Slide 1: Annual Accounts 2013
Annual Accounts 2013 CEO Mika Seitovirta CFO Reinhard Florey February 13, 2014
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 Johanna Henttonen Mika Seitovirta Reinhard Florey SVP – Investor CEO CFO Relations Feb. 13, 2014 3
Slide 4: Contents
Contents 1. FY 2013 overview and strategic priorities 2. Financial performance 3. Outlook and guidance Feb. 13, 2014 4
Slide 5: 2013 at a glance
2013 at a glance All commentary and figures relate to continuing operations1) Underl. EBITDA (EUR million) • Synergy and P150 related savings EUR 199 million in 2013 • Closure of the Krefeld melt shop as planned in December 2013 -1 • New industrial plan to restructure the European operations -34 -32
Slide 6: Continued growth for stainless steel globally – Europe stagnated in 2013
Continued growth for stainless steel globally– Europe stagnated in 2013 +4% +4% +8% +1% +6% +6% +6% +5% +4% +4% +4% -1% 2012 2013 2014f 2015f EMEA 2012 2013 2014f 2015f 2012 2013 2014f 2015f APAC AMERICAS +6% +5%+5% +4% 2012 2013 2014f 2015f TOTAL WORLD Data source: SMR, February 2014 Real Demand fo
Slide 7: Outokumpu Strategy Roadmap – 2013 good progress and delivery on restructuring
Outokumpu Strategy Roadmap – 2013 good progress and delivery on restructuring Restructuring + Profitable Growth = Perfor- mance Deliver on New Transform Ensure Ramp-up Expand Leverage Develop Full integration efficiency company financial and new synergies US presence Ferrochrome HPSA APAC proj
Slide 8: Solid progress in key strategic priorities in 2013
Solid progress in key strategic priorities in 2013 New Deliver on Ensure financial Ramp-ups for future efficiency synergies stability growth programs • Krefeld melt shop • P150 program: • Comprehensive plan to • Ramp-up of Ferro- closed in Dec Savings of €104 strengthen balance chrome proceeds. 2013
Slide 9: Strategic review of thin and precision strip operations in Sweden and Germany
Strategic review of thin and precision strip operations in Sweden and Germany • In June 2013, Outokumpu announced a strategic review of its thin and precision strip operations in Kloster and Nyby, Sweden and in Dahlerbrück, Germany with the aim of reducing capacities and achieving cost savings throu
Slide 10: Strengthening of the balance sheet
Strengthening of the balance sheet Summary of the announcement of November 30 Divestment of Terni and VDM Financial plan to further strengthen to ThyssenKrupp balance sheet • TK loan note as consideration (value • New EUR 500 million liquidity facility with December 31, 2013: EUR 1,283 million) matu
Slide 11: Overall savings expected to reach EUR 380 million in 2015
Overall savings expected to reach EUR 380 million in 2015 Realized (2013) and planned savings including all programs (EUR, million) 500 EMEA restructuring 450 Original synergies adjusted* 400 P150 savings 350 EUR Million 300 250 200 150 100 50 0 2013a 2014 2015 2016 2017 Savings targets exceed in 20
Slide 12: Significant profitability improvement targeted for Stainless Americas in 2014
Significant profitability improvement targeted for Stainless Americas in 2014 Key profitability levers for Americas business Market shares NAFTA 2013 1) Imports 1. Production optimization and cost efficiency Outokumpu 10% 2. Increasing volumes 22% 3. Expanding customer base Key figures, BA Stainless
Slide 13: Good performance and successful ramp-up of the Ferrochrome business
Good performance and successful ramp-up of the Ferrochrome business Outokumpu ferrochrome production • Unique low cost position as Europe’s only 600 ferrochrome producer with access to the 500 (1,000 tonnes) only known chromite reserves in the EU – 400 the Kemi mine 1). 300 200 • The performance of
Slide 14: Contents
Contents 1. FY 2013 overview and strategic priorities 2. Financial performance 3. Outlook and guidance Feb. 13, 2014 14
Slide 15: Q4 overview and FY 2013
Q4 overview and FY 2013 • Stainless steel deliveries down by 2% Group key figures, continuing operations1) to 620 kt vs Q3, FY down by 5% • The Q4 operational performance was in line EUR million Q4/13 Q3/13 Q4/12 2013 2012 with Q3 due to somewhat positive price and restated comparable comparable mix
Slide 16: EBITDA and EBIT by Business Areas
