Wartsila Oyj Abp · OMXHEX:WRT1V
Wartsila Oyj Abp — Wärtsilä — Merger or Acquisition (February 2005)
16 slides from Wartsila Oyj Abp's merger presentation, Feb 17, 2005
Slide 1: A Leading European Long Steel Producer
A Leading European Long Steel Producer February 17, 2005 at 13.00 (Finnish time) Adams Hall, Helsinki, Finland 05SER008 1
Slide 2: Owners’ Representatives
Owners’ Representatives Sakari Tamminen, Rautaruukki President and CEO Tom Johnstone, SKF President and CEO Ole Johansson, Wärtsilä President and CEO 05SER008 2
Slide 3: A Leading Long Steel Producer
A Leading Long Steel Producer Ruukki SKF Wärtsilä Ruukki long Ovako Steel Imatra Steel products* Net sales: €397 million Net sales: €254 million Net sales: €633 million NewCo Net Sales: €1.3 billion 18 production sites 2 Mton yearly steel production Bearing steel, low-alloy engineering steels and ca
Slide 4: Broad Product and Service Offering
Broad Product and Service Offering Pro Forma Net Sales: Bright bars €1.3 billion 13% of net sales Tubes and rings Bars 16% of net sales 35% Processing 40% Forgings 8% of net sales Wire rod 25% PC Strand 3% of net sales 05SER008 Note: Breakdown of 2004 pro forma net sales of €1.3 billion by product s
Slide 5: Ownership and Governance
Ownership and Governance Ruukki SKF Wärtsilä 47.0% 26.5% 26.5% NewCo Board of Directors and nominating companies: – Ruukki: Chairman + two members – SKF: Two members – Wärtsilä: Two members CEO, Jarmo Tonteri Registered office in Helsinki, Finland Headquarters in Stockholm, Sweden 05SER008 5
Slide 6: Strategic Rationale
Strategic Rationale Consolidation of the long steel industry Optimizing capacity utilization of NewCo Integrating the existing three businesses will result in substantial operational synergies A specialized long steel supplier with stronger strategic position to improve cost competitiveness and prof
Slide 7: Overview of Synergies
Overview of Synergies Owners are strongly committed to extract the synergies Identified cost synergies estimated at €30-40 million per year Realization of the synergies starts immediately after closing Full run-rate level to be achieved by end of 2007 through – Optimizing production cost base – Gain
Slide 8: Overview of NewCo
Overview of NewCo A leading European long steel producer of engineering steels – Main customer industries: rolling bearing, heavy vehicle, automotive and general Geographical Breakdown of engineering industries Net Sales – Broad product offering An independent financially strong company Outside Net
Slide 9: Production Locations
Production Locations Ruukki long products Hofors Ovako Mora Forsbacka Dalsbruk Imatra Smedjebacken Imatra Hällefors Koverhar Karlskoga Hallstahammar Ayr Kilsta Boxholm Hjulsbro Twente Alblasserdam Redon Molinella 05SER008 9
Slide 10: Pro Forma 2004 Key Financials
Pro Forma 2004 Key Financials Ruukki long (€ in million) Ovako Steel** Imatra Steel NewCo products* Sales 633 397 254 1 284 EBITDA 75 25 33 133 EBIT 54 12 20 86 Net Capital 264 139 130 533 Employed Total Assets 406 242 188 836 * Excluding reinforcing business 05SER008 ** Excluding La Foulerie and SK
Slide 11: Transaction Summary
Transaction Summary Ruukki to contribute Fundia Wire Oy Ab*, Fundia Special Bar AB* and Fundia Bar and Wire Processing AB* SKF to contribute Ovako Steel AB* Wärtsilä to contribute Imatra Steel Oy Ab* Equity ownership: Ruukki 47.0%, SKF 26.5%, Wärtsilä 26.5% Initial NewCo net gearing: 37.5% Definitiv
Slide 12: Benefits to Shareholders
Benefits to Shareholders Supports the shareholders’ strategy to focus on their respective core businesses Significant potential for profit and value enhancement through synergies Releases management resources and releases capital through planned refinancing of NewCo debt Significant holding in a lea
Slide 13: Implications to Ruukki
Implications to Ruukki Supports Ruukki’s strategy to focus on solution business in defined customer segments and on core market area EPS neutral in 2005, enhancing from 2006 onwards Annual net sales will decrease, Ruukki long products 2004 net sales €633 million Due to IFRS accounting EBIT will decr
Slide 14: Implications to SKF
Implications to SKF Supports SKF’s strategy to focus on front-end activities close to customer – Long-term supply contract – Steel cost turned from fixed to variable Slight improvement in margin and EPS SKF annual net sales decreased by approximately SEK 2 000 million (€222 million) Capital release
Slide 15: Implications to Wärtsilä
Implications to Wärtsilä Supports Wärtsilä’s strategy to focus on core businesses, clarifies the group structure Short term Group EBIT marginally down, EPS unchanged Upside on EPS through synergies Annual net sales will decrease – Imatra Steel 2004 sales €254 million Capital release of €25-30 millio
Slide 16: Biography of Jarmo Tonteri
Biography of Jarmo Tonteri Age, 52 years Positions – Currently CEO of Fundia AB – Held since 1992 various positions in Rautaruukki (e.g. CEO of Gasell) – Prior 1992 e.g. Managing Director of Lokomo Steel Inc. (part of Rauma Repola), Director of Metallurgy at Kuusakoski Oy, Sales Engineer at Outokump