Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Q1 2023 Earnings Presentation
27 slides from Outokumpu Oyj's earnings presentation, May 9, 2023
Slide 1: Solid result in a weaker market demonstrates Outokumpu's improved capabilities to create value
Solid result in a weaker market demonstrates Outokumpu's improved capabilities to create value Outokumpu Q1 2023 results Heikki Malinen, President & CEO Pia Aaltonen-Forsell, CFO May 9, 2023
Slide 2: Disclaimer
2 May 9, 2023 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 availab
Slide 3: Strong start to 2023
3 May 9, 2023 Strong start to 2023 Heikki Malinen, President & CEO
Slide 4: Adjusted EBITDA reached EUR 204 million
4 May 9, 2023 Seasonally strong quarter overshadowed by continued distributor de-stocking • Distributor de-stocking in both Europe and US impacted negatively stainless steel deliveries Adjusted EBITDA reached • Recycled material content* remained record high at 94% EUR 204 million • Efficient raw ma
Slide 5: Price gap between European and Asian stainless steel has narrowed
5 May 9, 2023 Nickel LME cash, USD/tonne Price gap between the European March and Asian stainless steel has 30000 25000 narrowed and import levels 20000 normalized 15000 10000 Transaction prices 304 stainless, USD/tonne* 5000 March 7500 2019 2020 2021 2022 2023 5000 Ferrochrome, USD/lb March 2500 2.
Slide 6: Adjusted EBITDA increased to EUR 204 million in the first quarter
6 May 9, 2023 Adjusted EBITDA increased to EUR 204 million in the first quarter - strong improvement from previous quarter Deliveries, kt Adjusted EBITDA quarter-on-quarter comparison1, EUR million 588 605 571 586 560 546 550 523 523 505 488 491 Stainless deliveries 450 increased by 12% Q1 Q2 Q3 Q4
Slide 7: Outokumpu continues to be the forerunner in sustainability
7 May 9, 2023 Outokumpu continues to be the forerunner in sustainability with strong ambitions to improve position further Safety performance, TRIFR • In Q1/23, we accelerated our safety cross- 8.7 learning program and strong focus on contractor safety to improve safety 4.4 4.1 3.2 2.4 performance 2
Slide 8: Stainless steel is energy-intensive and Nordics have low-carbon energy advantages
8 May 9, 2023 Stainless steel is an energy-intensive industry and Nordics have unique advantages in low-carbon energy Electricity price development EUR/MWh • We are looking for solutions to reduce our 500 scope 2 emissions further and improve our cost competitiveness 400 • New energy strategy is in
Slide 9: Only stainless company producing ferrochrome with a low CO2 footprint
9 May 9, 2023 We are the only stainless company producing ferrochrome with a low CO2 footprint and, therefore, uniquely positioned to capture competitive advantage from EU's Carbon Border Adjustment Mechanism (CBAM) CO2 emissions, global average vs. Outokumpu • CBAM is a carbon tariff: design includ
Slide 10: Phase 2 strategy execution on track and delivering clear results
10 May 9, 2023 Phase 2 strategy execution on track and delivering clear results Phase 3: Strong sustained performance • Successful customer-focused Phase 2: 2026– steering and margin Phase 1: Strengthen the core management Strengthen the 2023–2025 Investing in balance sheet growth and • Expansion of
Slide 11: Our industry-leading strong balance sheet gives us significant financial flexibility
11 May 9, 2023 Our industry-leading strong balance sheet gives us significant financial flexibility Pia Aaltonen-Forsell, CFO
Slide 12: Strong shareholder returns
12 May 9, 2023 • Net debt EUR -166 million Strong • Total liquidity reserves EUR 1.5 billion • Earnings per share EUR 0.22 in Q1/23 shareholder • EUR 252 million of capital returned to the returns shareholders while keeping our balance sheet the strongest in the industry prioritized ◦ EUR 100 millio
Slide 13: Financial performance remained solid
13 May 9, 2023 Financial performance remained solid Key figures Q1 2023 Q1 2022 Q4 2022 2022 Continuing operations Stainless steel deliveries 1,000 tonnes 505 605 450 2,106 Sales EUR million 2,006 2,573 1,895 9,494 Adjusted EBITDA EUR million 204 350 110 1,256 Net result EUR million 97 230 312 1,086
Slide 14: Phase 2 strategy execution: EBITDA run-rate improved by EUR 24 million