EBITDA and EBIT by Business Areas EBITDA excl. NRI per Business Area 1) EBIT excl. NRI per Business Area 1) EUR million EUR million 83 27 28 27 25 19 9 13 9 8 4 3 4 1 0 0 -3 -1 -1 -12 -7 -17 -14 -22 -7 -28 -27 -38 -35 -37 -50 -52 -33 -103 -54 -70 -68 -193 -87 -262 EMEA Americas APAC Spec. SL EMEA Am
Slide 17: LME nickel prices and net timing impacts
LME nickel prices and net timing impacts EUR million USD/tonne Timing gain/loss (EUR million) LME Nickel (USD/tonne) 60 22,000 Total timing effect impacted also by 40 EUR/USD rate and changes in prices of 20,000 other metals 20 18,000 0 16,000 -20 14,000 -40 12,000 -60 10,000 Q1/12 Q2/12 Q3/12 Q4/12
Slide 18: Positive operating cash flow driven by NWC release
Positive operating cash flow driven by NWC release 2013 IV/13 III/13 EUR million restated Net cash from operating activities 34 223 43 Net cash from investing activities -108 143 -39 Free cash flow -74 367 4 Net cash from financing activities 459 -199 113 Net change in cash and cash equivalents 385
Slide 19: Capital structure
Capital structure Dec. 31, 2013 Sept. 31, 2013 EUR million restated Net interest-bearing debt 1) 3,556 3,861 Total Equity 1,891 2,262 Equity-to-assets ratio, % 21.5 25.0 Debt-to-equity ratio (gearing), % 1) 188.0 170.7 • Net interest-bearing debt of EUR 3,556 million (incl. TK loan note of EUR 1,283
Slide 20: Divestures and planned rights issue to strengthen Outokumpu balance sheet
Ensure Divestures and planned rights issue to financial stability strengthen Outokumpu balance sheet Illustrative gearing impact of Terni and VDM divestment: EUR million Q4/13 Q4/13 VDM and Terni divestment: Mgmt. estimate • Net debt expected to decrease by EUR 1.3 billion (the value of the TK loan
Slide 21: Comprehensive financial plan to strengthen liquidity and balance sheet
Ensure Comprehensive financial plan to strengthen financial stability liquidity and balance sheet Debt maturity profile, December 31, 2013 Security package: EUR million Liquidity facility, RCF, bilateral loans and the Notes entitled to 1,500 Short-term debt* security package Outstanding notes • Pled
Slide 22: Synergy savings reached EUR 95 million and clearly exceeded target for 2013
Synergy savings reached EUR 95 million and Deliver on synergies clearly exceeded target for 2013 Synergy savings over time (cumulative) 250 • EUR 95 million synergy savings 200 achieved in 2013, exceeding the 200 >170 forecast of EUR 75 million for 2013 150 100 75 95 • Contributions from raw mater
Slide 23: Headcount reductions according to plan
Cost efficient Headcount reductions according to plan production Total headcount, continuing operations • 2013 headcount reduction: 766 positions – in line with -766 target of 770 14,000 -750 • In 2014 further headcount reduction of up to 750 is 12,000 expected 10,000 • Overall target is to reduce g
Slide 24: P300: Excellent progress in NWC reduction. Continued NWC efficiency focus in 2014
P300: Excellent progress in NWC reduction. New efficiency programs Continued NWC efficiency focus in 2014 Cash flow from working capital change (contd. ops.) 1,2) Inventory tonnes development (contd. ops.) 2) In 1,000 tonnes 500 1,000 400 -27% 300 300 800 200 351 271 300 100 166 600 150 0 -15 -71 20
Slide 25: Contents
Contents 1. FY 2013 overview and strategic priorities 2. Financial performance 3. Outlook and guidance Feb. 13, 2014 25
Slide 26: Market forecast shows low demand in EMEA and slight increase in Americas in Q1 2014
Market forecast shows low demand in EMEA and slight increase in Americas in Q1 2014 EMEA total stainless steel real demand1) Americas total stainless steel real demand1) 1,000 tonnes 1,000 tonnes 2,000 1,000 2013e 2014f 2013e 2014f 1,900 950 1,800 900 1,700 850 1,600 800 1,500 750 1,400 700 1,300 65
Slide 27: Business and financial outlook – Q1 2014
Business and financial outlook – Q1 2014 • Outokumpu expects o Modest improvement in the underlying market demand o Sequentially higher delivery volumes and some improvement in base prices o The progress in the cost efficiency initiatives and synergies to be steady • Outokumpu estimates o Underlying
Slide 28: Key targets updated
Key targets updated Capex Capital expenditure to be below EUR 200 million in 2014 (2013: EUR 183 million) Ferrochrome production targeted to be approx. 490 kt in 2014 (2013: 434 kt). Once fully ramped-up in Ferrochrome 2015 (technical capacity of 530 kt), annual ferrochrome deliveries will range bet
