Slide 1: Financial Statements 2018
Financial Statements 2018 CEO Roeland Baan CFO Chris de la Camp February 7, 2019
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
OUR VISION Best value creator Adjusted EBITDA of €750 million in stainless steel by 2020 through ROCE of 12% customer orientation and efficiency Gearing of <35%
Slide 5: Progress in 2018 overshadowed by exceptional market environment
Progress in 2018 overshadowed by exceptional market environment Group adjusted EBITDA, EUR Adjusted EBITDA year-on-year comparison1, EUR million million Higher electrode,other input and US truck freight costs partly offset by improved cost efficiency Significantly lower European base prices compensa
Slide 6: Unstable markets and substantially higher input costs reflected in the results
Unstable markets and substantially higher input costs reflected in the results Adjusted EBITDA, € million Europe Americas Long Products Ferrochrome 21 -27 -5 25 404 -120 217 210 16 295 10 248 203 107 80 -1 2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2017 2018 6 | February 7
Slide 7: Historically low base prices in Europe
Historically low base prices in Europe European US Nickel price, Ferrochrome price, average base price, average base price, USD/tonne USD/lb EUR/tonne USD/tonne 1,123 1,464 13,133 1.42 903* 1,374 1.31 10,411 2017 2018 2017 2018 2017 2018 2017 2018 * According to the CRU, they have been no longer abl
Slide 8: High import pressure in Europe…
High import pressure in Europe… Third-country cold rolled imports1 into Europe, Third-country cold rolled imports2 into the US, 1,000 tonnes 31% 1,000 tonnes 29% 100 50 50 50 30% 80 28% 40 40 40 20% 19% 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 wo
Slide 9: ...has been burdening base prices
...has been burdening base prices 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 China 1,100 1,450 1,000 3,000 1,350 900 1,250 800 2,000 700 1,150 600 1,050 1,000 1. 2mm sheet cold rolled 304 grade. CRU
Slide 10: Permanent safeguards are sufficient to cut EU imports
Permanent safeguards are sufficient to cut EU imports EU historical cold rolled imports in the scope of safeguard measure and quota for 1st period1 ,kt • 3 periods based on 2015 – 2017 average imports 600 • Feb/19 – Q2/19 5% increase • Q3/19 – Q2/20 5% increase -21% • Q3/20 – Q2/21 5% increase 500 4
Slide 11: Group key financials
Group key financials Key figures IV/18 IV/17 III/18 2018 2017 Stainless steel deliveries, 1,000 tonnes 534 561 582 2,428 2,448 Sales, EUR million 1,586 1,463 1,733 6,872 6,356 Adjusted EBITDA, EUR million 89 82 128 485 631 Net result, EUR million 27 128 29 130 392 Earnings per share, EUR 0.07 0.31 0
Slide 12: Stainless deliveries fell due to distributor destocking
Stainless deliveries fell due to distributor destocking Group adjusted EBITDA, EUR Adjusted EBITDA quarter-on-quarter comparison1, EUR million million Planned Insurance claim maintenance & record high shutdown in deliveries Tornio 133 136 128 Lower base prices offset by further 82 89 improved raw ma
Slide 13: Product mix continued to improve in Europe
Product mix continued to improve in Europe Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million Weaker base prices offset by better raw Planned maintenance material & product mix shutdown in Tornio, higher electrode and German pension other input costs plan adjustment
Slide 14: Distributor destocking continued in the Americas
Distributor destocking continued in the Americas Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million Seasonality & distributor destocking 10 13 -0 -6 -22 Net of IV/17 I/18 II/18 III/18 IV/18 Pricing & III/18 Deliveries timing & Costs Other IV/18 mix hedging 1) Indica
Slide 15: Long products’ profitability impacted by one-offs and section 232
Long products’ profitability impacted by one-offs and section 232 Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million Defined benefits Margin impact from medical plan in the section 232 US in Q3 & UK pensions changes 13 9 3 4 -1 -1 Net of IV/17 I/18 II/18 III/18 IV/1
Slide 16: Record-high ferrochrome production
Record-high ferrochrome production Adjusted EBITDA, EUR million Adj. EBITDA quarter-on-quarter comparison1, EUR million Insurance claim 83 56 42 39 46 IV/17 I/18 II/18 III/18 IV/18 III/18 Deliveries FeCr Costs Other IV/18 price 1) Indicative columns based on management estimates 16 | February 7, 201
Slide 17: Cash flow in 2018 impacted by unsatisfactory inventory management
2018 cash flow, EUR million Cash flow in Higher inventory value driven by input material costs 2018 impacted and better mix by unsatisfactory inventory Provisions, management EBITDA Working capital pensions, financial Operating cash flow Net cash from investing Cash flow before financing charges and
Slide 18: Strengthening of our balance sheet and reducing net debt are key priorities for 2019
Strengthening of our balance sheet and reducing net debt are key priorities for 2019 Net debt and gearing Net debt/LTM adjusted EBITDA 69% 51% 45% 40% <1.0 1.61 1.24 1.09 1.21 9.8 4.0 1.7 2.6 2015 2016 2017 2018 2015 2016 2017 2018 2020 Net debt, EUR billion Gearing target 18 | February 7, 2019
