Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Q1 2016 Earnings Presentation
32 slides from Outokumpu Oyj's earnings presentation, Apr 27, 2016
Slide 1: Interim statement Q1/2016
Interim statement Q1/2016 CEO Roeland Baan CFO Reinhard Florey April 27, 2016
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 Roeland Baan Reinhard Florey SVP CEO CFO Investor Relations 3
Slide 4: Q1 in line with our expectations
Q1 in line with our expectations Underlying EBIT, EUR million • Delivery volumes up by 6% • Operating cash flow EUR 74 million 2 • Net debt to below 1.6 billion -11 -20 -25 • Lower base prices • Scrap costs increased • Total of EUR 15 million write-downs -67 of trade receivables in Europe and aged i
Slide 5: ~1% demand growth expected for 2016
~1% demand growth expected for 2016 Americas Europe APAC Global +9% +7% +7% +6% +5% +5% +4% +4% +4% +4% +4% +2% +2% +2% +2% +3% -2% -1% +1% 0% +1% +1% +1% -2% 13 14 15 16f 17f 18f 13 14 15 16f 17f 18f 13 14 15 16f 17f 18f 13 14 15 16f 17f 18f USA OTHER AMERICAS OTHER EMEA CHINA OTHER APAC +12% +8% +
Slide 6: European base prices resilient
European base prices resilient European base prices1, EUR/tonne Third-country imports2 into Europe, 1,000 tonnes 1,250 90 50 Germany 80 70 40 1,200 60 30 Import 50 penetration 1,150 40 decreased slightly 20 to 24.4% in Q1 30 1,100 20 10 10 0 0 1,050 2007 2009 2011 2013 2015 From Asia 1,000 From rest
Slide 7: American base prices turning the corner
American base prices turning the corner US base prices1, USD/tonne Third-country imports2 into the US, 1,000 tonnes 1,450 40 50 35 40 1,400 30 Import 25 30 penetration decreased to 1,350 20 20.7% in Jan-Feb 15 20 1,300 10 10 5 1,250 0 0 2007 2009 2011 2013 2015 From Asia 1,200 From rest of world 201
Slide 8: 13-year low in nickel price reflected in stainless transaction prices
13-year low in nickel price reflected in stainless transaction 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 2,000 10,000 0 1,000 2011 2012 2013 2014 2015 2016 Europe USA China 8
Slide 9: Q1 key financials
Q1 key financials Deliveries grew in both Europe and Americas Key figures Q1/16 Q4/15 2015 Stainless steel deliveries, 1,000 tonnes 610 574 2,381 Sales down by 3.4% driven by lower prices Sales, EUR million 1,386 1,435 6,384 Underlying EBITDA, EUR million 38 50 196 Positives from higher deliveries o
Slide 10: Updates in Outokumpu financial reporting
Updates in Outokumpu financial reporting Reporting practices Underlying EBIT as main New business areas profitability measure • Interim statements in Q1 • Shows best underlying • Q1 reported according to and Q3 profit drivers and new BA structure: • Q2 and Q4/FY reports operational performance • Eur
Slide 11: Europe's performance stronger
Europe’s performance stronger Europe deliveries, Europe underlying EBIT, • End-demand stable, distributor demand 1,000 tonnes EUR million subdued • Prices under pressure 413 421 41 42 410 • Operating environment for plate 381 33 375 27 products subdued • Ferrochrome production 132,000 tonnes • EMEA
Slide 12: Americas' market dynamic started to improve
Americas’ market dynamic started to improve Americas deliveries, Americas underlying EBIT, • Apparent consumption up by 4.8% 1,000 tonnes EUR million • Antidumping and countervailing duty petitions against Chinese importers 161 filed in February 139 144 133 • Announced price increases expected to 11
Slide 13: Long Products' prices still under pressure
Long Products’ prices still under pressure Long Products deliveries, Long Products underlying EBIT, • Operating environment overall weak 1,000 tonnes EUR million particularly in the US • Prices under pressure in both Europe 62 4 and the US 58 3 3 52 50 • low nickel prices 42 • subdued Oil & Gas -rel
Slide 14: Positive operating cash flow
Positive operating cash flow EUR million Q1/16 Q4/15 2015 Net cash from operating • Change in working capital of 74 2 -34 EUR 58 million activities • Financing costs EUR 34 million Net cash from investing -17 319 239 activities • Overall liquidity reserves EUR 900 million Free cash flow 57 321 205 •
Slide 15: Net debt decreased to below EUR 1.6 billion
Net debt decreased to below EUR 1.6 billion Net debt and gearing Debt maturity profile, EUR million 188% 93% 3.56 69% 70% 1.97 1.61 1.55 2013 2014 2015 Q1/16 2016 2017 2018 2019 2020 2021+ Net debt, EUR billion Gearing, % Current debt Non-current debt Unutilized facilities 15
Slide 16: Real demand expected to remain sequentially flat in Q2
