Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — FY2014 Earnings Presentation
45 slides from Outokumpu Oyj's earnings presentation, Feb 12, 2015
Slide 1: Annual Accounts 2014
Annual Accounts 2014 CEO Mika Seitovirta CFO Reinhard Florey February 12, 2015
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 Mika Seitovirta Reinhard Florey SVP – Investor CEO CFO Relations February 12, 2015 3
Slide 4: Contents
Contents 1. 2014 overview and strategic priorities 2. Financial performance 3. Outlook and guidance February 12, 2015 4
Slide 5: 2014 shows continued progress
2014 shows continued progress EBIT excl. NRI (EUR million) 1, 2) • EUR 289 million underlying EBIT improvement Underl. EBIT -82 -87 -118 -90 -377 -45 • Clear improvement in all BAs, but Quarto Plate lagging behind -6 -28 3 -9 -88 • Stable volumes, 16% growth in Americas -85 -48 -3 -9 -57 -125 -133 -
Slide 6: Continued growth for stainless steel globally
Continued growth for stainless steel globally AMERICAS EUROPE APAC +12% +8% +9% +6% +3% +5% +3% +4% +3% +4% +2% +5% +6% +5% +1% +2% +1% -0% 12 13 14 15f 16f 17f 12 13 14 15f 16f 17f 12 13 14 15f 16f 17f +19% +12% +8% +8% +7% +8% +6% +7% +5% +6% +6% +4% +2% +4% +3% +4% +4% +4% +4% +5% +5% +4% +4%+4%
Slide 7: Improvement in stainless base prices
Improvement in stainless base prices Europe softening towards year-end, US stabilizing European base prices 304 stainless steel (EUR) 1) US base prices 304 stainless steel (USD) 1) [€/t] [$/t] 1,400 1,500 Germany USA 1,300 1,400 1,200 1,100 1,300 1,000 ,900 1,200 Jan Jan Jan Jan Jan Jan Jan Jan Jan
Slide 8: Stainless market volatility showed in both nickel price rally and record-high imports
Stainless market volatility showed in both nickel price rally and record-high imports Nickel price and stocks 1) Third-country imports into Europe 2) Jul 2014: 60,000 450 120,000 35% import share [USD/t] LME stocks tonnes [Ktonnes] (rhs) 400 from Asia 50,000 LME cash 100,000 price (lhs) 350 from Res
Slide 9: Balance sheet strengthened
Balance sheet strengthened Net interest-bearing debt and gearing • Significantly reduced net debt through divestment of Gearing 188% Net debt (EURm) Terni and VDM in which the EUR 1.3 billion loan note was used as consideration 3,556 93% • New EUR 500 million committed syndicated secured liquidity
Slide 10: Good progress in efficiency programs, further potential remains
Good progress in efficiency programs, further potential remains Realized and planned savings from all Cash flow from working capital change programs 400 600 EMEA restructuring 400 351 351 Synergies 350 500 P250 savings 300 EUR Million EUR Million 400 250 +186 300 200 200 150 100 100 50 0 0 2013 2014
Slide 11: EBITDA development per business area
EBITDA development per business area Coil EMEA Coil Americas EBITDA excl. NRI (EUR million) EBITDA excl. NRI (EUR million) 278 • Clear improvement in -11 • Robust market 85 profitability environment in 2014 -193 19 68 • Restructuring continued; • Market share gains 66 1 110 59 next milestone Bochum
Slide 12: Contents
Contents 1. 2014 overview and strategic priorities 2. Financial performance 3. Outlook and guidance February 12, 2015 12
Slide 13: Q4 and FY14 key financials overview
Q4 and FY14 key financials overview Group key figures Q4 • Stable base prices and good progress in EUR million III/14 IV/14 2013 2014 savings programs in Q4: improved profitability Stainless steel deliveries, kt 634 568 2,585 2,554 • Negative impact from low delivery volumes Sales 1,799 1,674 6,745
Slide 14: Good progress in cost saving programs
Good progress in cost saving programs Cumulative savings 2014-2017 and • Good progress in synergies, Q4 related cash costs (EURm) savings at EUR 25 million EMEA restructuring Synergy savings P250 • Synergies fully visible in 2015 +45 530 550 470 80 100 • P250 above expectations, Q4 20 340 385 EUR 20
Slide 15: Coil EMEA
Coil EMEA EMEA key figures • Focus on higher margin products is EUR million III/14 IV/14 2013 2014 paying off but impacting delivery volumes slightly negative Stainless steel deliveries1, kt 395 369 1,854 1,666 • Achieved base price increase about Ferrochrome deliveries, kt 33 49 212 133 EUR 30/t in
Slide 16: Coil Americas
Coil Americas Americas key figures • Progress in Calvert ramp-up in 2014 EUR million III/14 IV/14 2013 2014 • Technical ramp-up completed • Issues with CR lines and delivery Stainless steel deliveries1, kt 137 126 465 541 performance in H2 Sales 316 297 906 1,158 • All lines now operational EBITDA e