Slide 29: Clear operational priorities for 2014
Clear operational priorities for 2014 1. Finalization of the Calvert ramp-up 2. Implementation of EMEA restructuring 3. Implementation of the savings programs 4. Improvement in customer satisfaction through enhanced delivery reliability Clear plan in place to bring Outokumpu back Outokumpu delivers
Slide 30: Q&A
Q&A 30
Slide 31: Appendix
Appendix Feb. 13, 2014 31
Slide 32: Outokumpu balance sheet
Outokumpu balance sheet Assets (MEUR) 31.12.13 31.12.12 Restated1) Goodwill is at EUR 465 Non-current assets (31.12.2012: EUR 477 million) Intangible assets 570 607 Property, plant and equipment 3,254 3,716 Investments in associated companies 66 51 and joint ventures Other financial assets 20 19 D
Slide 33: Outokumpu balance sheet
Outokumpu balance sheet Equity and liabilities (MEUR) 31.12.13 31.12.12 Restated1) Total equity 1,891 2,952 Incl. ThyssenKrupp loan note of Non-current liabilities EUR 1,283 million (Sept. 30, Long-term debt 3,270 2,935 2013: EUR 1,269) which will be Other financial liabilities 15 39 used as a con
Slide 34: Cost analysis 2013
Cost analysis 2013 Operative cost components 1) 2) Comments • Raw materials account for around 60% of the total operative costs of the Group • Share of Ni from total raw material cost is around 60% • Share of Cr from total stainless raw material cost is around 15-20%, but due to the captive supply,
Slide 35: Outokumpu global production - healthy balance between melting and finished with planned closures
Outokumpu global production - healthy balance between melting and finished with planned closures (planned state end of 2015) Million tonnes 5 4 1.4 Capacity Reduction Balanced ! 3 0.4 0.4 Plate & Long 2 3.3 Hot Band White 1 2.3 Cold Rolled 0 Melting Finished products Melting capacity shown after Kre
Slide 36: Balanced stainless production structure
Balanced stainless production structure After the new EMEA industrial plan (planned state end of 2015) thousand tonnes million t Coil EMEA HPSA Coil Americas APAC Total Finland Germany 1) Sweden 1) UK & USA Calvert San Luis Potosí Shanghai Melting 2) 1,450 450 450 900 3.3 Hot Rolling 1,450 900 870 3
Slide 37: New EMEA industrial plan introduced Oct. 1, 2013
EMEA New EMEA industrial plan introduced industrial plan Oct. 1, 2013 • Acceleration of the melting capacity reduction in Germany to achieve an efficient production footprint in European stainless steel operations. • Capacity optimization to increase efficiency and capacity utilization. o Transfer o
Slide 38: Balanced customer base across industries
Balanced customer base across industries Sales by customer segment 1) Sales by end-customer segment 1) Healthy balance between end-customer segments across both investment and consumer driven industries Other Consumer Distributors 5% goods & 45% Medical Heavy 21% industries 24% Automotive 18% Metal
Slide 39: Broadest product portfolio across stainless steel
Broadest product portfolio across stainless steel Deliveries by product grade 1) • New Outokumpu has a broad product portfolio to serve all customers 2) Other • Significantly higher share of ferritic grades Duplex 3% 3% leads into reduced sensitivity to Nickel price volatility Ferritic • Outokumpu p
Slide 40: Industrial production as the major driver for stainless growth…
Industrial production as the major driver for stainless growth… Growth p.a. Economic Index 2005=100 Industrial Production 2013 - 2017 Growth Prospects 200 180 Fundamental APAC 160 140 120 +5% growth 100 2011 2013 2015 2017 140 Recovery from Americas 120 +4% economic crisis and continued growth 100 2
Slide 41: … leads to growing stainless consumption mainly in APAC, and to some extent in Americas and EMEA
… leads to growing stainless consumption mainly in APAC, and to some extent in Americas and EMEA [Total stainless steel real demand in million tonnes] Ø Growth p.a. 38.1 2014-2016 36.4 34.6 32.9 31.2 29.9 27.3 +5% 26.7 25.3 24.0 22.7 APAC 20.0 21.0 18.5 +3% Americas 3.7 3.8 3.1 3.3 3.4 3.5 2.5 EMEA
Slide 42: Raw materials - Price development in 2013
Raw materials - Price development in 2013 19,000 Nickel1 1.3 Ferrochrome2 7 Feb 14 European contract price Q1’2014 U 18,000 U 14 105 USD/t 1.18 USD/lb S S 1.2 European spot price 17,000 D D / 16,000 / 1.1 7 Feb 14 t l 1.045 USD/lb o 15,000 b 1.0 n 14,000 13,000 0.9 2013 Feb Mar Apr May Jun Jul Aug S