Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — FY2015 Earnings Presentation
45 slides from Outokumpu Oyj's earnings presentation, Feb 11, 2016
Slide 1: Annual Accounts 2015
Annual Accounts 2015 CEO Roeland Baan CFO Reinhard Florey February 11, 2016
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: Today's attendees of Outokumpu
Today‘s attendees of Outokumpu Johanna Henttonen Roeland Baan Reinhard Florey SVP – Investor CEO CFO Relations February 11, 3 2016
Slide 4: Contents
Contents 1. 2015 overview 2. Financial performance 3. Outlook and guidance February 11, 4 2016
Slide 5: 2015 in brief
EBIT, EUR million 20 8 2015 in brief 2 0 -20 -6 -3 -3 -9 -9 -11 -28 -25 -40 -26 -40 -45-48 -60 • EMEA improved due to restructuring benefits despite difficult market -80 -67 -74 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 • Stronger balance sheet due to divestment of SKS and Fischer Mexicana Und
Slide 6: About 1% demand growth expected for 2016
About 1% demand growth expected for 2016 AMERICAS EUROPE APAC +13% +8% +9% +7% +5% +5% +4% +1% +1% 0% +1% +1% +2%+2% +4% -1% -2% -2% 12 13 14 15f 16f 17f 12 13 14 15f 16f 17f 12 13 14 15f 16f 17f +19% +12% +8% +8% +8% +8% +6% +6% +6% +3% +4% +4% +4% +4%+3% +4% +3%+4% +3% +1% +1% +1% 0% -2% -0% -4% -
Slide 7: Stainless steel base price resilient in Europe, but strongly down in the US
Stainless steel base price resilient in Europe, but strongly down in the US European base prices 1) , EUR/t US base prices 1) , USD/t 1,250 1,450 Germany USA 1,200 1,400 1,150 1,350 1,100 1,300 1,050 1,250 1,000 1,200 2012 2013 2014 2015 2012 2013 2014 2015 Source: CRU January 2016 1) 2mm sheet cold
Slide 8: Strong decline in commodity prices resulted in distributor destocking
Strong decline in commodity prices resulted in distributor destocking Nickel price and stocks 1) Outokumpu sales by customer type 60,000 600 Distributors End-customers USD/t Ktonnes 50,000 500 40,000 400 44% 30,000 300 56% 20,000 200 10,000 100 0 0 Nickel price 2005 2006 2007 2008 2009 2010 2011 201
Slide 9: Import pressure in Europe decreased, US imports remaining at elevated levels
Import pressure in Europe decreased, US imports remaining at elevated levels Third-country imports into Europe, total market 3.7 Mtonnes in 20151 Third-country imports into the US, total market 1.7 Mtonnes in 20151 120 CR, kt 50 CR, kt Ø 85 kt 45 100 Ø 34 kt Ø 66 kt 40 80 35 Ø 25 kt Ø 46kt 30 60 25
Slide 10: Balance sheet strengthened significantly
Balance sheet strengthened significantly Net interest-bearing debt and gearing 188 4 3.6 190 • Divestments strengthened 170 financial position 3 150 • 60% stake in SKS in China • 50% stake in Fischer 130 92.6 Mexicana in Mexico 69.1 110 2 2.0 1.6 90 Net debt down to EUR 1.6 billion, gearing to 69%
Slide 11: Synergies, P250 and P400 completed according to targets
Synergies, P250 and P400 completed according to targets Realized (EUR million) Total target (EUR million) Cost reduction EMEA 20 100 restructuring Cost reduction Synergies 200 200 200 Cost reduction P250 250 250 Total cost 470 550 reduction NWC reduction P400 574 400 2013 2014 2015 2016 2017 New sav
Slide 12: Contents
Contents 1. 2015 overview 2. Financial performance 3. Outlook and guidance February 11, 12 2016
Slide 13: Q4 and FY15 key financials overview
Q4 and FY15 key financials overview Q4/15 Group key figures • Stainless steel deliveries flat EUR million IV/15 III/15 2015 2014 • Sales declined 4%; lower volumes and prices Stainless steel deliveries, kt 574 570 2,381 2,554 • Underlying EBIT improved as a result of Sales 1,435 1,487 6,384 6,844 im
Slide 14: Good progress in cost saving programs
Good progress in cost saving programs Cumulative savings 2013-2017 and related cash costs, MEUR • Synergy savings and P250 EMEA restructuring Synergy savings P250 completed according to targets 530 550 470 80 100 • EUR 16 million savings in Q4 385 20 200 200 200 185 • Total savings of EUR 470 millio
Slide 15: P400 program completed: NWC focus to continue
P400 program completed: NWC focus to continue Cumulated cash flow from working capital change 1) Inventory days development 2) 574 120 600 106 105 100 102 96 500 90 400 400 351 351 300 60 200 30 100 0 0 2013 2014 2015 2015 2013 2014 Q3/15 Q4/15 2015 target avg avg avg 1) Change in accounts payables,
Slide 16: Coil EMEA industrial setup developing well
