Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Q3 2021 Earnings Presentation
29 slides from Outokumpu Oyj's earnings presentation, Nov 4, 2021
Slide 1: Outokumpu Q3 2021 results
Outokumpu Q3 2021 results Heikki Malinen, President & CEO Pia Aaltonen-Forsell, CFO November 4, 2021
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: Business & market update
Business & market update Heikki Malinen, President & CEO 3 | November 4, 2021
Slide 4: €295 million adjusted EBITDA
• Strong demand and high utilization continued Adjusted EBITDA across the group increased to • Realized prices for stainless steel continued to €295 million increase, driven by the strong COVID-19 rebound • Strategy execution ahead of plan and EBITDA - best quarter in run-rate improvement target rai
Slide 5: Sustainability is at the core of our strategy, covering all elements of ESG
Sustainability is at the core of our strategy, covering all elements of ESG Safety performance (TRIFR) Organizational Health Index survey ongoing Leadership pipeline program to support 8.7 empowering leadership Vaccination centers in Germany & US Diversity & Inclusion initiative in Americas 4.4 4.1
Slide 6: High energy efficiency in the third quarter and recycled content remained above 90%
High energy efficiency in the third quarter and recycled content remained above 90%* Updated 1.5 ºC climate targets finalized and submitted to the SBTi Outokumpu featured as a 10-year power supply agreement signed to Climate Leader in increase the share of wind power in the Vision 2045 energy mix Su
Slide 7: EU renews anti-dumping duties on cold rolled from China and Taiwan
In September, EU published decision to renew the current anti-dumping duties on cold rolled from China and Taiwan for another five years 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 kt
Slide 8: Global spot prices continued to rise due to ongoing supply shortages
Global spot prices continued to rise due to ongoing supply shortages and logistical challenges that constrain global trade Transaction prices 304 stainless, USD/tonne Average Ferrochrome nickel price, benchmark price, 5,400 USD/tonne USD/lb. 4,900 4,400 3,900 3,400 0% 2,900 2,400 1,900 1,400 2014 20
Slide 9: Q3 adjusted EBITDA €295 million - higher realized prices due to strong COVID-19 rebound
Q3 adjusted EBITDA €295 million - higher realized prices due to strong COVID-19 rebound Group adjusted EBITDA, Adjusted EBITDA quarter-on-quarter comparison1, EUR million EUR million Cost inflation in energy, consumables and freight Deliveries seasonally decreased by 8% 295 223 177 Price increases w
Slide 10: Financial targets of strategy phase 1 raised
Financial targets of strategy phase 1 raised EBITDA run-rate improvement target raised from €200 million Outokumpu has to €250 million committed to de-risk the company by the end of 2022 Deleveraging continues through the first phase of the strategy beyond the initial leverage target 10 | November 4
Slide 11: Financial update
Financial update Pia Aaltonen-Forsell, CFO 11 | November 4, 2021
Slide 12: Cumulative €163 million realized EBITDA run-rate improvement achieved by end of September
Cumulative €163 million realized EBITDA run-rate improvement achieved already by the end of September Gross annualized EBITDA run-rate improvement Solid implementation pipeline by the end of 2022, EUR million 250 50 Realized Illustrative plan 827 Initiatives Target 40 implemented 604 Initiatives in
Slide 13: Progress in Q3 was driven by the Cost & Capital Discipline
Gross annualized EBITDA run-rate improvement, EUR million Progress in Q3 was driven by the Cost & Capital Discipline and Commercial Excellence streams Commercial Excellence Lean & Agile Cost & Capital Discipline Lean & Agile Organization Organization stream mainly completed Q1’21 Q2’21 Q3‘21 13 | No
Slide 14: Additional €50 million target is driven by Cost & Capital Discipline and Commercial Excellence
Additional €50 million target is driven by Cost & Capital Discipline and Commercial Excellence Initial €200 million EBITDA Raised €250 million EBITDA run-rate improvement target run-rate improvement target Commercial Excellence Additional €20 million Cost & Capital Discipline impact Additional Lean
Slide 15: Key figures Q3/21
Key figures Q3/21 Q3/20 Q2/21 2020 Stainless steel deliveries 1,000 tonnes 575 488 626 2,121 Sales EUR million 1,949 1,254 1,873 5,639 Adjusted EBITDA EUR million 295 22 223 250 Net result EUR million 182 -63 129 -116 Earnings per share EUR 0.40 -0.15 0.30 -0.28 Operating cash flow EUR million 180 1