Slide 17: APAC
APAC APAC key figures • Turbulent stainless markets EUR million III/14 IV/14 2013 2014 • Soft demand and volatile prices; regional overcapacity Stainless steel deliveries, kt 60 54 184 220 Sales 124 114 388 444 • Deliveries up to 220 kt in 2014 EBITDA excl. NRI 2 4 9 8 • Increased volumes with EBIT
Slide 18: Quarto Plate
Quarto Plate Quarto Plate key figures EUR million III/14 IV/14 2013 2014 • Deliveries grew 18% to 98 kt in 2014 along with Degerfors ramp-up Deliveries, kt 24 24 83 98 Sales 113 120 406 450 • Unsatisfactory performance EBITDA excl. NRI -1 -4 1 -7 • High raw material and ramp-up EBIT excl. NRI -5 -9
Slide 19: Long Products
Long Products Long Products key figures • Relatively healthy demand and pricing EUR million III/14 IV/14 2013 2014 in 2014 Deliveries, kt 60 43 214 248 • Deliveries grew by 16% to 248 kt Sales 171 129 556 651 reflecting increase in internal deliveries EBITDA excl. NRI 10 12 -3 40 EBIT excl. NRI 8 11
Slide 20: Operating cash flow
Operating cash flow • Measures to improve working EUR million III/14 IV/14 2013 2014 capital efficiency continued in Q4 resulting in strong operating cash flow Net cash from operating 23 122 34 -126 activities • Operating cash flow FY2014 negative due to seasonal build- Net cash from investing activ
Slide 21: P300 closed above target, EUR million NWC release in Q4
P300 closed above target, EUR 133 million NWC release in Q4. Additional potential in 2015 Cash flow from working capital change 1) Inventory days development 2) EUR million Ø 2013: 103 400 Ø 2014: 98 Ø 2015 target: 86 4) 351 48 351 248 133 114 67 106 101 105 107 96 88 85 2013 I/14 II/14 III/14 IV/14
Slide 22: Contents
Contents 1. FY 2014 overview and strategic priorities 2. Financial performance 3. Outlook and guidance February 12, 2015 22
Slide 23: Market forecast shows stainless steel demand increase in EMEA in Q1 2015
Market forecast shows stainless steel demand increase in EMEA in Q1 2015 vs. Q4 2014 EMEA total stainless steel real demand1) Americas total stainless steel real demand1) 1,000 tonnes 1,000 tonnes 1,950 1,000 +12% +1% 1,900 950 1,850 900 1,800 850 1,750 800 1,700 750 1,650 700 1,600 650 1,550 600 1,
Slide 24: Business and financial outlook for Q1 2015
Business and financial outlook for Q1 2015 • Stainless steel demand has improved from the year-end 2014 lows but outlook for the first quarter varies by region. o In EMEA, order intake is improving and underlying demand remains relatively healthy o Asia remains soft in the beginning of the year o In
Slide 25: Clear priorities for 2015
Clear priorities for 2015 1. Further profitability improvement and debt reduction 2. Progress in Calvert towards full potential 3. Completion of the EMEA restructuring 4. Enhanced delivery reliability 5. Further progress in savings programs 6. NWC management and cash flows Bringing Outokumpu back to
Slide 26: Q&A
; t Se ERE. Vow PH i Ppem outokumpu C) February 12, 2015
Slide 27: 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
Slide 28: Appendix
Appendix February 12, 2015 28
Slide 29: Outokumpu balance sheet
Outokumpu balance sheet Assets (MEUR) 31.12.14 30.09.14 Non-current assets Intangible assets 567 569 Property, plant and equipment 3,138 3,142 Investments in associated companies 78 71 and joint ventures Other financial assets 29 26 Deferred tax assets 44 52 Increase due to changes in plan asset v
Slide 30: Outokumpu balance sheet
Outokumpu balance sheet Equity and liabilities (MEUR) 31.12.14 30.09.14 Total equity 2,132 2,144 Non-current liabilities Long-term debt 1,597 1,852 Other financial liabilities 18 13 Deferred tax liabilities 31 44 Defined benefit and other long-term 372 379 employee benefit obligations Provisions 198
Slide 31: Debt maturity profile
Debt maturity profile Debt maturity profile, December 31, 2014 • Positive cash flow and reduction in cash EUR million led to reduction of debt by EUR 300 2,500 Unutilized facilities million in Q4 Long-term debt 2,048 2,000 Short-term debt* • Liquidity facility, revolving credit facility, 1,500 1,148
Slide 32: Cost analysis 2014
Cost analysis 2014 Operative cost components 1) Comments • Raw materials account for around 60% of the total operative costs of the Group • Energy and other consumables account for some 10-15% of the total operative costs • Personnel expenses some 10% of the total operative costs • Other cost of sal
