Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Q2 2023 Earnings Presentation
29 slides from Outokumpu Oyj's earnings presentation, Aug 3, 2023
Slide 1: Good performance in the first half of 2023, preparations started for strategy phase 3
Good performance in the first half of 2023, preparations started for strategy phase 3 Outokumpu Q2 2023 results Heikki Malinen, President & CEO Pia Aaltonen-Forsell, CFO August 3, 2023
Slide 2: Disclaimer
2 August 3, 2023 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 avai
Slide 3: H1 adjusted EBITDA €394 million - strong result in the current market environment
3 August 3, 2023 H1 adjusted EBITDA €394 million - strong result in the current market environment Heikki Malinen, President & CEO
Slide 4: Q2/23 was overshadowed by softened market conditions in Europe, while Americas stayed strong
4 August 3, 2023 Q2/23 was overshadowed by softened market conditions in Europe, while strong performance in the Americas continued • Stainless steel deliveries remained at a modest level as expected, reflecting the weaker market conditions Adjusted EBITDA reached • Realized prices for stainless ste
Slide 5: Price gap between European and Asian stainless steel has narrowed further in Q2/23
5 August 3, 2023 Nickel LME cash, USD/tonne Price gap between the European 30000 June and Asian stainless steel has 25000 narrowed further in Q2/23 20000 15000 10000 Transaction prices 304 stainless, USD/tonne* 5000 June 7500 2019 2020 2021 2022 2023 5000 Ferrochrome, USD/lb June 2500 2.5 2 0 2019 2
Slide 6: Slight decrease in adjusted EBITDA was driven by lower realized prices for stainless steel
6 August 3, 2023 Slight decrease in adjusted EBITDA was driven by lower realized prices for stainless steel, while costs were well controlled Deliveries, kt Adjusted EBITDA quarter-on-quarter comparison1, EUR million 605 Realized prices for stainless steel 571 586 560 546 550 decreased in both regio
Slide 7: Improving safety with the help of robots and AI
7 August 3, 2023 Improving safety with the help of robots and AI Highlights in Q2/23 Safety performance, TRIFR (= Number of total recordable incidents per million • Record strong safety performance; working hours 2021 and 2022 numbers include only continuing operations TRIFR was 1.2 • New robot and
Slide 8: Outokumpu Circle Green taking over new areas
8 August 3, 2023 Strong new partnerships in Q2/23 leading the way with our towards-zero stainless steel – up to 92% Outokumpu lower carbon footprint compared to the industry average Circle Green taking • Thyssenkrupp Materials Processing Europe over new areas and Boysen Group ⇒ Automotive industry i
Slide 9: Phase 2 strategy execution proceeding as planned, preparations for phase 3 have started
9 August 3, 2023 Phase 2 strategy execution proceeding as planned, preparations for the phase 3 have started Phase 3: Strong sustained performance 2026– Phase 2: Phase 1: Strengthen the core 2023–2025 Strengthen the balance sheet Americas expansion, European 2021–2022 competitiveness, value- Targete
Slide 10: In strategy phase 3 we aim to unlock significant additional potential in our business
10 August 3, 2023 In strategy phase 3 we aim to unlock significant additional potential in our business Priority areas for phase 3 Americas European Value-chain Sustainability expansion competitiveness integration leadership • Hot rolling and cold rolling • Competitiveness • Minority share in FPX Ni
Slide 11: Feasibility study to investigate options to expand our operations in the U.S.
11 August 3, 2023 We are conducting a feasibility study to investigate options to expand our operations in the U.S. to capture the promising market growth potential U.S. is a promising market.. ..with future growth opportunities • Regulatory environment drives • Supply shortage in USMCA of expected
Slide 12: Exploring options to reorganize hot rolling and expand cold rolling capacity in the U.S.