Slide 19: Disappointing year for the Americas
Disappointing year for the Americas Adj. EBITDA year-on-year comparison1, EUR million Includes 1. Strong operational Mainly driven input and freight performance continues and by improved costs increase of product mix ~€40 million our reliability has improved significantly €6 million accural release
Slide 20: We have taken decisive actions to translate strong operational performance into financial results
We have taken decisive actions to translate strong operational performance into financial results 1. Strengthen commercial Improvement capabilities During Q4, areas Disappointing identified, 2. Streamline supply chain special task performance action plan processes force formed created 3. Implement t
Slide 21: Outlook for Q1 2019
Outlook for Q1 2019 • Stainless steel market is expected to remain challenging due to high distributor inventory levels • Stainless steel deliveries expected to be higher than in Adjusted EBITDA expected Q4/18 to be lower than in Q4/18 (EUR 89 million) • Americas’ performance expected to remain weak
Slide 22: Calvert Site visit 2019
Calvert Site visit 2019 Outokumpu will host a site visit to the Calvert stainless steel mill on April 2, 2019
Slide 23: Appendix
Appendix
Slide 24: Becoming the best value creator
Becoming the best value creator Vision Best value creator Must- Safety in stainless steel by Win High performing 2020 through customer battles organization orientation and efficiency Operational excellence* Commercial excellence Americas Digital transformation** Strengths Strong market position Worl
Slide 25: Must-win battles updated
Safety MUST-WIN High performing • World-class supply chain and manufacturing excellence BATTLES organization • must-win battles combined Quality, supply chain and Operational UPDATED excellence manufacturing Commercial excellence • New must-win battle • New digital business and Americas manufacturin
Slide 26: We will deliver an adjusted EBITDA of €750 million in 2020
Adjusted EBITDA, € million We will deliver +110 an adjusted +100 -100 +160 EBITDA of +320 €750 million in 2020 2015 Efficiency Commercial Market 2018 Efficiency Commercial 2020 gains growth gains growth target Approximate figures, based on management estimates
Slide 27: 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 28: Broadest product portfolio globally
Broadest product portfolio globally Deliveries by product grade in 2018 Outokumpu product forms Duplex Other 4% 3% Ferritic Hot rolled 17% 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 29: We focus on growth segments
We focus on growth segments Consumer goods, automotive, architecture, building and construction Distributors End-customers Consumer goods & medical 8% 17% Automotive Architecture, building & 24% construction 46 % Chemical, petrochem. and 21% energy 54 % Metal processing & tubes Heavy industries 6% 2
Slide 30: 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 around 10% of the total operative costs • Other cost of sales includes e.g. freight, mainten
Slide 31: Debt structure and maturity profile
Debt structure and maturity profile Debt structure*, % Debt maturity profile*, EUR million 19% 800 35% 600 18% 400 200 1% 3% 6% 17% 0 2019 2020 2021 2022 2023+ Bonds Convertible bonds Long-term loans Pension loans Finance leases Short-term loans Current debt Non-current debt Commercial paper Unutili
Slide 32: Stainless steel demand continues to grow
Stainless steel demand continues to grow Other Consumer goods +10% & Medical Expected global +17% stainless steel Global real demand in 2023 Automotive 50.2 stainless steel +13% real demand in 2018 43.2 Chemical, Petrochemical & Energy +11% million tonnes Architecture, Building & Construction +25% m
Slide 33: 3% demand growth expected for 2019
3% demand growth expected for 2019 Americas Europe APAC Global +6% +6% +6% +5% +5% +5% +4% +2% +4% +4% +3% +2% +3% +2% +2% +1% +4% +1% +1% +1% -1% -2% -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 34: Weaker-than-typical Q1 expected
Weaker-than-typical Q1 expected EMEA total stainless steel real demand1 Americas total stainless steel real demand1 +3% -2% 2,200 1,000 2,100 900 2,000 1,900 800 1,800 700 1,700 600 1,600 1,500 500 SMR Feb'19 SMR Feb'19 34 | February 7, 2019 1) Total stainless = rolled & forged products, excl. 13Cr
Slide 35: 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 29.4 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 3.8 3.9 2.8 23.9 3.7 2.7 2.7 22.8 21.9 22.8 3.5 3.5 2.5 2.5 2.5 21.3
Slide 36: 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 Q1/19 1.5 D 13,000 D 1.12 USD/lb / / t 11,000 l 18 Jan 19 o b 1 0.91 USD/lb n 9,000 23 Jan 19 11,615 USD/t 7,000 0.5 Jan'17 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan'18 Fe
Slide 37: For more information, call Outokumpu Investor Relations
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