Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Q1 2015 Earnings Presentation
43 slides from Outokumpu Oyj's earnings presentation, Apr 29, 2015
Slide 1: Interim report Q1 2015
Interim report Q1 2015 CEO Mika Seitovirta CFO Reinhard Florey April 29, 2015
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 April 29, 2015 3
Slide 4: Contents
Contents 1. Q1/15 overview and strategic priorities 2. Financial performance 3. Outlook and guidance April 29, 2015 4
Slide 5: Q1 2015 in brief
Q1 2015 in brief Underlying EBIT (EUR million) 1) EBIT excl. NRI • Positive underlying EBIT of EUR 2 million -48 -3 3 -9 8 2 • Deliveries up by 9% -6 -9 • Coil EMEA continued steady progress -28 -45 • Quarto Plate to break-even underlying EBIT I/14 II/14 III/14 IV/14 I/15 • Solid development in savi
Slide 6: Continued demand growth for stainless steel globally
Continued demand growth for stainless steel globally AMERICAS EUROPE APAC +12% +8% +9% +7% +6%+5% +6% +6% +5% +5% +4% +2% +2% +1% +1% +1% +1% -0% 12 13 14 15f 16f 17f 12 13 14 15f 16f 17f 12 13 14 15f 16f 17f +19% +12% +9% +8% +8% +8% +8% +8% +7% +6% +6% +7% +4% +4% +5% +4% +5%+6% +3% +3% +3% +3% +3
Slide 7: Stainless steel base prices remain flat lately
Stainless steel base prices remain flat lately European base prices (EUR) 1) US base prices (USD) 1) €/t $/t 1,300 1,500 Germany USA 1,200 1,400 1,100 1,300 1,000 1,200 Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Source: CRU April 2015 1) 2mm sheet cold
Slide 8: Nickel price development and stock levels
Nickel price development and stock levels Nickel price and stocks 1) 60,000 500 USD/t Ktonnes 50,000 400 40,000 300 30,000 LME stocks (rhs) 200 LME cash price (lhs) 20,000 100 10,000 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1) Source: nickel cash LME daily official April 29, 2015 8
Slide 9: Stainless steel imports to Europe ease in Q1/15. Asian imports to the US growing
Stainless steel imports to Europe ease in Q1/15. Asian imports to the US growing Third-country imports into Europe Third-country imports into the US Total market size 7.2 million tonnes in 2014 Total market size 3.7 million tonnes in 2014 Imports from Asia High import levels kt kt from Asia decreasi
Slide 10: Underlying EBIT development per business area
Underlying EBIT development per business area Coil EMEA Coil Americas Underlying EBIT (EUR million) Underlying EBIT (EUR million) 62 -93 28 6 21 15 15 10 -25 -28 -33 -40 I II III IV I I II III IV I 2014 2015 2014 2015 APAC Quarto Plate Long Products Underlying EBIT (EUR million) Underlying EBIT (EUR
Slide 11: Corrective actions to get Coil Americas back on track
Corrective actions to get Coil Americas back on track Asian imports into Americas have continued to increase Underlying EBIT Jose Ramon Salas deteriorated to as the new interim Demand from EUR -28 million head for the BA distributor segment in Q1 weak due to low nickel price and elevated stock level
Slide 12: Contents
Contents 1. Q1/15 overview and strategic priorities 2. Financial performance 3. Outlook and guidance April 29, 2015 12
Slide 13: Q1 key financials overview
Q1 key financials overview Group key figures • Stainless steel deliveries grew by 9.2% EUR million I/15 IV/14 I/14 2014 Stainless steel deliveries, kt 620 568 676 2,554 • Underlying EBIT improved as a result Sales 1,768 1,674 1,617 6,844 of higher volumes and steady EBIT -10 -36 -188 -243 performanc
Slide 14: Good progress in cost saving programs
Good progress in cost saving programs Cumulative savings 2013-2017 and • Synergy savings EUR 10 million and related cash costs (EURm) P250 savings EUR 25 million in Q1, EMEA restructuring Synergy savings P250 bringing total savings to date to 550 EUR 420 million 530 470 100 420 80 20 385 • Additiona
Slide 15: Coil EMEA
Coil EMEA EMEA key figures • Imports from China and Taiwan decreasing but Q1 order intake slow due to high stock EUR million I/15 IV/14 I/14 2014 levels Stainless steel deliveries, kt 411 369 464 1,666 Ferrochrome external 22 49 25 133 • Deliveries up by 11.4% q-o-q but lower y-o-y deliveries, kt Sa
Slide 16: Coil Americas
