Slide 1: Q3 2018 results
Q3 2018 results CEO Roeland Baan CFO Chris de la Camp October 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
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 | October 26, 2018
Slide 5: Solid performance despite continued market uncertainties
Solid performance despite continued market uncertainties Group adjusted EBITDA, EUR million Adjusted EBITDA quarter-on-quarter comparison1, EUR million Improved cost efficiency and seasonally lower personnel costs partly offset by higher input and truck freight costs Fagersta, defined 133 136 128 be
Slide 6: Historically low European base prices
Historically low European base prices European US Nickel price, Ferrochrome price, average base price, average base price, USD/tonne USD/lb EUR/tonne USD/tonne 1,499 984* 1,470 14,476 1.42 1.38 799* 13,266 II/18 III/18 II/18 III/18 II/18 III/18 II/18 III/18 * According to the CRU, they are no longer
Slide 7: Import pressure continues in Europe
Import pressure continues in Europe Third-country cold rolled imports1 into Europe, Third-country cold rolled imports2 into the US, 1,000 tonnes 31% 31% 1,000 tonnes 100 29% 50 50 50 80 40 40 40 20% 20% 18% 60 30 30 30 40 20 20 20 20 10 10 10 0 0 0 0 From rest of world From China From rest of world
Slide 8: Impact of European safeguards is expected to materialize next year
Impact of European safeguards is expected to materialize next year European base prices1 (Germany)*, US base prices1, Transaction prices 304 stainless, EUR/tonne USD/tonne USD/tonne 1 200 1 550 4 000 Europe USA 1 100 1 450 China 3 000 1 000 1 350 900 1 250 2 000 800 1 150 700 1 050 1 000 1. 2mm shee
Slide 9: Group key financials and financial targets 2020
Group key financials and financial targets 2020 Key figures III/18 III/17 II/18 Stainless steel deliveries, 1,000 582 623 668 Adjusted tonnes EBITDA Sales, EUR million 1,733 1,480 1,883 EUR 750 million Adjusted EBITDA, EUR million 128 56 136 Net result, EUR million 29 -27 25 ROCE Earnings per share,
Slide 10: Europe – profitability supported by richer product mix
Europe – profitability supported by richer product mix Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million Lower base prices Efficiency gains and seasonally lower partly offset by personnel costs partly offset by higher richer product mix graphite electrode and other
Slide 11: Americas – higher base prices offset by increased destocking
Americas – higher base prices offset by increased destocking Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million E.g. tax refund in Mexico, FX derivatives 10 13 -0 -6 Higher truck -34 freight and input costs partly offset by efficiency gains III/17 IV/17 I/18 II/18 I
Slide 12: Successful Fagersta acquisition reflected in Long Products’ result
Successful Fagersta acquisition reflected in Long Products’ result Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million Defined benefits medical plan change in the US & unrealized FX gains 13 9 3 4 -2 Net of III/17 IV/17 I/18 II/18 III/18 Pricing II/18 Deliveries timi
Slide 13: Ferrochrome – solid operations continued
Ferrochrome – solid operations continued Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million 56 42 46 39 16 FeCr III/17 IV/17 I/18 II/18 III/18 II/18 Deliveries Costs Other III/18 price 1) Indicative columns based on management estimates 13 | October 26, 2018
Slide 14: Cash flow negatively impacted by increase in net working capital
Cash flow, EUR million Increased inventories Cash flow due to distributor destocking negatively impacted by increase in net working capital Provisions, Working Operating Net cash Cash flow EBITDA pensions, capital cash flow from before financial investing financing charges and activities activities
Slide 15: Net debt remained stable, leverage down
Net debt remained stable, leverage down Net debt and gearing Net debt/LTM adjusted EBITDA 69% 51% 45% 45% 40% 41% <1.0 1.61 1.24 1.09 1.09 1.21 1.21 9.8 4.0 1.7 2.3 3.0 2.5 2015 2016 2017 I/18 II/18 III/18 2015 2016 2017 I/18 II/18 III/18 2020 Net debt, EUR billion Gearing target 15 | October 26, 20
Slide 16: Outlook for Q4 2018
Outlook for Q4 2018 • Typical Q4 pattern with seasonal market slowdown and annual maintenance work in BA Europe • Deliveries expected to remain at Q3 level in BA Europe whereas decline expected in the Americas Adjusted EBITDA expected to be at a similar level to • Negative impact from USD 0.14/lb lo
Slide 17: Outokumpu CMD 2018
Outokumpu CMD 2018 Outokumpu will host a Capital Markets Day on November 20, 2018.
Slide 18: Appendix
Appendix
Slide 19: Creating value through our must-win battles
Creating value through our must-win battles 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 Performing World Class Supply Manufacturing Commercial
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 globally
Broadest product portfolio globally Deliveries by product grade in 2017 Outokumpu product forms Duplex Other 3% 3% Ferritic Hot rolled 18% Ferrochrome Slab Quarto plate black coil Hot and cold Rolled and Precision strip Cast semis rolled white coil forged billet Austenitic Austenitic (CrNi) (CrNiMo)
Slide 23: We focus on growth segments
We focus on growth segments Consumer goods, automotive, architecture, building and construction Distributors End-customers Consumer goods & 16% medical 17% Automotive Architecture, building & construction 45% Chemical, petrochem. and 18% 55% 22% energy Metal processing & tubes Heavy industries 6% 3%
Slide 24: Debt structure and maturity profile
Debt structure and maturity profile Debt structure*, % Debt maturity profile, EUR million 18% 800 41% 600 17% 400 200 1% 5% 12% 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 Commercial paper Unutiliz
Slide 25: Stainless steel demand continues to grow
Stainless steel demand continues to grow Other Consumer goods +11% Expected global & Medical stainless steel +21% real demand in 2020 Global Automotive 45.3 stainless steel +18% real demand in 2015 +21% 37.5 million tonnes Chemical, Architecture, Petrochemical Building & million tonnes and Energy Co
Slide 26: 6% demand growth expected for 2018
6% demand growth expected for 2018 Americas Europe APAC Global +6% +6% +6% +5% +5% +5% +4% +3% -1% +4% +4% +4% +2% +3% +1% -1% +2% +2% +4% +1% +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 +7% +6% +
Slide 27: 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 +6% +3% 2 200 1 000 2 100 900 2 000 1 900 800 1 800 700 1 700 600 1 600 1 500 500 SMR Jul'18 SMR Oct'18 SMR Jul'18 SMR Oc
Slide 28: 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 4,9 4,8 4,9 4,9 4,9 29,3 3,3 3,3 5,0 5,1 3,2 3,2 3,2 3,2 27,1 4,2 4,2 3,0 4,0 3,0 25,0 3,9 2,8 23,9 3,7 3,8 2,7 2,7 22,8 23,0 2,5 2,5 21,3 22,1 3,5 3,5 2,5
Slide 29: Raw materials - price development
Raw materials - price development Nickel1 Ferrochrome2 17,000 2 European contract price European spot price U 15,000 U S S Q4/18 1,5 D 13,000 D 1.24 USD/lb / / t 11,000 l 11 Oct 18 o b 1 0.96 USD/lb n 9,000 11 Oct 18 12,420 USD/t 7,000 0,5 Jan'17 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan'18 Fe
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 Aki Vesikallio Investor Relations Manager Mobile: +358 50 544 8925 E-ma