Slide 1: Interim report Q2/2017
Interim report Q2/2017 CEO Roeland Baan CFO Chris de la Camp July 25, 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 through customer orientation and efficiency
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: Solid Q2 result despite FeCr production challenges
Solid Q2 result despite FeCr production challenges Adjusted EBITDA, EUR million • Safety: a fatal accident occurred in Degerfors • Significant year-on-year improvement with 294 ~EUR 500 million adjusted EBITDA in H1/17 • Productivity and efficiency improvements continued to yield solid results 199 •
Slide 6: European base prices under pressure due to declining distributor demand
European base prices under pressure due to declining distributor demand European base prices1 (Germany), Third-country cold rolled imports2 into Europe, EUR/tonne 1,000 tonnes 1 200 100 50 80 40 Import 1 150 60 30 penetration up to 27.1% in Q2 40 20 1 100 20 10 1 050 0 0 1 000 From rest of world Fro
Slide 7: US base prices stable
US base prices stable US base prices1, Third-country cold rolled imports2 into the US, USD/tonne 1,000 tonnes 1 450 40 40 Import penetration of 1 400 30 30 22.7% in Q2 1 350 20 20 10 10 1 300 0 0 1 250 1 200 From rest of world From China 2013 2014 2015 2016 2017 From rest of Asia Import penetration
Slide 8: Key financials
Key financials Increased deliveries in the Key figures II/17 II/16 2016 Americas were offset by decreased deliveries in Stainless steel deliveries, 1,000 tonnes 625 629 2,444 Europe and Long Products Sales, EUR million 1,659 1,379 5,690 Q2/17 sales increased by Adjusted EBITDA, EUR million 199 66 30
Slide 9: Europe continued its strong performance
Europe continued its strong performance Deliveries, 1,000 tonnes Adjusted EBITDA, EUR million • Strong underlying demand in Q2/17 in all customer segments 421 413 415 257 396 395 398 • Q2/17 average base price increased by 178 EUR 120/tonne compared to Q2/16 • Distributor inventories above historica
Slide 10: Americas’ performance stable
Americas’ performance stable Deliveries, 1,000 tonnes Adjusted EBITDA, EUR million • Robust demand in Q2/17 185 186 29 182 27 • Distributor demand was negatively 177 12 impacted by declining raw material prices 1 167 • Distributor inventories decreased to below 161 -3 long-term average levels • Q2/1
Slide 11: Long Products solidly profitable
Long Products solidly profitable Deliveries, 1,000 tonnes Adjusted EBITDA, EUR million • Underlying demand remained solid 75 9 70 65 68 during Q2/17 7 59 50 • Decline in distributor demand towards 2 2 the end of the quarter • Higher base prices in Europe and the US compared to Q2/16 -1 • Q2/16 EBITD
Slide 12: Cash position strengthened further
Cash position strengthened further • Net working capital increased by EUR 29 million EUR million II/17 II/16 2016 during Q2 driven by Net cash from operating • Reduction in inventory tonnes 150 54 389 activities • Trade and other receivables decreased by EUR 85 million Net cash from investing • Trad
Slide 13: Leverage reduced to below 2.0
Leverage reduced to below 2.0 • Voluntary redemption of EUR 25 Net debt and gearing Debt maturity profile, EUR billion million of the outstanding EUR 250 188% million senior secured notes due 1,2 2021 in June 9.8 4.0 • Moody’s rating update: 2.4 0,8 93% 1.8 • Issuer corporate family rating 3.56 69%
Slide 14: Timing impact on EBITDA
Timing impact on EBITDA Timing impact on metals • Timing gains or losses arise from the difference Metal market Purchasing between purchase price and invoice price of metal Case: price base components FeCr price change Invoicing gain base • Purchasing base = period which determines alloy Delivery pu
Slide 15: Business and financial outlook for Q3/2017
Business and financial outlook for Q3/2017 • Typical seasonal slowdown • Market pressure towards decreasing base prices in both Europe and the US • Stainless steel deliveries in Europe and Long Products to decrease, relatively flat in the Americas • Ferrochrome Outokumpu expects • Lower ferrochrome
Slide 16: We are solidly on track
We are solidly on track We are driving The EUR 500 We have improved topline growth and million by 2020 our profitability efficiency through EBIT target is firmly through self-help our must-win within our reach battles 16
Slide 17: Appendix
Appendix
Slide 18: Income statement
Income statement (MEUR) April-June 2017 April-June 2016 Sales 1,659 1,379 Cost of sales -1,432 -1,287 Gross margin 226 92 Other operating income 19 36 SG&A costs -84 -112 Other operating expenses -7 -10 EBIT 154 6 Share of results in associated companies and joint ventures 4 1 Financial income and e
Slide 19: Balance sheet
Balance sheet Assets (MEUR) June 30, 2017 Dec 31, 2016 Equity and liabilities (MEUR) June 30, 2017 Dec 31, 2016 Non-current assets Total equity 2,561 2,416 Intangible assets 489 504 Non-current liabilities Property, plant and equipment 2,730 2,874 Non-current debt 996 987 Investments in associated O
Slide 20: 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 21: Improving performance
Improving performance Financial targets for 2020 EBIT ROCE Gearing EUR 500 million 12% <35% 21
Slide 22: 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 23: 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%
Slide 24: 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 25: 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 26: ~4-5% demand growth expected for 2017
~4-5% demand growth expected for 2017 Americas Europe APAC Global +5% +4% +4% +4% +3% +3% +3% +5% +5% +3% +4% +4% +3% +2% +2% +2% +2% +2% +2% +4% +1% +1% -4% -2% 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 27: Q3’17 real demand expected to decrease 6% q/q in EMEA and increase 2% in Americas
Q3’17 real demand expected to decrease 6% q/q in EMEA and increase 2% q/q in Americas EMEA total stainless steel real demand1 Americas total stainless steel real demand1 1,000 tonnes 1,000 tonnes -6% 2 000 1 000 +2% 1 950 950 1 900 900 1 850 850 1 800 800 1 750 750 1 700 700 1 650 650 600 1 600 550
Slide 28: 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] 25,8 26,1 4,9 25,3 4,9 4,6 4,6 4,7 4,6 4,5 4,6 3,2 23,8 3,2 3,2 3,2 22,6 22,3 4,1 3,0 3,0 3,0 4,0 3,0 21,2 21,4 3,9 4,0 2,8 20,6 3,7 3,8 2,7 19,1 19,6 3,5 2,5 2
Slide 29: Transaction prices trending down on the back of weakening alloy prices
Transaction prices trending down on the back of weakening alloy 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 2 1 000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 2011 2012 2013
Slide 30: Raw materials - price development
Raw materials - price development 12,000 Nickel1 1,9 Ferrochrome2 European contract price U 11,000 U 1,7 S S 1,5 10,000 European spot price D D Q3/17 1,3 1.10 USD/lb / 9,000 / t l 1,1 o 8,000 b 21 Jul 17 0,9 0.75 USD/lb n 7,000 21 Jul 17 0,7 9,560 USD/t 6,000 0,5 Jan'16 Feb Mar Apr May Jun Jul Aug S
Slide 31: 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 32: For more information, call Outokumpu Investor Relations or visit www.outokumpu.com/investors
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