12 August 3, 2023 We are exploring options to reorganize our hot rolling and expand our cold rolling capacity in the U.S. Hot rolling Cold rolling • Currently, Outokumpu procures its hot rolling • Currently, Outokumpu has ~600kt of cold rolling services from an external party* capacity in the U.S. a
Slide 13: Strongest balance sheet in the industry helps us to withstand changing conditions
13 August 3, 2023 Strongest balance sheet in the industry helps us to withstand changing conditions Pia Aaltonen-Forsell, CFO
Slide 14: Strong liquidity position, prudent capital discipline continues
14 August 3, 2023 • Net debt EUR -9 million ◦ EUR 152 million dividend paid in April Strong liquidity ◦ EUR 141 million of pension loans prepaid in June position, prudent • Total liquidity reserves EUR 1.2 billion • Another credit rating upgrade by Moody's capital discipline continues • In H2/23 foc
Slide 15: Solid financials
15 August 3, 2023 Solid financials Key figures Q2 2023 Q2 2022 Q1 2023 Continuing operations Stainless steel deliveries 1,000 tonnes 502 560 505 Sales EUR million 1,911 2,686 2,006 Adjusted EBITDA EUR million 190 491 204 • Net result EUR 89 Net result EUR million 89 338 97 million Earnings per share
Slide 16: Phase 2 strategy execution: cumulative EBITDA run-rate improvement EUR 82 million
16 August 3, 2023 Phase 2 strategy execution firmly progressing: Cumulative EBITDA run-rate improvement EUR 82 million by the end of Q2 2023 Transformation journey Projects that supported Phase 1 Phase 2 EBITDA run-rate 200 improvement in H1/23 EBITDA run-rate improvement target: • More efficient ut
Slide 17: BA Europe
17 August 3, 2023 Europe’s stainless steel deliveries, 1,000 tonnes BA Europe 450 Market conditions in Europe softened 401 410 414 faster than anticipated, which is 400 370 372 369 reflected in Q2/23 results 356 338 356 355 349 350 322 316 • Decrease in profitability was driven by 300 Q2 Q3 Q4 Q1 Q2
Slide 18: BA Americas
18 August 3, 2023 Americas’ stainless steel deliveries, 1,000 tonnes BA Americas 192 194 200 185 Strong result delivered in a resilient 176 180 177 167 market, exploring options to strengthen 148 147 Outokumpu further in the U.S. 150 134 136 125 142 • Improved profitability in Q2/23 was driven 100 b
Slide 19: BA Ferrochrome
19 August 3, 2023 Ferrochrome production, 1,000 tonnes BA Ferrochrome Production was increased back to 150 123 127 131 131 128 125 129 128 118 normal levels in Q2/23, while business 112 104 area prepared for a maintenance break 100 69 70 • Production increased by 69% as the 50 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q
Slide 20: Effective capital management in weaker market conditions
20 August 3, 2023 Effective capital management in weaker market conditions Q2/23 cash flow, EUR million Annual capex, EUR million Annual capex reduced NWC increased in line with from EUR 200 million normal seasonality to EUR 170 million -124 200 185 -35 160 25 -28 -2 EBITDA Working Capital Provision
Slide 21: We are managing the changing conditions with confidence
21 August 3, 2023 We are managing the changing conditions with confidence Heikki Malinen, President & CEO
Slide 22: Quick response to changing market conditions to ensure our profitability
22 August 3, 2023 Quick response to changing market conditions to ensure our profitability • Marc-Simon Schaar was appointed Chief Procurement Officer and a member of Outokumpu Leadership Team ◦ Crucial role in managing our cost base, inflationary impacts and sustainability efforts on our decarboniz
Slide 23: Risk outlook
23 August 3, 2023 Risk outlook Positives • Pick up in our order intake in July in Europe • China stimulus • Low distributor inventories, restocking to begin? • Speeding up our own actions to benefit from deflationary environment • Growing demand for Circle Green Uncertainties • Scrap market tighteni
Slide 24: Outlook for Q3 2023
24 August 3, 2023 Outlook for Q3 2023 Group stainless steel deliveries in the third quarter are expected to decrease by 5–15% compared to the second quarter, in line with the seasonal pattern. For business area Europe, the market environment is challenging in the third quarter. The planned maintenan
Slide 25: Thank you! Questions & answers
25 August 3, 2023 Thank you! Questions & answers Our efforts in sustainability have been globally recognized
Slide 26: BA Europe's adjusted EBITDA was EUR 52 million in Q2
26 August 3, 2023 BA Europe’s adjusted EBITDA was EUR 52 million in Q2 Adjusted EBITDA, EUR million Adjusted EBITDA quarter-on-quarter comparison1, EUR million Includes also negative raw material impacts 289 122 128 122 52 69 52 Q2/2022 Q3/2022 Q4/2022 Q1/2023 Q2/2023 Q1/23 Deliveries Pricing & mix
Slide 27: BA Americas' adjusted EBITDA was EUR 110 million in Q2
27 August 3, 2023 BA Americas’ adjusted EBITDA was EUR 110 million in Q2 Adjusted EBITDA, EUR million Adjusted EBITDA quarter-on-quarter comparison1, EUR million Includes also positive 136 135 raw material impacts 110 110 68 68 23 Q2/2022 Q3/2022 Q4/2022 Q1/2023 Q2/2023 Q1/23 Deliveries Pricing & mi
Slide 28: BA Ferrochrome's adjusted EBITDA was EUR 36 million in Q2
28 August 3, 2023 BA Ferrochrome’s adjusted EBITDA was EUR 36 million in Q2 Adjusted EBITDA, EUR million Adjusted EBITDA quarter-on-quarter comparison1, EUR million 36 93 16 34 36 14 16 Q2/2022 Q3/2022 Q4/2022 Q1/2023 Q2/2023 Q1/23 Deliveries Costs Ferrochrome price Other Q2/23 1) Indicative columns
Slide 29: Imports into Europe and US have normalized
29 August 3, 2023 Imports into Europe and US have normalized Third-country cold rolled imports1 into Europe, Third-country cold rolled imports2 into the US, 1,000 tonnes 1,000 tonnes Import penetration Import penetration (in %) (in %) kt kt 40 40 150 40 35 30 100 21% 30 20 23% 20 50 25 10 0 20 0 0 2