Coil EMEA industrial setup developing well Coil EMEA stainless deliveries, kt • Challenging markets in 2015 • Nickel price at 12-year lows 411 415 • End demand stable, continued 369 374 377 destocking • Fluctuating imports to Europe • Deliveries declined by 5.3% vs 2014 • Base prices down about EUR
Slide 17: Coil Americas suffered from difficult markets
Coil Americas suffered from difficult markets Coil Americas stainless deliveries, kt • Operating environment difficult in 2015 • Imports peaked H1 close to 30% 126 126 134 138 111 • Intense competition and strongly declining prices • FY15 deliveries down 6% y-o-y impacted by weak order intake during
Slide 18: APAC, Quarto Plate & Long Products
APAC, Quarto Plate & Long Products APAC Quarto Plate Long Products Underlying EBIT Underlying EBIT Underlying EBIT 0 12 0 -2 -4 -3 3 4 3 -4 -3 -6 -9 -16 -3 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 •Tough markets in 2015 with • Operating environment ex
Slide 19: Strong focus on managing the cash flows
Strong focus on managing the cash flows • EUR 2 million positive operating cash EUR million IV/15 III/15 2015 2014 flow in Q4 • Proceeds from the disposal of Net cash from operating subsidiaries, net of cash and tax 2 67 -34 -126 at EUR 375 million as a result of SKS activities divestment Net cash f
Slide 20: Financial stability improved
Financial stability improved Net debt and gearing, EUR million and % 1,500 • Successful refinancing in December 1,000 • Revolving credit facility extended • New EUR 655 million tranche maturing in Feb 2019 500 • Remaining EUR 145 million maturing in Feb 2017 • Prepayment and extension of 0 bilateral
Slide 21: Contents
Contents 1. 2015 overview 2. Financial performance 3. Outlook and guidance February 11, 21 2016
Slide 22: Real demand in Q1/16 expected to decline in EMEA and Americas
Real demand in Q1/16 expected to decline in EMEA and Americas from Q4/15 EMEA total stainless steel real demand1 Americas total stainless steel real demand1 1,000 tonnes 1,000 tonnes 2,000 -2% 1,100 1,950 -2% 1,000 1,900 1,850 900 1,800 1,750 800 1,700 700 1,650 1,600 600 1,550 1,500 500 Q1 2015 Q2
Slide 23: Business and financial outlook for Q1 2016
Business and financial outlook for Q1 2016 Market commentary Outokumpu estimate for Q1 Year 2016 has started with downward Market uncertainties warrant prudence in the revisions to economic growth outlooks and outlook statement. pressure in the materials sector Outokumpu estimates first-quarter deli
Slide 24: CEO's first 40 days at the office
CEO’s first 40 days at the office
Slide 25: Bringing Outokumpu to the next level
Bringing Outokumpu to the next level Immediate actions Building long-term competitiveness • Moving ahead with Coil Americas • Manufacturing excellence for efficiency turnaround and lower production costs • Finalizing European restructuring • Bringing the operational capability and productivity to a
Slide 26: Q&A
; t Se ERE. Vow PH i Ppem outokumpu C) February 11, 2016
Slide 27: For more information, call Outokumpu Investor Relations
For more information, call Outokumpu Investor Relations or visit www.outokumpu.com/investors Johanna Henttonen Senior Vice President – Investor Relations Phone +358 9 421 3804 Mobile +358 40 5300 778 E-mail: johanna.henttonen@outokumpu.com Tommi Järvenpää Manager – Investor Relations Phone +358 9 42
Slide 28: Appendix
Appendix February 11, 28 2016
Slide 29: Coil EMEA
Coil EMEA EMEA key figures Q4 highlights EUR million IV/15 III/15 2015 2014 • Difficult market conditions continued in Stainless steel deliveries, kt 377 374 1,577 1,666 Q4 Ferrochrome external 29 133 deliveries, kt • Stable stainless steel deliveries Sales 944 973 4,134 4,520 EBIT excl. NRI 30 -3 1
Slide 30: Coil Americas
Coil Americas Americas key figures Q4 highlights EUR million IV/15 III/15 2015 2014 • Delivery volumes grown during the Stainless steel deliveries, kt 138 134 509 541 past two quarters, Q4 similar to Q3 Sales 272 276 1,111 1,158 • Base price further down by USD 50/t EBIT excl. NRI -54 -49 -198 -82 i
Slide 31: APAC
APAC APAC key figures Q4 highlights EUR million IV/15 III/15 2015 2014 • Following the divestment of SKS, Stainless steel deliveries, kt 33 51 197 220 APAC business area consists of Sales 65 97 403 444 service centers in China and EBIT excl. NRI -4 -8 -20 -6 Australia, as well as warehouses and Unde