Coil Americas Americas key figures • Difficult market environment • Weak demand from the distributor EUR million I/15 IV/14 I/14 2014 sector Stainless steel deliveries, kt 126 126 135 541 • Continued high Asian imports into Sales 308 297 254 1,158 the US EBIT excl. NRI -30 -0 -36 -82 • Low nickel pr
Slide 17: APAC
APAC APAC key figures • Weak stainless steel market in APAC • Declining GDP growth in China EUR million I/15 IV/14 I/14 2014 • Pick up in market activity following Stainless steel deliveries, kt 52 54 48 220 the Chinese New Year failed to Sales 112 114 88 444 materialize EBIT excl. NRI -2 1 -5 -6 Un
Slide 18: Quarto Plate
Quarto Plate Quarto Plate key figures • Market environment continued weak with industrial customers hesitant to EUR million I/15 IV/14 I/14 2014 place new orders Stainless steel deliveries, kt 26 24 24 98 • Depressed investment climate Sales 122 120 102 450 • Low nickel price EBIT excl. NRI 0 -9 -2
Slide 19: Long Products
Long Products Long Products key figures • Overall demand weak • Low nickel price EUR million I/15 IV/14 I/14 2014 • Subdued project activity Stainless steel deliveries, kt 52 43 65 248 Sales 149 129 149 651 • European market impacted by EBIT excl. NRI 4 11 0 33 weakening euro and sluggish demand Und
Slide 20: Operating cash flow
Operating cash flow • Negative EUR 62 million operating cash flow EUR million I/15 IV/14 I/14 2014 • Cash outflow from redundancy provisions EUR -61 million (EMEA Net cash from operating -56 MEUR ) and change in -62 122 -14 -126 activities derivatives EUR -82 million offset by EUR 75 million of NWC
Slide 21: Debt and financing
Debt and financing Net debt and gearing Debt maturity profile EUR million 2,000 Gearing 1,771 Unutilized facilities 188% Net debt (EURm) Long-term debt 1,500 956 Short-term debt 1,000 93% 3,556 91% 488 500 1,974 2,034 312 815 292 289 200 112 54 71 64 0 2013 2014 I/15 2015 2016 2017 2018 2019 2021 20
Slide 22: EUR 75 million NWC release in Q1. Targeting cumulative EUR 400 million release in 2015
EUR 75 million NWC release in Q1. Targeting cumulative EUR 400 million release in 2015 Cash flow from working capital change 1) Inventory days development 2) EUR million Ø 2013: 100 426 Ø 2014: 102 Ø 2015 400 target: 86 3) 75 351 48 248 133 119 67 109 107 112 97 100 97 89 76 2013 I/14 II/14 III/14 I
Slide 23: Contents
Contents 1. Q1/15 overview and strategic priorities 2. Financial performance 3. Outlook and guidance April 29, 2015 23
Slide 24: Market forecast shows 4% stainless steel demand growth in both EMEA and Americas for Q2
Market forecast shows 4% stainless steel demand growth in both EMEA and Americas for Q2 EMEA total stainless steel real demand1) Americas total stainless steel real demand1) 1.000 tonnes 1.000 tonnes +4% 1,950 1,000 +4% 1,900 950 1,850 900 1,800 850 1,750 800 750 1,700 700 1,650 650 1,600 600 1,550
Slide 25: Business and financial outlook for Q2 2015
Business and financial outlook for Q2 2015 Market outlook for stainless steel Outokumpu estimates varies by region Flat delivery volumes q-o-q: deliveries In Europe, order intake improving expected to increase somewhat in and underlying demand remaining Europe and decrease in Americas relatively hea
Slide 26: Clear priorities for 2015
Clear priorities for 2015 1. Turning Coil Americas back on track 2. Continued profitability improvement in all business areas 3. Further progress in savings programs 4. Debt reduction and keeping financing costs intact 5. NWC management and cash flows Aiming for a clear improvement in profitability
Slide 27: Q&A
Q&A April 29, 2015 27
Slide 28: For more information, call Outokumpu Investor Relations
For more information, call Outokumpu Investor Relations or visit www.outokumpu.com/investors Johanna Henttonen Senior Vice President – Investor Relations Phone +358 9 421 3804 Mobile +358 40 5300 778 E-mail: johanna.henttonen@outokumpu.com Tommi Järvenpää Manager – Investor Relations Phone +358 9 42
Slide 29: Appendix
Appendix April 29, 2015 29
Slide 30: Outokumpu balance sheet
Outokumpu balance sheet Assets (MEUR) 31.3.15 31.12.14 Non-current assets Intangible assets 576 567 Property, plant and equipment 3,237 3,138 Investments in associated companies 79 78 and joint ventures Other financial assets 28 29 Deferred tax assets 53 44 Defined benefit plan assets 39 36 Trade an
