Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Investor Day (May 2013)
22 slides from Outokumpu Oyj's investor day presentation, May 22, 2013
Slide 1: Integration & Strategy
Integration & Strategy Outokumpu Experience Reinhard Florey 2013 Strategy & Integration May 22-23, 2013 Outokumpu Old Billingsgate, London, UK
Slide 2: Merging two stainless champions
Merging two stainless champions Combine 2 x 100 years of experience Combine 2 complementary global business approaches Combine 2 outstanding customer bases Combine 2 asset bases with significant synergy potential Integration & Strategy, Reinhard Florey 5/22/2013 2
Slide 3: Outline
Outline 1. Outokumpu strategy roadmap 2. Update on integration 3. Short term improvement: P300 and P150 4. Raw material procurement and hedging strategy Integration & Strategy, Reinhard Florey 5/22/2013 3
Slide 4: Strategic initiatives are the driver of change and support the Outokumpu strategy roadmap
Strategic initiatives are the driver of change and support the Outokumpu strategy roadmap Restructuring + Growth = Perfor- mance New Transform Ensure Full integration Deliver on Ramp-up Expand Leverage Develop efficiency company financial and new synergies US presence Ferrochrome HPSA APAC projects
Slide 5: Outline
Outline 1. Outokumpu strategy roadmap 2. Update on integration 3. Short term improvement: P300 and P150 4. Raw material procurement and hedging strategy Integration & Strategy, Reinhard Florey 5/22/2013 5
Slide 6: From integration planning to implementation – the creation of new Outokumpu
From integration planning to implementation – the creation of new Outokumpu Integration planning Integration implementation ? From Signing to Closing From Day 1 to Day 90 2013–2014 • Planning work under Day 1 execution Living and leveraging the strict legal restrictions Organization new organi
Slide 7: New Outokumpu operations
New Outokumpu operations • Four Business Areas with sales, profit, production and supply chain management responsibility • Strong group functions with global processes and topical responsibility to ensure efficiency and alignment • Comprehensive governance approach through new Outokumpu Leadership T
Slide 8: Our transformation principles
Our transformation principles Right volumes, with the right From volumes to profitability profit Minimize money tied into inventories Set the benchmark for customer From production service in reliability, technical to customers expertise, flexibility Build trust across the company Working together A
Slide 9: Transaction expected to create annual synergy savings of EUR 200 million
Transaction expected to create annual synergy savings of EUR 200 million Production site closures ~35% • Planned closures of melt shops in Germany (Krefeld and Bochum) • Possible additional reduction of thin cold rolling production Synergy savings by category capacity in Sweden (financial savings no
Slide 10: Update synergy savings – EUR 16 million achieved in Q1 2013
Update synergy savings – EUR 16 million achieved in Q1 2013 Synergy savings over time (cumulative) 250 • We are on track to reach Max 200 for targeted annual Min 150 savings of EUR 50 million in 2013 100 50 • Krefeld melt shop ramp- 50 16 down proceeding on plan, 0 melt shop closed by the Q1 13 2013
Slide 11: Outline
Outline 1. Outokumpu strategy roadmap 2. Update on integration 3. Short term improvement: P300 and P150 4. Raw material procurement and hedging strategy Integration & Strategy, Reinhard Florey 5/22/2013 11
Slide 12: Short-term improvement programs
Short-term improvement programs • P150 is aiming an additional cost saving of EUR 150 million on EBITDA level • Full implementation and effective until end of 2014 Cost = P150 = • Considerable impact already in 2013 expected (EUR 30-50 million bottom line effect) • Global scope of program: all entit
Slide 13: P150 cost savings program
P150 cost savings program • P150 planning targeted to be completed in May with first actions started Admin & Other Headcount • Complete roll-out into entire IT organization done Corporate • Settle framework for program Functions controlling and reporting • Split of top-down target into single levers
Slide 14: P300 cash release program
P300 cash release program • Seamless transition from successful P250 program to P300 done in Q1 • P300 target setting for Accounts inventories, accounts payables Payables / Inventories Receivables and receivables for 2013 fixed and set of actions started • Complete roll-out into entire organization
Slide 15: Outline
Outline 1. Outokumpu strategy roadmap 2. Update on integration 3. Short term improvement: P300 and P150 4. Raw material procurement and hedging strategy Integration & Strategy, Reinhard Florey 5/22/2013 15
Slide 16: Raw material procurement focus 2013
Raw material procurement focus 2013 Bundling purchasing power with a global, lean and agile organization Using the right raw materials Synergy and P150 Leveraging purchasing power to efficiently in a global production savings increase discounts network Cash Flow Increasing payment terms and Optimizi
Slide 17: Stainless volatility
Stainless volatility Mill Orders Trade Stocks Nickel Price 2010 2011 2012 2013 Integration & Strategy, Reinhard Florey 5/22/2013 17
Slide 18: Timing gains / losses from alloy surcharge
Timing gains / losses from alloy surcharge • Timing gains or losses arise from difference between purchase price illustrative illustrative and invoice price of metal components Timing Gain on Nickel Timing Loss on Nickel • Purchasing Base (period which Nickel determines alloy purchase price Nickel m
Slide 19: Is the current alloy surcharge appropriate to manage volatility?
Is the current alloy surcharge appropriate to manage volatility? Surcharges (as e.g. applicable in Europe and the US) are unable to match timing of nickel purchases with sale of stainless steel Lead time in production does not correspond to pricing periods Change of lead times due to economic
Slide 20: Outokumpu’s way forward to manage metal related risks
Outokumpu’s way forward to manage metal related risks Offer a variety of pricing models which have one element in common: pricing period is in the future so that metal risk can be hedged Alloy surcharge Daily (updated) alloy surcharge Fixed price sale for short and long-term deliveries Pri
Slide 21: Cornerstones of the new hedging concept
Cornerstones of the new hedging concept Minimize valuation risk by moving raw material pricing forward to m+1 or m+2 Hedging via Suppliers Close communication Create a risk Updated guideline with between Metal Desk in Raw Hedging culture for Material Procurement and raw guideline definition of risk
Slide 22: Q&A Outokumpu Experience
Q&A Outokumpu Experience 2013 May 22-23, 2013 Old Billingsgate, London, UK