Slide 32: Quarto Plate
Quarto Plate Quarto Plate key figures Q4 highlights EUR million IV/15 III/15 2015 2014 • Operating environment remained Stainless steel deliveries, kt 24 24 105 98 extremely difficult as industrial Sales 99 104 459 450 investment activity continued EBIT excl. NRI -4 -14 -19 -26 subdued Underlying EB
Slide 33: Long Products
Long Products Long Products key figures Q4 highlights EUR million IV/15 III/15 2015 2014 • Overall demand for long products Stainless steel deliveries, kt 42 58 213 248 continued to be weak and prices were Sales 100 142 551 651 under pressure EBIT excl. NRI -8 1 2 33 • Clearly lower total deliveries
Slide 34: Outokumpu balance sheet (assets)
Outokumpu balance sheet Assets (MEUR) 31.12.15 30.9.15 Non-current assets Intangible assets 498 567 Property, plant and equipment 3,005 3,061 Investments in associated companies 63 82 and joint ventures Other financial assets 41 38 Deferred tax assets 16 61 Defined benefit plan assets 35 38 Trade an
Slide 35: Outokumpu balance sheet (equity and liabilities)
Outokumpu balance sheet Equity and liabilities (MEUR) 31.12.15 30.9.15 Total equity 2,329 2,085 Non-current liabilities Non-current debt 1,249 1,494 Other financial liabilities 9 11 Deferred tax liabilities 16 38 Defined benefit and other long-term 369 335 employee benefit obligations Provisions 113
Slide 36: Cost analysis 2015
Cost analysis 2015 Operative cost components 1) Comments • 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 incl
Slide 37: Headcount reductions
Headcount reductions Total headcount reduction 1) Personnel per BA at the end of 2015 13,327 766 301 658 436 773 Coil EMEA 112 1,123 Coil Americas APAC 2,150 Quarto Plate 1,152 7,008 Long Products 9,850 Other operations 2012 2013 2014 2015 2016- 2017e 2017e • Outokumpu has reduced some 2,330 jobs si
Slide 38: Capacities and production flow
Capacities and production flow Coil EMEA Quarto Plate (QP) Long Products (LP) [kt p.a.] [kt p.a.] [kt p.a.] MELTING TORNIO AVESTA SHEFFIELD (FIN) (SWE) (UK) 1,450 450 450 Slabs, Blooms, Billets, Ingots ROLLING TORNIO AVESTA HOT (FIN) (SWE) 1,450 900 PLATE & DEGERFORS NEWCASTLE SHEFFIELD RICHBURG DEG
Slide 39: Capacities and production flow
Capacities and production flow Coil Americas TOTAL Group capacity [kt p.a.] MELTING CALVERT (US) 900 3.3m tonnes CALVERT ROLLING (US) HOT 870 3.2m tonnes PLATE & LONG 0.3m tonnes rolled + HBW) GOODS (Cold FINISHED CALVERT SL POTOSI (US) (MEXICO) 350+150 250 2.4m tonnes Today: • Calvert integrated st
Slide 40: Balanced customer base across industries
Balanced customer base across industries Sales by customer segment 1) Sales by end-customer segment 1) Distributors End-customers Consumer goods Other & Medical 20% 15% 44% 17% 56% Automotive 22% 5% Heavy 4% Architecture, industries 17% Building & Construction Metal Chemical, processing Petrochemica
Slide 41: Broadest product portfolio across stainless steel
Broadest product portfolio across stainless steel Deliveries by product grade 1) • Outokumpu has a broad product portfolio to Other serve all customers 3% • Significantly higher share of ferritic grades Duplex 7% leads into reduced sensitivity to nickel price volatility2) Austenitic Ferritic (CrNi)
Slide 42: Balanced customer base and comprehensive service center network in Europe
Balanced customer base and comprehensive service center network in Europe Total stainless market size in 2015 2) Nordic 418 Total Europe: 5.865 Eskilstuna Coil EMEA sales by customer segment 1) Outokumpu core market UK Outokumpu non-core Distributors market 272 43% 36 % 40% Sheffield Germany 1.605 D
Slide 43: Nickel price development
Nickel price development 60,000 500 [Ktonnes] [USD/t] LME stocks (rhs) 450 50,000 400 LME cash price (lhs) 40,000 350 300 30,000 250 200 20,000 150 10,000 100 50 ,0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 • The nickel prices were trending lower during the year as slowing demand from
Slide 44: Raw materials - price development
Raw materials - price development Nickel1 1.2 Ferrochrome2 16,000 European contract price European spot price U U 1.1 S S 14,000 15 Jan 16 D D 1 8,380 USD/t Q1/16 / / 0.92 USD/lb t 12,000 l 0.9 o b n 10,000 0.8 15 Jan 16 0.73 USD/lb 8,000 0.7 Jan'15 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan'16
Slide 45: February 11,
February 11, 45 2016