Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Corporate Update (March 2017)
33 slides from Outokumpu Oyj's corporate update, Mar 7, 2017
Slide 1: Welcome to Outokumpu Americas
Welcome to Outokumpu Americas March 7, 2017 Michael S. Williams – Head of Americas Timothy J. Lynch – Head of Americas Operations
Slide 2: Speakers
Speakers Michael Williams heads the Timothy Lynch heads Operations for Americas business area of the Americas business area of Outokumpu. Outokumpu. Picture Michael joined the company in 2015 Timothy joined the company in 2015 with over 30 years of experience in with over 20 years of experience in a
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
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: Outokumpu – global leader in stainless steel
Outokumpu – global leader in stainless steel Sales of EUR 5.7 billion in 2016 5% 6% Europe Stainless 66% Americas 85% recycled steel is 100% 23% Long Products content raw recyclable Other operations materials Strong market position 1) ~55% of sales is direct sales to end-customers Over 10,000 people
Slide 6: We have a strong presence in key regions
We have a strong presence in key regions Avesta Tornio Kemi Degerfors Nyby Sheffield Krefeld Calvert Dillenburg Wildwood Richburg Dahlerbrück San Luis Potosí Integrated melt shop, hot and cold rolling Other mills Mine Service center
Slide 7: Outokumpu returned to profitability in 2016
Outokumpu returned to profitability in 2016 Underlying EBIT, EUR million Europe Americas 45 191 85 -91 -163 -88 -101 2015 2016 2015 2016 Long Products Other operations 7 -30 -377 -7 -48 2015 2016 2015 2016 2013 2014 2015 2016 7
Slide 8: 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 9: America's stainless market is growing
America’s stainless market is growing Total Americas cold rolled market 2016: 2,500 ktons Canada 2016-20: +21ktons 166 ktons CAGR: 3.1% US 1,607 ktons 2016-20: +180 ktons Mexico 345 ktons CAGR: 2.7% 2016-20: +70 ktons CAGR: 4.7% South America 382 ktons 2016-20: +66 ktons CAGR: 4.1% Source: SMR, Dec
Slide 10: We are firmly established in the market
We are firmly established in the market Americas’ underlying EBIT, EUR million Calvert -7 -24 -18 -43 Mexinox -91 -91 • Strong #2 in the US -163 • 25% market share in NAFTA in 2016 Q1 Q2 Q3 Q4 • Full commercial capability in place in 2018 2014 2015 2016 2016 10
Slide 11: Antidumping action lead to recovering base prices in the US
Antidumping action lead to recovering base prices in the US US base prices1, Third-country imports2 into the US, USD/tonne 1,000 tonnes 1,450 40 40 Import penetration 1,400 30 30 increased to 25.0% in Q4 1,350 20 20 Imports from 10 10 1,300 China into the 0 0 US 1,250 decreased significantly 1,200 F
Slide 12: Demand and supply in balance
Demand and supply in balance NAFTA cold rolled market size (1,000 tonnes) and Outokumpu market share OTK Third party Third party OTK OTK 2,500 +100 +100 +120 +130 +100 30% 22% 2,000 20% 1,500 10% 1,000 500 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016e 2017f CR consumption in NAFTA CR ca
Slide 13: Distributors and service centers are the predominant route-to-market in the US
Distributors and service centers are the predominant route-to-market in the US Distributors End-customers 11% Consumer goods 1% 3% Automotive 44% 16% Metal processing 74% 26% Heavy industries Construction & Architecture 25% Other 13
Slide 14: On track to profitability with Americas must-win battles
On track to profitability with Americas must-win battles AMERICAS HIGH MANUFACTURING WORLD CLASS COMMERCIAL SAFETY PERFORMING EXCELLENCE SUPPLY CHAIN EXCELLENCE ORGANIZATION 14
Slide 15: We have actions in place to achieve best-in-class safety
We have actions in place to achieve best-in-class safety Background • Safety audits Total recordable incident Top performers in any process industry completed in 2016 frequency, TRIFR (Group are the ones which have top safety level) performance too. We have been • Implementation of Safe clearly behi
Slide 16: New leaders shaping the team into a High Performing Organization
New leaders shaping the team into a High Performing Organization Upskilled talent in SG&A New organization, commercial and cost reduction new top leaders operations teams on track Energized Business Continued and engaged team: service center in investment in 96% OHI San Luis Potosi, training and res