14 May 9, 2023 Phase 2 strategy execution firmly progressing: EBITDA run-rate improved by EUR 24 million in Q1 2023 Gross annualized EBITDA run-rate improvement, Highlights in Q1/23 EUR million • Strong strategic initiative pipeline of Realized more than 1,000 projects - almost Illustrative plan 300
Slide 15: Outokumpu is successfully exiting Long Products
15 May 9, 2023 Majority of the Long Products business divested • Divestment was completed on January 3, 2023, and the Outokumpu is total consideration of the transaction on a debt and cash free basis was EUR 228 million successfully exiting • Net debt impact was EUR 100 million in Q1/23 the Long Pro
Slide 16: BA Europe
16 May 9, 2023 Europe’s stainless steel deliveries, 1,000 tonnes BA Europe Seasonally increased volumes, 480 negative impact from lower stainless 391 401 410 414 420 prices was partly offset by positive raw 356 356 355 370 372 369 material impacts 360 338 316 322 300 • Strong margin management resul
Slide 17: BA Americas
17 May 9, 2023 Americas’ stainless steel deliveries, 1,000 tonnes BA Americas Profitability driven by increased volumes and positive raw material 240 168 176 192 194 180 185 177 167 impacts while stainless prices declined 180 134 136 148 125 142 120 • Strong rebound in performance following 60 a tou
Slide 18: BA Ferrochrome
18 May 9, 2023 Ferrochrome production, 1,000 tonnes BA Ferrochrome Production optimization continued 160 136 and adjusted EBITDA slightly 123 112 127 131 131 128 125 129 128 increased 120 104 69 70 80 • Ferrochrome production was at Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 50-60% of its full capacity
Slide 19: Working capital successfully managed and increased
19 May 9, 2023 Working capital successfully managed and increased as a result of seasonally higher volumes Q1/23 cash flow, EUR million Annual capex, EUR million Includes EUR 100 million Inventories increased in from Long Products' 200 volumes while lower metal divestment and EUR 15 prices offset th
Slide 20: Strong start to the year clearly demonstrates Outokumpu's improved resilience
20 May 9, 2023 Strong start to the year clearly demonstrates Outokumpu's improved resilience Heikki Malinen, President & CEO
Slide 21: Risk outlook is neutral at the moment
21 May 9, 2023 Risk outlook is neutral at the moment Positives • Timing & impact of China re-opening • Green transition investments Uncertainties • Likelihood of soft vs. hard landing? • War in Ukraine and its consequences • Energy market in winter 2023/2024
Slide 22: Outlook for Q2 2023
22 May 9, 2023 Outlook for Q2 2023 Group stainless steel deliveries in the second quarter are expected to remain stable compared to the first quarter. Ferrochrome production will increase and return to normal levels in the second quarter; however, the business area is preparing for a maintenance bre
Slide 23: Thank you! Questions & answers
23 May 9, 2023 Thank you! Questions & answers
Slide 24: BA Europe's adjusted EBITDA was EUR 122 million in Q1
24 May 9, 2023 BA Europe’s adjusted EBITDA was EUR 122 million in Q1 Adjusted EBITDA, EUR million Adjusted EBITDA quarter-on-quarter comparison1, EUR million 289 122 193 128 69 122 69 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q4 2022 Deliveries Pricing & mix Net of timing Costs Other Q1 2023 and hedgi
Slide 25: BA Americas' adjusted EBITDA was EUR 68 million in Q1
25 May 9, 2023 BA Americas’ adjusted EBITDA was EUR 68 million in Q1 Adjusted EBITDA, EUR million Adjusted EBITDA quarter-on-quarter comparison1, EUR million 136 135 68 90 68 23 23 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q4 2022 Deliveries Pricing & mix Net of timing Costs Other Q1 2023 and hedging
Slide 26: BA Ferrochrome's adjusted EBITDA was EUR 16 million in Q1
26 May 9, 2023 BA Ferrochrome’s adjusted EBITDA was EUR 16 million in Q1 Adjusted EBITDA, EUR million Adjusted EBITDA quarter-on-quarter comparison1, EUR million 93 16 79 14 34 14 16 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q4 2022 Deliveries Ferrochrome price Costs Other Q1 2023 1) Indicative column
Slide 27: Imports into Europe and US have normalized
27 May 9, 2023 Imports into Europe and US have normalized Third-country cold rolled imports1 into Europe, Third-country cold rolled imports2 into the US, 1,000 tonnes 1,000 tonnes Import penetration Import penetration (in %) (in %) kt kt 40 50 40 150 40 35 30 30 20% 100 30 20 23% 20 50 25 10 10 0 20