Slide 1: Q2 2018 results
Q2 2018 results CEO Roeland Baan CFO Chris de la Camp July 24, 2018
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: Speakers
Speakers Roeland Baan Chris de la Camp Tommi Järvenpää President & CEO CFO Vice President Investor Relations 3
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: Good performance in an adverse environment
Good performance in an adverse environment Group, adjusted EBITDA, Adj. EBITDA quarter-on-quarter comparison*, EUR million EUR million 133 136 Higher transportation, 199 electrode and other input costs 133 136 56 82 Emission Net of II/17 III/17 IV/17 I/18 II/18 I/18 Deliveries Pricing & timing and C
Slide 6: European base prices under pressure, US base prices increasing
European base prices under pressure, US base prices increasing European US Nickel price, Ferrochrome price, average base price, average base price, USD/tonne USD/lb EUR/tonne USD/tonne 1,100 1,470 14,476 1,396 1.42 984* 13,276 1.18 I/18 II/18 I/18 II/18 I/18 II/18 I/18 II/18 Sources: Base prices: CR
Slide 7: Significant drop in European base prices...
Significant drop in European base prices... European base prices1 (Germany)*, US base prices1, Transaction prices 304 stainless, EUR/tonne USD/tonne USD/tonne 4,000 Europe 1,200 1,500 USA 1,150 1,450 3,500 China 1,100 1,400 1,050 3,000 1,000 1,350 2,500 950 1,300 900 2,000 1,250 850 800 1,200 1,500
Slide 8: …as imports into Europe continue to rise
…as imports into Europe continue to rise Third-country cold rolled imports1 into Europe, Third-country cold rolled imports2 into the US, 1,000 tonnes 1,000 tonnes 120 50 40 40 29% 31% 100 40 20% 21% 30 30 80 30 60 20 20 20 40 10 10 10 20 0 0 0 0 From rest of world From China From rest of world From
Slide 9: Group key financials
Group key financials Key figures II/18 II/17 I/18 Stainless steel deliveries, 1,000 tonnes 668 625 644 Sales, EUR million 1,883 1,657 1,671 Adjusted EBITDA, EUR million 136 199 133 Net result, EUR million 25 109 49 Earnings per share, EUR 0.06 0.26 0.12 Operating cash flow, EUR million 71 150 39 Net
Slide 10: Europe – good result in challenging market
Europe – good result in challenging market Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million 83 73 129 Higher electrode and other input 83 73 costs, partly 69 offset by lower freight costs 37 I/18 Deliveries Pricing Net of Costs Other II/18 II/17 III/17 IV/17 I/18
Slide 11: Americas started to benefit from higher base prices
Americas started to benefit from higher base prices Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million 27 10 -0 -6 10 Higher transportation, -34 -6 electrode and other input costs I/18 Deliveries Pricing Net of Costs Other II/18 II/17 III/17 IV/17 I/18 II/18 & mix t
Slide 12: Long Products solidly improving profitability
Long Products solidly improving profitability Adjusted EBITDA1, EUR Adj. EBITDA quarter-on-quarter comparison2, EUR million million 9 7 9 3 4 Higher electrode and other input costs -2 4 I/18 Deliveries Pricing Net of II/18 II/17 III/17 IV/17 I/18 II/18 timing & Costs & mix hedging 1) Fagersta Stainl
Slide 13: Ferrochrome impacted by planned maintenance
Ferrochrome impacted by planned maintenance Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million 42 39 56 Higher maintenance 48 costs and coke 42 39 price 16 II/17 III/17 IV/17 I/18 II/18 I/18 Deliveries FeCr price Costs Other II/18 1) Indicative columns based on mana
Slide 14: Solid operating cash flow
Solid operating cash flow Cash flow, EUR million Includes -18 136 Fagersta acquisition -47 Includes redemption costs of 2021 notes 71 -69 2 EBITDA Working Provisions, Operating Net cash from Cash flow capital pensions, financial cash flow investing before charges and other activities financing activ
Slide 15: Net debt increased driven by dividend payment
Net debt increased driven by dividend payment • Dividend: EUR 103 million • Share repurchases: EUR 17 million Net debt and gearing • Seasonal increase in net working Net debt/LTM adj. EBITDA 188% capital EUR 18 million • Fagersta Stainless acquisition: EUR 14 million 93% 9.8 69% 3.56 51% 40% 41% 45%
Slide 16: Successful re-financing of 2021 notes
