Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Q1 2017 Earnings Presentation
30 slides from Outokumpu Oyj's earnings presentation, Apr 27, 2017
Slide 1: Interim statement Q1/2017
Interim statement Q1/2017 CEO Roeland Baan CFO Chris de la Camp April 27, 2017
Slide 2: Today's attendees from Outokumpu
Today’s attendees from Outokumpu Roeland Baan Chris de la Camp Tommi Järvenpää CEO CFO Director Investor Relations 2
Slide 3: 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 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: Strong start to the year
Strong start to the year Adjusted EBITDA, EUR million • All business areas delivered black 294 numbers • Americas continued its turnaround and reached positive EBIT • Productivity and efficiency improvement measures resulted in higher delivery 116 volumes and considerable cost benefits 98 66 • Stron
Slide 6: European base prices continued to improve
European base prices continued to improve European base prices1 (Germany), Third-country cold rolled imports2 into Europe, EUR/tonne 1,000 tonnes 1,200 100 50 80 40 Import 1,150 penetration 60 30 slightly down 40 20 to 24.2% in Q1 1,100 20 10 1,050 0 0 1,000 From rest of world From China 2013 2014 2
Slide 7: US base prices at strong levels
US base prices at strong levels US base prices1, Third-country cold rolled imports2 into the US, USD/tonne 1,000 tonnes 1,450 40 40 Import penetration of 1,400 30 30 23.0% in January 1,350 20 20 Imports from 10 10 1,300 China into the 0 0 US decreased 1,250 significantly 1,200 From rest of world Fro
Slide 8: Key financials
Key financials Increase in deliveries driven Key figures I/17 I/16 2016 by significantly higher deliveries in the Americas and Stainless steel deliveries, 1,000 tonnes 639 610 2,444 Long Products Sales, EUR million 1,757 1,386 5,690 Q1/17 sales increased by Adjusted EBITDA, EUR million 294 29 309 27
Slide 9: Step-change in Europe's profitability
Step-change in Europe’s profitability Deliveries, 1,000 tonnes Adjusted EBITDA, EUR million • Robust market in Q1 with strong demand in all customer segments 421 413 415 257 • Q1/17 average base price increased by 396 395 EUR 100/tonne compared to Q1/16 • Distributor inventories increased 107 110 •
Slide 10: Americas reached record-earnings
Americas reached record-earnings Deliveries, 1,000 tonnes Adjusted EBITDA, EUR million • Strong market in Q1 185 29 182 • Q1/17 average base price increased by 177 12 USD 170/tonne compared to Q1/16 1 167 • Favorable market environment attracted 161 -3 higher import volumes to the region • Distribut
Slide 11: Long Products solidly profitable
Long Products solidly profitable Deliveries, 1,000 tonnes Adjusted EBITDA, EUR million • Strong demand from automotive and 75 9 70 65 aerospace, recovery in Oil&Gas in Q1 59 50 • Higher base prices in Europe but prices remain under pressure in the US as 2 2 import volumes remained at high levels • C
Slide 12: Increase in NWC resulted in negative operating cash flow
Increase in NWC resulted in negative operating cash flow • Net working capital increased by EUR 280 million during Q1 driven by EUR million I/17 I/16 2016 • Increase in trade and other receivables due to higher base and raw material prices as well as Net cash from operating higher delivery volumes p
Slide 13: Leverage reduced significantly
Leverage reduced significantly Net debt and gearing Debt maturity profile, EUR billion 1.2 188% 9.8 0.8 4.0 93% 2.4 3.56 69% 55% 51% 0.4 1.97 1.61 1.38 1.24 0 2013 2014 2015 2016 I/17 2017 2018 2019 2020 2021 2022+ Net debt, EUR billion Net debt/adjusted EBITDA Gearing Current debt Non-current debt
Slide 14: Business and financial outlook for Q2/2017
Business and financial outlook for Q2/2017 • Underlying stainless steel demand is expected to remain robust in both Europe and the US Outokumpu expects • Stainless steel base prices are expected its Q2/2017 adjusted to continue to improve EBITDA to be • Q2 stainless steel deliveries of both somewhat
Slide 15: Appendix