Slide 33: Headcount reductions
Headcount reductions Total headcount reduction 1) Personnel per BA at the end of 2014 324 (3%) 14,000 -766 602 838 -436 EMEA (5%) (7%) 12,000 651 Americas 2,128 (5%) 7,582 APAC 10,000 (18%) (63%) Quarto Plate 8,000 Long Products 6,000 Other operations 2012 2013 2014 2017e • 2014 reduction target of
Slide 34: Capacities and production flow following restructuring
Capacities and production flow following restructuring Coil EMEA Quarto Plate (QP) Long Products (LP) [kt p.a.] [kt p.a.] [kt p.a.] MELTING TORNIO AVESTA SHEFFIELD (FIN) (SWE) (UK) 1,450 450 450 Slabs, Blooms, Billets, Ingots ROLLING TORNIO AVESTA HOT (FIN) (SWE) 1,450 900 PLATE & DEGERFORS NEWCASTL
Slide 35: Capacities and production flow ('to be' state)
Capacities and production flow (‘to be’ state) Coil Americas APAC TOTAL Group capacity [kt p.a.] [kt p.a.] MELTING CALVERT (US) 900 3.3m tonnes CALVERT ROLLING (US) HOT 870 3.2m tonnes PLATE & LONG 0.3m tonnes rolled + HBW) GOODS (Cold FINISHED CALVERT SL POTOSI SHANGHAI (US) (MEXICO) (CHINA) 350+15
Slide 36: Balanced customer base across industries
Balanced customer base across industries Sales by customer segment 1) Sales by end-customer segment 1) Healthy balance between end-customer segments across both investment and consumer driven industries Other Consumer Distributors 8% goods & (5%) Medical 47% (45%) 19 % Heavy (21%) industries 23 % (2
Slide 37: Broadest product portfolio across stainless steel
Broadest product portfolio across stainless steel Deliveries by product grade 1) • Outokumpu has a broad product portfolio to serve all customers Other 2% • Significantly higher share of ferritic grades Duplex (3%) 4% leads into reduced sensitivity to nickel price (3%) volatility2) Austenitic Ferrit
Slide 38: Balanced customer base and comprehensive service center network in Europe
Balanced customer base and comprehensive service center network in Europe Total stainless market size in 2014 2) Nordic 440 Total Europe: 5.810 Eskilstuna Coil EMEA sales by customer segment 1) Outokumpu core market UK Outokumpu non-core Distributors market 270 41% 33 % 44 % Sheffield Germany 1.580
Slide 39: Industrial production as the major driver for stainless growth
Industrial production as the major driver for stainless growth… Growth p.a. Economic Index 2010=100 Industrial Production 2014 - 2017 Growth Prospects 140 Fundamental APAC 120 100 +4% growth 80 2010 2011 2012 2013 2014 2015 2016 2017 120 Recovery from Americas +3% 110 economic crisis 100 and continu
Slide 40: Growing stainless consumption mainly in APAC
… leads to growing stainless consumption mainly in APAC, and to some extent in Americas and EMEA [Total stainless steel real demand in million tonnes] Ø Growth p.a. 42.4 2014-2017 40.6 38.5 36.9 34.9 32.7 29.9 28.0 30.7 29.1 27.4 +5.7% 26.0 24.5 22.5 20.0 18.5 APAC 3.6 3.7 3.9 4.0 +3.4% 3.2 3.1 3.3
Slide 41: Nickel price development
Nickel price development 60,000 450 [USD/t] [Ktonnes] LME stocks (rhs) 400 50,000 LME cash price (lhs) 350 40,000 300 250 30,000 200 20,000 150 100 10,000 50 0 0 2005 2005 2007 2008 2009 2010 2011 2012 2013 2014 2015 o Price was rallying during the first half of 2014, driven by the future concerns o
Slide 42: Raw materials - price development
Raw materials - price development Nickel1 1.4 Ferrochrome2 21,000 3 Feb 15 European contract price U U 1.3 15,375 USD/t European spot price Q1/15 S S 19,000 1.2 1.08 USD/lb D D / / 1.1 t 17,000 l o b 1 n 15,000 0.9 29 Jan 15 0.82 USD/lb 13,000 0.8 Jan'14 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec J
Slide 43: Change in the definition of underlying profitability from Q1/14 onwards
Change in the definition of underlying profitability from Q1/14 onwards • Change in underlying definition Net following the change in Reported Non- Operating Metal Realized realizable EBIT/EBITDA profit recurring derivatives timing value Outokumpu’s metal hedging policy items in the beginning of 201
Slide 44: Ramp-up of the Ferrochrome business completed
Ramp-up of the Ferrochrome business completed Outokumpu ferrochrome production • Unique low cost position as Europe’s only 600 ferrochrome producer with access to the 500 (1,000 tonnes) only known chromite reserves in the EU – 400 the Kemi mine 1). 300 200 • The ramp-up of new capacity completed: 10
Slide 45: February 12,
February 12, 45 2015