Successful re-financing of 2021 notes Debt maturity profile, EUR million • In June 2018, Outokumpu issued EUR 250 1000 million 4.125% secured notes due June 2024 800 • Proceeds used primarily to call 7.250% June 2021 notes 600 • Significant step pushing interest cost towards 400 EUR 50 million targe
Slide 17: Outlook for Q3 2018
Outlook for Q3 2018 • In line with the market, stainless steel deliveries are expected to be seasonally lower in business area Europe and to remain stable in the Adjusted EBITDA Americas. expected to be lower • Base price pressure continues in Europe but the than in Q2/18 but negative impact of this
Slide 18: Appendix
Appendix
Slide 19: 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 20: Topline growth and cost reductions will deliver EBITDA of EUR 750 million
Topline growth and cost reductions will deliver EBITDA of EUR 750 million TOP LINE GROWTH • Increase volume through • Achieve 3% annual efficiency and productivity improvement debottlenecking 55% • Achieve 15% savings in • Richer mix through procurement improved capability and • Reduce variable and
Slide 21: Fully integrated production asset base
Fully integrated production asset base Europe Americas Long Products Total Avesta + Krefeld + Tornio Degerfors Calvert Mexinox Sheffield Richburg Degerfors Fagersta 1,000 tonnes Nyby Dillenburg Finland Sweden USA Mexico UK USA Sweden Sweden Sweden Germany Melting 1,450 450 900 450 3,250 Hot rolling
Slide 22: Broadest product portfolio across stainless steel
Broadest product portfolio across stainless steel Deliveries by product grade in 2017 Outokumpu product forms Other Duplex 3% 3% Hot rolled Arial Slab Quarto plate Ferritic black coil 18% Austenitic (CrNi) 59% Hot and cold rolled Rolled and Precision strip Cast semis white coil forged billet Austeni
Slide 23: We focus on growth segments
We focus on growth segments Consumer goods, automotive, architecture, building and construction Distributors End-customers 16% Consumer goods & medical 17% Automotive Architecture, building & construction 45% 22% Chemical, petrochem. and energy 55% Metal processing & tubes 18% Heavy industries 18% 6
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: Debt structure and maturity profile
Debt structure and maturity profile Debt structure*, % Debt maturity profile, EUR million 19% 800 600 40% 400 17% 200 1% 3% 13% 0 7% 2018 2019 2020 2021 2022+ Bonds Convertible bonds Long-term loans Pension loans Finance leases Short-term loans Current debt Non-current debt Unutilized facilities Com
Slide 26: Stainless steel demand continues to grow
Stainless steel demand continues to grow Other Consumer goods -2% Expected global & Medical stainless steel +28% real demand in 2020 47.3 Global Automotive stainless steel +21% real demand in 2015 +26% 37.5 million tonnes Chemical, Architecture, Petrochemical Building & million tonnes and Energy Con
Slide 27: 6% demand growth expected for 2018
6% demand growth expected for 2018 Americas Europe APAC Global +6% +6% +7% +5% +4% +5% +4% +4% +3% +5% +6% +5% +4% +5% +4% +1% +2% +3% +3% +5% +2% +1% -4% -2% 15 16 17 18f 19f 20f 15 16 17 18f 19f 20f 15 16f 17 18f 19f 20f 15 16 17 18f 19f 20f USA OTHER AMERICAS OTHER EMEA CHINA OTHER APAC +6% +7% +
Slide 28: Demand down in Q3 in Europe in line with typical seasonality, in Americas growth of 4% from Q2
Demand down in Q3 in Europe in line with typical seasonality, in Americas growth of 4% from Q2 EMEA total stainless steel real demand1 Americas total stainless steel real demand1 1,000 tonnes 1,000 tonnes +4% -7% 2,200 1,000 950 2,100 900 2,000 850 800 1,900 750 1,800 700 650 1,700 600 1,600 550 500
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] 5.1 5.0 4.9 4.9 4.9 4.9 5.0 4.8 28.8 3.2 3.3 3.3 28.0 4.4 3.2 3.2 3.2 4.2 3.0 4.0 3.0 25.0 3.9 2.8 23.9 3.7 3.8 2.7 22.8 23.3 2.6 22.2 3.5 3.5 2.5 2.5 2.5 21.3
Slide 30: Raw materials - price development
Raw materials - price development Nickel1 Ferrochrome2 17,000 1.9 European contract price U U 1.7 Q3/18 15,000 S S 1.5 1.38 USD/lb European spot price D 13,000 D 1.3 / / t l 1.1 9 Jul 18 11,000 1.01 USD/lb o b 0.9 9 Jul 18 n 9,000 13,970 USD/t 0.7 7,000 0.5 Jan'16 Feb Mar Apr May Jun Jul Aug Sep Oct
Slide 31: 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 Vice President – Investor Relations Phone +358 9 421 3466 Mobile +358 40 576 0288 E-mail: tommi.jarvenpaa@outokumpu.com Aki Vesikallio Investor Relations Manager Mobile: +358 50 544 8925 E-ma