Slide 16: BA Europe – higher realized prices offset lower deliveries
BA Europe – higher realized prices offset the negative impact from seasonally lower deliveries and increased costs Europe adjusted EBITDA, Adjusted EBITDA quarter-on-quarter comparison1, EUR million EUR million Deliveries seasonally decreased by 13% Higher consumable 149 prices, energy & freight cos
Slide 17: BA Americas – strong demand and continued successful turnaround
BA Americas – strong demand and continued successful turnaround Americas adjusted EBITDA, Adjusted EBITDA quarter-on-quarter comparison1, EUR million EUR million Variable costs increased 84 as a result of higher Higher consumable prices 65 realized prices 54 14 18 Pricing Net of Q2/21 Deliveries tim
Slide 18: BA Ferrochrome – favorable price development offset by decrease in volumes
BA Ferrochrome – favorable price development offset by decrease in volumes Ferrochrome adjusted EBITDA, Adjusted EBITDA quarter-on-quarter comparison1, EUR million EUR million 67 Higher sales price was 64 impacted by increased Chinese spot market prices 42 & lower EUR/USD FX rate 34 9 FeCr Q3/20 Q4
Slide 19: BA Long Products – continued positive progress on turnaround strategy
BA Long Products – continued positive progress on turnaround strategy despite seasonally lower volumes Long Products adjusted EBITDA, Adjusted EBITDA quarter-on-quarter comparison1, Energy prices, EUR million EUR million freight costs and maintenance costs increased 11 12 9 Product mix improved 0 -3
Slide 20: Investing in working capital while maintaining strict capex discipline
In order to support strong demand, we are investing in working capital while maintaining strict capex discipline Q3/21 cash flow, Annual capex, EUR million EUR million 240 €180 million 200 160 120 80 40 0 2020 2021 EBITDA Working Provisions, Operating Net cash from Cash flow before capital pensions,
Slide 21: We will continue to deleverage through the first phase of the strategy
We will continue to deleverage through the first phase of the strategy until the end of 2022 Net debt, EUR million Net debt/LTM adjusted EBITDA 69% 1,800 70% IFRS16 impact* 1,600 60% 51% 1,400 45% 45% 50% 1,200 40% 44% 44% 1,000 32% 40% 25% 800 30% 600 < 3.0 20% 400 200 10% 1,610 1,242 1,091 1,241 1
Slide 22: We are redeeming the 2024 bond in December
We are redeeming the 2024 bond in December to optimize capital structure and reduce interest expenses Debt structure* Debt maturity profile*, EUR million 9% 1,000 Total liquidity reserves 23% increased to €1.0 billion 18% 800 in Q3/21 600 10% 400 20% 19% 200 0 Bonds Convertible bonds Cash & 2021 202
Slide 23: Outlook
Outlook Heikki Malinen, President & CEO 23 | November 4, 2021
Slide 24: Outlook for Q4 2021
Group stainless steel deliveries in the fourth quarter are expected to remain at a similar level compared to the third quarter. The European ferrochrome benchmark price increased to USD Outlook for 1.80/lb for the fourth quarter. Higher stainless steel prices are reflected in the already received Q4
Slide 25: Thank you! Questions & answers
Thank you! Questions & answers 25 | November 4, 2021
Slide 26: More ambitious ESG strategy was launched in May
More ambitious ESG strategy was launched in May Environment Social Governance Reduce emissions and provide Health and safety of our people Ensure transparency solutions for a sustainable future in everything we do and compliant processes GHG emissions Safety Share of local suppliers Scopes 1-3 Fatal
Slide 27: SBTi is the highest CO2 standard and Outokumpu has an approved target
SBTi is the highest CO2 standard and Outokumpu is the only stainless steel company with an approved target Previous target of SBTi 2.0 ºC was Outokumpu's value chain emissions tCO2-eq/t stainless steel upgraded with a commitment Business Ambition for 1.5 °C to SBTi 1.5 ºC 1.9 1.5 0.9 0.8 Scope 3 0.5
Slide 28: Outokumpu is the only stainless steel company reporting emissions from all three scopes
Outokumpu is the only stainless steel company reporting its emissions from all three scopes Value chain emissions, tCO2-eq/t of stainless steel 7.8 • With all three scopes included, Outokumpu Scope 1 & 2 has the lowest CO2 footprint; only 1.5 Scope 3 5.4 tonnes of CO2 per tonne of stainless steel Sc
Slide 29: Our efforts on sustainability have been globally recognized
Our efforts on sustainability have been globally recognized 29 | November 4, 2021