Slide 17: World Class Supply Chain efforts yielding results
World Class Supply Chain efforts yielding results Ongoing Immediate logistics development optimization • On-time delivery and spend reduction • Transportation • Integrated supply chain Management System organization implementation in Mexinox • Transportation Management System • Strengthening regiona
Slide 18: Manufacturing Excellence has a big profitability impact
Manufacturing Excellence has a big profitability impact, with proven results • 22% throughput achievement at CAPL Overall Equipment • Melt shop heat sequencing Effectiveness: improvement of 15% Every 1% of yield • 25% variable cost per tonne increasing volume improvement improvement = beyond namepla
Slide 19: Cost competitive operations in Calvert
Cost competitive operations in Calvert Cost components Raw materials • Scrap ratio of 80-85% • Annual austenitic scrap usage of ~400 kt Energy • Long-term contracts with Alabama Power and Sempra Gas Labor • Highly competitive labor costs • Workforce flexibility Others • Logistics Raw materials Energ
Slide 20: Calvert's production flow
Calvert’s production flow 20
Slide 21: Synergies through optimized work-share with Mexinox
Synergies through optimized work-share with Mexinox Mexinox Calvert Regional Regional • Main focus on Mexico Chicago sales office • Main focus on the US (~70%) cross regional (~70%) supply • Limited capabilities of Specialization Mexinox mill • Austenitics • Production cost advantages • 72” wide • P
Slide 22: Commercial Excellence builds further inroads into the market
Commercial Excellence builds further inroads into the market, with a lot of runway Becoming the preferred partner of Market share growth choice – earning our fair share • Outperforming the market in quality - • Increased production capability as volumes increase • Broader portfolio • Recognized cust
Slide 23: We have significant improvement potential
We have significant improvement potential Cost improvement is the biggest lever Topline growth • 25% improvement in variable costs per • Volume increase tonne achieved in 2016 • Market share growth • 10% of SG&A cost reduced • Profitable sales growth through increased production capability and Furth
Slide 24: We are on our way to solid profitability
We are on our way to solid profitability Significant further Strong foothold Clear focus and improvement and good position strong execution potential in costs in the Americas drive and topline growth 24
Slide 25: Apendix
Apendix
Slide 26: Outokumpu Americas leadership team
Outokumpu Americas leadership team Americas Michael S. Williams Human Resources and Business Controlling Organizational Development Patrick Grundke David Scheid Communications IT Donna Lutter Julia Ferguson Sales Supply Chain Management Operations Stephen Letnich Jose Ramon Salas Tim Lynch
Slide 27: Mexinox, Stainless Steel Finishing Mill
Mexinox, Stainless Steel Finishing Mill 27
Slide 28: Mexinox – excellence in tailored solutions
Mexinox – excellence in tailored solutions • Founded in 1976 • Capacity to cold roll 250K MT • Expertise in austenitic and ferritic grades • Tailored finishing solutions: slitting, cut-to-length, blanks, circles • Winner of 2016 ISSF Sustainability Award for water recycling
Slide 29: Mexinox's production flow
Mexinox’s production flow 29
Slide 30: Fortinox – service center excellence
Fortinox – service center excellence 30
Slide 31: Value-added services at Fortinox
Value-added services at Fortinox CTL Lines Blanking Slitting Lines Grinding & Polishing Grinding & Polishing Grinding & Polishing Lines Lines Lines
Slide 32: The US market demand is recovering
The US market demand is recovering Prices still below historical averages Preliminary Demand is antidumping recovering: duties + 2% in dampening 2017* Stock levels Chinese Prices slightly imports increasing, below but below historical historical averages averages 32 *Source: SMR, October 2016
Slide 33: Global megatrends call for long lasting and sustainable solutions
Global megatrends call for long lasting and sustainable solutions Economic and population Climate change and Mobility and growth limited resources urbanization Medical engineering Buildings Sea water desalination related investments Elevators +1 Chemical and Automotive pharmaceutical growth Aerospac