Appendix
Slide 16: Income statement
Income statement (MEUR) Jan-March 2017 Jan-March 2016 Sales 1,757 1,386 Cost of sales -1,435 -1,309 Gross margin 322 76 Other operating income 21 26 SG&A costs -87 -104 Other operating expenses -4 -11 EBIT 252 -12 Share of results in associated companies and joint ventures 3 -1 Financial income and
Slide 17: Balance sheet
Balance sheet Assets (MEUR) March 31, 2017 Dec 31, 2016 Equity and liabilities (MEUR) March 31, 2017 Dec 31, 2016 Non-current assets Total equity 2,502 2,416 Intangible assets 503 504 Non-current liabilities Property, plant and equipment 2,826 2,874 Non-current debt 1,010 987 Investments in associat
Slide 18: 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 19: Improving performance
Improving performance Financial targets for 2020 EBIT ROCE Gearing EUR 500 million 12% <35% 19
Slide 20: Our must-win battles deliver EUR 500 million in 2020
Our must-win battles deliver EUR 500 million in 2020 Topline growth and cost efficiency based on self-help 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 ca
Slide 21: We focus on growth segments
We focus on growth segments Consumer goods, automotive, architecture, building and construction Distributors End-customers 17% Consumer goods & medical 15% Automotive Architecture, building & construction 45 % 23% Chemical, petrochem. and energy 55 % Metal processing & tubes 18% Heavy industries 18%
Slide 22: 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 23: Broadest product portfolio across stainless steel
Broadest product portfolio across stainless steel Deliveries by product grade in 2016 Outokumpu product forms Other Duplex 3% 4% Hot rolled Ferrochrome Slab Quarto plate black coil Ferritic Austenitic 19% (CrNi) 57% Hot and cold rolled Rolled and Precision strip Cast semis white coil forged billet A
Slide 24: ~4% demand growth expected for 2017
~4% demand growth expected for 2017 Americas Europe APAC Global +4% +4% +4% +4% +3% +3% +2% +4% +4% +4% +4% +4% +2% +2% +2% +2% +2% +1% +3% +1% 0% +1% -3% -2% 15 16f 17f 18f 19f 20f 15 16f 17f 18f 19f 20f 15 16f 17f 18f 19f 20f 15 16f 17f 18f 19f 20f USA OTHER AMERICAS OTHER EMEA CHINA OTHER APAC +5
Slide 25: Q2'17 real demand expected to decrease 1% q/q in EMEA and 5% in Americas
Q2’17 real demand expected to decrease 1% q/q in EMEA and 5% q/q in Americas EMEA total stainless steel real demand1 Americas total stainless steel real demand1 1,000 tonnes 1,000 tonnes -1% 2,000 1,000 -5% 1,950 950 1,900 900 1,850 850 1,800 800 1,750 750 1,700 700 1,650 650 600 1,600 550 1,550 500
Slide 26: Low capacity utilization in China, healthier 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] 25.8 26.1 4.9 25.3 4.9 4.6 4.6 4.7 4.6 4.5 4.6 3.2 23.8 3.2 3.2 3.2 22.6 3.0 3.0 3.0 21.8 4.0 3.0 21.2 20.9 3.9 3.9 2.7 20.0 3.7 3.8 3.8 2.7 19.1 19.2 3.5 2.6 2
Slide 27: Stainless prices rising due to higher raw material prices
Stainless prices rising due to higher raw material prices Nickel price, USD/tonne Transaction prices 304 stainless, USD/tonne 60,000 5,000 50,000 4,000 40,000 30,000 3,000 20,000 10,000 2,000 0 2 2 2 2 2 2 2 2 2 2 2 2 1,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 2011 2012 2013 2014 2015 201
Slide 28: Raw materials - price development
Raw materials - price development 12,000 Nickel1 1.9 Ferrochrome2 European contract price Q2/17 U 11,000 U 1.7 1.54 USD/lb S S 1.5 10,000 European spot price D D 1.3 7 Apr 17 / 9,000 / 1.17 USD/lb t l 1.1 8,000 7 Apr 17 o 9,950 USD/t b 0.9 n 7,000 0.7 6,000 0.5 Jan'16 Feb Mar Apr May Jun Jul Aug Sep
Slide 29: 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 Wildwood Dillenburg Finland Sweden Sweden USA Mexico UK USA Sweden USA Germany Melting 1,450 450 900 450 3,250 Hot rolling 1,450 900 870 3,
Slide 30: For more information, call Outokumpu Investor Relations
For more information, call Outokumpu Investor Relations or visit www.outokumpu.com/investors Tommi Järvenpää Director– 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: +49 17