Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Q1 2018 Earnings Presentation
30 slides from Outokumpu Oyj's earnings presentation, Apr 26, 2018
Slide 1: Q1 2018 results
Q1 2018 results CEO Roeland Baan CFO Chris de la Camp April 26, 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
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: Operationally solid first quarter
Operationally solid first quarter Group, adjusted EBITDA, Adj. EBITDA quarter-on-quarter comparison*, EUR million EUR million 294 133 199 82 133 56 82 Deliveries Lower Gain from Pricing Net of Ferrochrome Input I/17 II/17 III/17 IV/17 I/18 IV/17 maintenance emission timing and costs I/18 allowance h
Slide 6: Volatile nickel price development
Volatile nickel price development European US Nickel price, Ferrochrome price, average base price, average base price, USD/tonne USD/lb EUR/tonne USD/tonne 1,374 1,396 1,127 13,276 1.39 1,100 1.18 11,584 IV/17 I/18 IV/17 I/18 IV/17 I/18 IV/17 I/18 Sources: Base prices: CRU, April 2018, 2mm cold roll
Slide 7: Group key financials
Group key financials Key figures I/18 I/17 IV/17 Stainless steel deliveries, 1,000 tonnes 644 639 561 Sales, EUR million 1,671 1,756 1,463 Adjusted EBITDA, EUR million 133 294 82 Net result, EUR million 49 182 128 Earnings per share, EUR 0.12 0.44 0.31 Operating cash flow, EUR million 39 -53 104 Net
Slide 8: Europe – robust operational performance
Europe – robust operational performance Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million 83 168 129 37 83 69 37 IV/17 Deliveries Less Pricing Net of Input I/18 I/17 II/17 III/17 IV/17 I/18 maintenance timing & costs hedging 1) Indicative columns based on managemen
Slide 9: Americas – disappointing result due to low pricing
Americas – disappointing result due to low pricing Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million 29 27 -0 -6 -34 -0 -6 IV/17 Deliveries Net of Pricing Input Mexinox I/18 I/17 II/17 III/17 IV/17 I/18 timing & costs restructuring hedging costs 1) Indicative colum
Slide 10: Long Products improving steadily
Long Products improving steadily Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million 9 7 4 3 4 3 -2 IV/17 Deliveries Pricing Net of Input I/18 I/17 II/17 III/17 IV/17 I/18 timing & costs hedging 1) Indicative columns based on management estimates 10
Slide 11: Ferrochrome impacted by lower contract price and weaker USD
Ferrochrome impacted by lower contract price and weaker USD Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million 56 42 97 Further negative impact from 48 56 42 weaker USD 16 I/17 II/17 III/17 IV/17 I/18 IV/17 Deliveries FeCr price Input costs I/18 1) Indicative column
Slide 12: Positive operating cash flow despite seasonal increase in working capital
Positive operating cash flow despite seasonal increase in working capital Free cash flow, EUR million 140 -61 -40 39 -33 6 EBITDA Working Provisions, Operating Net cash from Free cash capital pensions, financial cash flow investing flow charges and other activities 12
Slide 13: Net debt remained below EUR 1.1 bn
Net debt remained below EUR 1.1 bn Net debt and gearing Net debt/LTM adj. EBITDA 188% 93% 9.8 69% 3.56 51% 40% 41% 1.97 1.61 4.0 1.24 2.3 <1.0 1.09 1.09 1.7 2013 2014 2015 2016 2017 I/18 2015 2016 2017 I/18 2020 Net debt, EUR billion Gearing 13
Slide 14: Outlook for Q2 2018
Outlook for Q2 2018 • Healthy underlying stainless steel demand • Base prices are trending upwards in the US supported by steel import tariffs Outokumpu expects • Base prices in Europe under pressure due to Q2 adjusted EBITDA higher Asian imports to be at a similar level • Benefits from higher FeCr
Slide 15: Appendix
