Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Outokumpu January conference call 2013
48 slides from Outokumpu Oyj's conference presentation, Jan 7, 2013
Slide 1: Creating a new global leader in stainless steel
Creating a new global leader in stainless steel Mika Seitovirta CEO Outokumpu January 7, 2013
Slide 2: Today's attendees of Outokumpu
Today‘s attendees of Outokumpu Kari Tuutti Mika Seitovirta Esa Lager Tamara Weinert EVP – Marketing, CEO CFO VP – Investor Relations Communications and IR • CEO since 2011 • CFO since 2005 • Joined Outokumpu • Joined Outokumpu • CEO Glaston: • Joined Outokumpu in 2011 from Inoxum GmbH 2007-2009 in 1
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: Outokumpu acquires Inoxum - overview
Outokumpu acquires Inoxum - overview • Outokumpu and ThyssenKrupp announced the Inoxum – Sales of € 6.7 billion 1) combination of Outokumpu and Inoxum on High January 31, 2012 Performance Alloys 18% • The combined entity operates under the name Stainless of Outokumpu, which will continue to be Steel
Slide 5: New Outokumpu highlights
New Outokumpu highlights 5 4 January 2013
Slide 6: New Outokumpu
New Outokumpu The new global leader in stainless steel and high performance alloys Leading market #1 stainless steel with 40% market Balanced customer base across presence share in Europe and 12% globally all key industry sectors Broadest product portfolio A strong position in the attractive Product
Slide 7: New Outokumpu Strategy Roadmap
New Outokumpu Strategy Roadmap Restructuring + Growth = Perfor- mance Harvest Transform Ensure Full integration Deliver on ongoing Ramp-up Expand Leverage Develop company financial and new synergies efficiency US presence Ferrochrome HPSA APAC structure stability culture projects Mill closures P100
Slide 8: Transaction logic remains strong
Transaction logic remains strong 8 4 January 2013
Slide 9: Strategic merits of transaction remain strong
Strategic merits of transaction remain strong Transaction creates a new global leader in stainless steel with close to 40% market New leader share in Europe and 12% globally. With Terni the market share would have been somewhat higher. Transaction continues to result in melting capacity reduction of
Slide 10: Transaction expected to create annual synergy savings of € 200 million
Transaction expected to create annual synergy savings of € 200 million Synergy savings by category Production site closures ~35% • Planned closures of meltshops in Germany (Krefeld and Bochum) 15 % • Possible additional reduction of thin cold rolling production capacity in Sweden (financial savings
Slide 11: Production site closures account for 35% of the total synergy savings
Production site closures account for 35% of the total synergy savings Production site closures Production site closures ~35% • Planned closures of meltshops in Germany (Krefeld and • Krefeld meltshop will be ramped-down Bochum) and closed in 2013 • Possible additional reduction of thin cold rolling
Slide 12: Capacity utilization and optimization account for 25% of the total synergy savings
Capacity utilization and optimization account for 25% of the total synergy savings Capacity utilization and optimization savings Production site closures ~35% • Planned closures of meltshops in Germany (Krefeld and • Tornio & Bochum meltshop Bochum) capacity utilization will increase • Possible addi
Slide 13: Procurement & raw materials account for 25% of the total synergy savings
Procurement & raw materials account for 25% of the total synergy savings Procurement & raw materials savings Production site closures ~35% • Planned closures of meltshops in Germany (Krefeld and • Leveraging group purchasing Bochum) power and common suppliers • Possible additional reduction of thin
Slide 14: Reductions in sales and general costs contribute 15% to the total synergy savings
Reductions in sales and general costs contribute 15% to the total synergy savings Sales and general cost savings Production site closures ~35% • Planned closures of meltshops in Germany (Krefeld and • Streamlining the overlapping sales Bochum) offices especially in Europe • Possible additional reduc
Slide 15: Up to € 150 million of the savings achieved during the first 2 years
Up to € 150 million of the savings achieved during the first 2 years Synergy savings over time (cumulative) 250 200 Max 150 Min 100 50 0 2013 2014 2015 2016 2017 Note: synergy saving target of € 200 million includes closures of Krefeld and Bochum meltshops but excludes possible savings from capacity
Slide 16: Outokumpu global production overview– excess melting capacity prior to planned meltshop closures
Outokumpu global production overview– excess melting capacity prior to planned meltshop closures 5 000 4 500 Imbalance 4 000 3 500 3 000 325 Plate & Long 2 500 4.900 Cold rolled 1) 2 000 Melting 1 500 2 795 1 000 500 0 Melting Finished products 16 1) Melting capacity shown before the Krefeld meltsho
Slide 17: Outokumpu global production overview– healthy balance between hot and cold with planned closures
Outokumpu global production overview– healthy balance between hot and cold with planned closures 5 000 4 500 Balance for 4 000 hot and cold 3 500 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 Finished products 17 1) Sales of least profitable finis
Slide 18: Overcapacity of melting capacity in stainless production
Overcapacity of melting capacity in stainless production– prior to planned Bochum meltshop closure 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 750 940 425 105 3
Slide 19: Balanced stainless production structure after the planned Bochum meltshop closure
Balanced stainless production structure – after the planned Bochum meltshop closure 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 750 940 425 105 350 270 290 Coil Coil Co
Slide 20: New Outokumpu value drivers
New Outokumpu value drivers 20 4 January 2013
Slide 21: New Outokumpu value drivers
New Outokumpu value drivers The new global leader in stainless steel and high performance alloys 1 #1 stainless steel with 40% 2 Leading market Balanced customer base market share in Europe presence and 12% globally across all key industry sectors 3 4 Broadest product portfolio A strong position in
Slide 22: New global leader in stainless steel
1 New global leader in stainless steel Cold rolled flat capacity (kt) 3 500 3 000 Remedy impact on cold rolling capacity 2 500 2 000 1 500 1 000 500 0 Outokumpu Posco Acerinox Aperam Tisco Yusco Baosteel Source: CRU Nov. 2011, Outokumpu 22 4 January 2013
Slide 23: Extensive production, sales network and technical experts in all key markets
Extensive production, sales network and 1 technical experts in all key markets Sweden Specialty stainless production units and an R&D center. USA New integrated production site in Calvert. High performance stainless plate, bar and pipe production units. Finland UK Modern fully integrated chrome mine
Slide 24: New Outokumpu has strong customer feedback on key customer priorities
New Outokumpu has strong customer 1 feedback on key customer priorities 80 % 75 70 65 Outokumpu 60 Company A 55 Company B 50 45 40 Product quality Delivery reliability Technical expertise 24 Source: Outokumpu and Inoxum customer survey. 720 stainless customers interviewed in 14 4 January 2013 countr
Slide 25: Balanced customer base across industries
2 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% Architect
Slide 26: Balanced customer base across industries
2 Balanced customer base across industries • Through our dedicated sales teams for each customer segment we ensure in-depth understanding of customer needs and materials requirements. • Customers will benefit from our material selection experience gained from various environments and applications. H
Slide 27: Broadest product portfolio across stainless steel and high performance alloys
Broadest product portfolio across stainless 3 steel and high performance alloys 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 se
Slide 28: Broadest product portfolio across stainless steel and high performance alloys
Broadest product portfolio across stainless 3 steel and high performance alloys High Zirconium alloys Titanium alloys HPA Nickel alloys High performance resistance Corrosion austenitic grades Duplex grades Standard Cr-Ni Mo Stainless austenitic grades Standard Cr-Ni austenitic grades Ferritic grades
Slide 29: A strong position in the attractive high performance alloys business
A strong position in the attractive high 4 performance alloys business • #2 market position globally with healthy profitability and growth outlook Material performance • Highly tailored material solutions to the most demanding environments in terms of material Zirconium alloys performance Titanium a
Slide 30: Expansion in Americas through Calvert ramp-up
Expansion in Americas through Calvert 5 ramp-up • Positive demand outlook in Americas • Creating a new low-cost, high-quality Calvert, Alabama supplier in NAFTA – strengthening the already strong market share of 20% 1) Outokumpu Mexinox, • Broader product range and highly San Luis Potosí competitive
Slide 31: Expansion in Americas through Calvert ramp-up
Expansion in Americas through Calvert 5 ramp-up Production base in USA and Mexico (end of 2012) Sales by customer segment (mgt estimates 2011) Chemical, Calvert, San Luis Potosí, petrochemical USA Mexico and energy 1% Automotive & Melting 900 1) heavy Other industries 4% 4% Hot rolling 870 2) 175 3)