Slide 31: Outokumpu balance sheet
Outokumpu balance sheet Equity and liabilities (MEUR) 31.3.15 31.12.14 Total equity 2,223 2,132 Non-current liabilities Non-current debt 1,732 1,597 Other financial liabilities 16 18 Deferred tax liabilities 36 31 Defined benefit and other long-term 392 372 employee benefit obligations Provisions 14
Slide 32: Cost analysis Q1 2015
Cost analysis Q1 2015 Operative cost components 1) Comments • Raw materials account for around 63% of the total operative costs of the Group • Energy and other consumables account for some 10-15% of the total operative costs • Personnel expenses some 10% of the total operative costs • Other cost of
Slide 33: Headcount reductions
Headcount reductions Total headcount reduction 1) Personnel per BA at the end of Q1/15 13,327 319 766 (3%) 793 659 589 (7%) EMEA 436 (6%) (5%) Americas 301 APAC 2,133 Quarto Plate 7,331 (18%) 1,974 (62%) Long Products Other operations 9,850 2012 2013 2014 I/15 2015- 2017e 2016e • Overall target is t
Slide 34: Capacities and production flow following restructuring
Capacities and production flow following restructuring Coil EMEA Quarto Plate (QP) Long Products (LP) [kt p.a.] [kt p.a.] [kt p.a.] MELTING TORNIO AVESTA SHEFFIELD (FIN) (SWE) (UK) 1,450 450 450 Slabs, Blooms, Billets, Ingots ROLLING TORNIO AVESTA HOT (FIN) (SWE) 1,450 900 PLATE & DEGERFORS NEWCASTL
Slide 35: Capacities and production flow ('to be' state)
Capacities and production flow (‘to be’ state) Coil Americas APAC TOTAL Group capacity [kt p.a.] [kt p.a.] MELTING CALVERT (US) 900 3.3m tonnes CALVERT ROLLING (US) HOT 870 3.2m tonnes PLATE & LONG 0.3m tonnes rolled + HBW) GOODS (Cold FINISHED CALVERT SL POTOSI SHANGHAI (US) (MEXICO) (CHINA) 350+15
Slide 36: 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 14% goods & 48% (47%) (8%) Medical 18 % (19%) Heavy Automotive indust
Slide 37: Broadest product portfolio across stainless steel
Broadest product portfolio across stainless steel Deliveries by product grade 1) • Outokumpu has a broad product portfolio to serve all customers Other 2% • Significantly higher share of ferritic grades Duplex (2%) 4% leads into reduced sensitivity to nickel price (4%) volatility2) Ferritic Austenit
Slide 38: Balanced customer base and comprehensive service center network in Europe
Balanced customer base and comprehensive service center network in Europe Total stainless market size in 2015 2) Nordic 450 Total Europe: 5.960 Eskilstuna Coil EMEA sales by customer segment 1) Outokumpu core market UK Outokumpu non-core Distributors market 280 41% 34% 43% Sheffield Germany 1.610 Da
Slide 39: Industrial production as the major driver for stainless growth
Industrial production as the major driver for stainless growth… Growth p.a. Economic Index 2010=100 Industrial Production 2015 - 2019 Growth Prospects 140 Fundamental APAC 120 100 +4% growth 80 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 130 Recovery from Americas 120 110 100 +3% economic cris
Slide 40: Growing stainless steel consumption mainly in APAC
… leads to growing stainless steel consumption mainly in APAC, and to some extent in Americas and EMEA [Total stainless steel real demand in million tonnes] Ø Growth p.a. 42.4 2015-2017 40.4 38.5 37.0 35.0 32.7 29.9 30.6 29.0 +5.9% 27.3 26.1 24.5 22.5 20.0 APAC 3.7 3.8 3.8 4.0 +3.0% 3.5 Americas 3.1
Slide 41: Nickel price development
Nickel price development 60,000 500 [USD/t] [Ktonnes] LME stocks (rhs) 450 50,000 400 LME cash price (lhs) 40,000 350 300 30,000 250 200 20,000 150 10,000 100 50 ,0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 o The nickel price was at its highest value of the quarter at 15,455 USD/tonne
Slide 42: Raw materials - price development
Raw materials - price development 22,000 Nickel1 1.4 Ferrochrome2 European contract price U U 1.3 20,000 European spot price S Q2/15 S 17 Apr 15 1.2 12,730 USD/t 1.08 USD/lb D 18,000 D 1.1 / / t 16,000 l 1 o b 0.9 n 14,000 16 Apr 15 0.8 0.76 USD/lb 12,000 0.7 Jan'14 Feb Mar Apr May Jun Jul Aug Sep O
Slide 43: April 29, 2015
April 29, 2015 43