Appendix
Slide 16: 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 17: 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 2-3% annual efficiency and productivity improvement debottlenecking 55% • Achieve 15% savings in • Richer mix through procurement improved capability and • Reduce variable an
Slide 18: Fully integrated production asset base
Fully integrated production asset base Europe Americas Long Products Total Krefeld + Tornio Avesta + Nyby Degerfors Calvert Mexinox Sheffield Richburg Degerfors 1,000 tonnes Dillenburg Finland Sweden Sweden USA Mexico UK USA Sweden Germany Melting 1,450 450 900 450 3,250 Hot rolling 1,450 900 870 3,
Slide 19: 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 Ferrochrome Slab Quarto plate Ferritic black coil 18% Austenitic (CrNi) 59% Hot and cold rolled Rolled and Precision strip Cast semis white coil forged billet A
Slide 20: 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 21: 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 22: Debt structure and maturity profile
Debt structure and maturity profile Debt structure*, % Debt maturity profile, EUR billion 15% 1.2 42% 0.8 17% 0.4 2% 12% 6% 0 6% 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 Commerc
Slide 23: Stainless steel demand continues to grow
Stainless steel demand continues to grow Other Consumer goods +0% Expected global & Medical stainless steel +24% real demand in 2020 46.7 Global Automotive stainless steel +20% real demand in 2015 +24% 37.5 million tonnes Chemical, Architecture, Petrochemical Building & million tonnes and Energy Con
Slide 24: 5% demand growth expected for 2018
5% demand growth expected for 2018 Americas Europe APAC Global +6% +6% +5% +5% +3% +5% +4% +3% +5% +5% +5% +3% +5% +2% +3% +4% +3% +5% +2% +4% +1% +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 25: Demand expected to grow in Q2 in EMEA but shrink in the Americas from Q1
Demand expected to grow in Q2 in EMEA but shrink in the Americas from Q1 EMEA total stainless steel real demand1 Americas total stainless steel real demand1 1,000 tonnes 1,000 tonnes -6% 2,200 +2% 1,000 950 2,100 900 2,000 850 800 1,900 750 1,800 700 650 1,700 600 1,600 550 500 1,500 Q1 Q2 Q3 Q4 Q1
Slide 26: 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] 5.0 5.0 4.8 4.7 4.6 4.7 4.7 4.7 3.3 3.3 28.6 3.2 27.7 4.3 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 22.8 3.5 2.5 2.5 2.5 2.6 21.3 21.8 3.5
Slide 27: EU import penetration flat qoq, US imports down in response to section 232
EU import penetration flat qoq US imports down in response to section 232 Third-country cold rolled imports1 into Europe, Third-country cold rolled imports2 into the US, 1,000 tonnes 1,000 tonnes 100 29% 50 40 40 29% 25% 80 40 30 30 19% 60 30 20 20 40 20 20 10 10 10 0 0 0 0 From rest of world From C
Slide 28: EU base prices decreasing, US base prices increasing
EU base prices decreasing, US base prices increasing European base prices1 (Germany), US base prices1, Transaction prices 304 stainless, EUR/tonne USD/tonne USD/tonne 5,000 1,200 1,450 Europe USA 1,400 4,000 China 1,150 1,350 1,100 3,000 1,300 1,050 2,000 1,250 1,000 1,200 1,000 2013 2014 2015 2016
Slide 29: Raw materials - price development
Raw materials - price development 17,000 Nickel1 1.9 Ferrochrome2 European contract price U U 1.7 Q2/18 15,000 S S 1.5 1.42 USD/lb European spot price D 13,000 D 1.3 / / t l 1.1 19 Apr 18 11,000 1.01 USD/lb o b 0.9 24 Apr 18 n 9,000 14,250 USD/t 0.7 7,000 0.5 Jan'16 Feb Mar Apr May Jun Jul Aug Sep O
Slide 30: 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 Simone Cujai Investor Relations Manager Phone: +49 2151 83 4226 Mobile: