacity utilization in China, on healthier level in Europe and Americas
Low capacity utilization in China, on healthier level in Europe and Americas Asia Europe Americas [CR, Mtonnes] [CR, Mtonnes] [CR, Mtonnes] 25.4 25.7 4.9 4.9 25.0 4.7 4.6 4.6 4.6 4.6 23.8 4.5 3.2 3.2 3.2 3.2 22.6 22.4 4.1 3.0 3.0 3.0 4.0 3.0 21.2 21.3 3.9 2.8 20.3 3.7 3.8 3.8 2.7 19.1 19.2 3.5 3.5 2
Slide 32: Stainless prices rising due to higher raw material prices
Stainless prices rising due to higher raw material prices Nickel price, USD/tonne Transaction prices 304 stainless, USD/tonne 60,000 5,000 50,000 4,000 40,000 30,000 3,000 20,000 10,000 2,000 0 2 2 2 2 2 2 2 2 2 2 2 1,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 2011 2012 2013 2014 2015 2016 6 7
Slide 33: Nickel price development
Nickel price development 60,000 600 [Ktonnes] [USD/t] 50,000 LME stocks (rhs) SHFE stocks (rhs) LME cash price (lhs) 500 40,000 400 30,000 300 20,000 200 10,000 100 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 • Nickel prices fell below USD 8,000/tonne in early February 2016 due t
Slide 34: Fully integrated production asset base
Fully integrated production asset base Europe Americas Long Products Total Krefeld + Tornio Avesta + Nyby Degerfors Calvert Mexinox Sheffield Richburg Degerfors Wildwood Dillenburg Finland Sweden Sweden USA Mexico UK USA Sweden USA Germany Melting 1,450 450 900 450 3,250 Hot rolling 1,450 900 870 3,
Slide 35: For more information, call Outokumpu Investor Relations
For more information, call Outokumpu Investor Relations or visit www.outokumpu.com/investors Tommi Järvenpää Director– Investor Relations Phone +358 9 421 3466 Mobile +358 40 576 0288 E-mail: tommi.jarvenpaa@outokumpu.com Simone Cujai Investor Relations Manager Phone: +49 2151 83 4226 Mobile: +49 17