Real demand expected to remain sequentially flat in Q2 EMEA total stainless steel real demand, 1,000 tonnes Americas total stainless steel real demand, 1,000 tonnes 2,000 1,100 +2% 1,950 -2% 1,000 1,900 1,850 900 1,800 1,750 800 1,700 700 1,650 1,600 600 1,550 1,500 500 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4
Slide 17: Business and financial outlook for Q2/2016
Business and financial outlook for Q2/2016 Market commentary Outokumpu estimates for Q2 In Europe • Underlying demand in key sectors Delivery volumes to be sequentially flat outside of Oil & Gas expected to continue healthy Underlying EBIT to remain at a similar level as in Q1 • Stock levels among d
Slide 18: Improving competitiveness and financial performance
Improving competitiveness and financial performance To be the best value Financial targets for 2020 creator in stainless steel by 1 2020 through customer orientation and EBIT efficiency. EUR 500 million The best value in the industry 2 for customers, shareholders and employees ROCE through: 12% HIGH
Slide 19: Immediate actions for a step change in cost and competitive position
Immediate actions for a step change in cost and competitive position 1 New organizational set-up Net debt SG&A cost reduction 2 EUR 100 million by the end of 2017 EUR 1.2 billion by the end of 2017 NWC reduction 3 At least EUR 200 million by end of 2016 19
Slide 20: Our new vision
Our new vision To be the best value creator in stainless steel by 2020 through customer orientation and efficiency. 20
Slide 21: Appendix
Appendix 21
Slide 22: Balance sheet
Balance sheet Assets (MEUR) 31.3.16 31.12.15 Non-current assets Intangible assets 496 498 Property, plant and equipment 2,924 3,005 Investments in associated companies 62 63 and joint ventures Other financial assets 45 41 Deferred tax assets 22 16 Defined benefit plan assets 47 35 Trade and other re
Slide 23: Balance sheet
Balance sheet Equity and liabilities (MEUR) 31.3.16 31.12.15 Total equity 2,229 2,329 Non-current liabilities Non-current debt 870 1,249 Other financial liabilities 9 9 Deferred tax liabilities 16 16 Defined benefit and other long-term 388 369 employee benefit obligations Provisions 111 113 Trade an
Slide 24: Cost analysis
Cost analysis Operative cost components in 2015 Comments • 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 incl
Slide 25: Headcount reductions
Headcount reductions Total headcount reduction Personnel per business area at the end Q1/16 14,000 13,327 766 13,000 436 1,123 12,000 292 656 82 1,620 11,000 Europe 2,263 Americas 10,000 9,300 Long Products 9,000 Other operations 7,709 8,000 25
Slide 26: Balanced customer base across industries
Balanced customer base across industries Distributors End-customers Consumer goods & medical Automotive 20% 15% Architecture, building & construction 44% 17% 56% Chemical, petrochem. and energy 22% 5% Metal processing & tubes 4% 17% Heavy industries Other Figures for full year 2015 26
Slide 27: Broadest product portfolio across stainless steel
Broadest product portfolio across stainless steel Deliveries by product grade in 2015 Outokumpu product forms Other Duplex 3% 4% Ferrochrome Slab Quarto plate Austenitic (CrNi) Ferritic 56% 21% Hot rolled Hot and cold rolled Precision strip black coil white coil Austenitic (CrNiMo) Rolled and Cast s
Slide 28: Fully integrated production asset base
Fully integrated production asset base Europe Americas Long Products Total Tornio Avesta Krefeld Degerfors Calvert Mexinox New Castle Sheffield Richburg Degerfors Wildwood Finland Sweden Germany Sweden USA Mexico USA UK USA Sweden USA Melting 1,450 450 900 450 3,250 Hot rolling 1,450 900 870 3,220 C
Slide 29: 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 4.9 4.9 4.6 4.6 3.3 3.3 3.3 24 25 25 4.7 4.6 4.5 4.6 3.3 3.2 3.2 3.2 3.2 23 22 21 3.9 2.8 21 3.8 3.8 2.8 20 3.6 3.7 3.7 2.6 2.6 2.7 19 19 3.5 3.5 2.6 18 18 1
Slide 30: Unbalanced trade flows
Unbalanced trade flows CR in kt, 92 125 110 515 330 Factors supporting exports: Exchange rate benefits 38 Game changers: Cost advantages Government subsidies EU antidumping case Different regulations Indonesian nickel ore ban Possible US antidumping Source: Foreign trade statistics Mar
Slide 31: Nickel price development
Nickel price development 60,000 500 [Ktonnes] [USD/t] 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 2016 • Nickel prices slumped to 13-year lows below 8,000 USD/tonne in early Fe
Slide 32: 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