Slide 32: Expansion in APAC with focus on high performance stainless products
Expansion in APAC with focus on high 6 performance stainless products • Asia is the fastest growing region in terms of Outokumpu presence in Asia stainless steel consumption • Strong demand for quality-focused special grades • Outokumpu and SKS are recognised quality brands in the region • Continued
Slide 33: Cost efficient and balanced global production platform
Cost efficient and balanced global production 7 platform 4 000 Balance for 3 500 hot and cold 3 000 325 2 500 Plate & Long 2 000 Cold rolled 1) 3 500 1 500 Melting 2) 2 795 1 000 500 0 Melting Finished products 33 1) Sales of least profitable finished products to be potentially scaled down if capaci
Slide 34: Own chromite mine and ferrochrome expansion
8 Own chromite mine and ferrochrome expansion • Ramp-up of the new Ferrochrome capacity has Highly competitive Ferrochrome production cost 1) started in November 2012 – full volumes of Outokumpu 530.000 tonnes expected to be reached by 2015 • Unique position as Europe’s only ferrochrome Competitors
Slide 35: Financials
Financials 4 January 2013 KUMPU
Slide 36: Key financials – Profit & Loss
Key financials – Profit & Loss New Outokumpu key P&L financials (pro forma) Profitability drivers for 2013 MEUR Jan - Sep 2012 FY2011 +• Ferrochrome expansion Sales 7.379 9.647 +• Calvert ramp-up EBITDA -431) 478 3,5) +• € 50 million synergy savings Operating result -365 2) -207 4,5) +• € 60 million
Slide 37: Key financials – Balance Sheet
Key financials – Balance Sheet New Outokumpu key balance sheet financials (pro forma) MEUR September 30, 2012 Net interest-bearing debt1) 2.742 Equity2) 3.601 Debt-to-equity ratio (gearing) 2) 76.1% ThyssenKrupp loan note 876 Gearing ratio on December 31, 2012 will be impacted by numerous factors 3)
Slide 38: Key financials – Capital Expenditure
Key financials – Capital Expenditure New Outokumpu capital expenditure (mgt estimates) Minimized capex for 2013 MEUR 2012 1) 2013 2) • 2012 was the peak year for new Outokumpu capital expenditure, Capex is planned to be significantly lower Maintenance in 2013 and beyond 140 120-150 capex • For 2013,
Slide 39: Consideration for Inoxum
Consideration for Inoxum As at September 30, 2012 MEUR Comments Cash payment to ThyssenKrupp 1.000 Was paid to ThyssenKrupp at closing Shares issued to ThyssenKrupp (29.9% of Outokumpu issued new shares equivalent to 29.9% of 516 1) combined company) total share capital existing at the time of closi
Slide 40: Loan note development
Loan note development 1 400 MEUR 1 200 163 1 000 18 45 87 61 800 30 45 188 600 438 400 876 200 235 1.087 1 250 0 1) 1) Loan Note Capex Ops Res. NWC change Others Loan Note Capex Ops Res. NWC change Others Loan Note Delta Dec Loan Note 30/9/11 30/9/12 Oct/Nov 12 Oct/Nov Oct/Nov Oct/Nov 30/11/12 2012
Slide 41: Remedy divestment considerations
Remedy divestment considerations • Outokumpu commits to the divestiture of Inoxum’s integrated stainless mill in Terni, Italy: • 1.6 million tonnes of melting and hot rolling capacity • Cold rolling capacity of up to 525.000 tonnes • Remedy also includes Outokumpu’s service center in Germany and Ter
Slide 42: Organization
Organization 42 4 January 2013
Slide 43: Outokumpu Leadership Team (OLT)
Outokumpu Leadership Team (OLT) CEO Mika Seitovirta HR & HSS 1) CFO Pii Kotilainen (acting) Esa Lager Marketing, IR & Strategy, Integration, Communications procurement, IT & Legal Kari Tuutti Reinhard Florey High Performance Stainless Coil Americas Stainless Coil EMEA Stainless APAC Stainless and Al
Slide 44: Business Areas with clear role and targets
Business Areas with clear role and targets Stainless Coil Stainless Coil High Performance Stainless APAC Americas EMEA Stainless and Alloys Establish a strong Maintain and expand Contribute to the Drive profitable market position in our very strong Outokumpu growth of High the Americas European Stai
Slide 45: Centralized functions to ensure group wide alignment and cost efficiency
Centralized functions to ensure group wide alignment and cost efficiency Stainless Coil Stainless Coil High Performance Procurement Stainless APAC Americas EMEA • Group wide unified process; Stronger negotiation position Stainless and Alloys • Reduced inefficiencies; Reduced transaction cost Establi
Slide 46: Summary
Summary 4 January 2013 KUMPU
Slide 47: Summary
Summary • Transaction creates the global leader in stainless steel and high performance alloys • New Outokumpu has a clear strategy and plan to return the company into sustainable profitability • Focus for 2013 will be in strengthening the balance sheet and implementing the planned synergy savings •
Slide 48: Q&A
Q&A