Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Shareholder Meeting (February 2014)
49 slides from Outokumpu Oyj's shareholder meeting presentation, Feb 14, 2014
Slide 1: Outokumpu Oyj Extraordinary General Meeting 2014
Outokumpu Oyj Extraordinary General Meeting 2014 February 14, 2014
Slide 2: Opening of the Extraordinary General Meeting
Opening of the Extraordinary General Meeting Item 1 on the agenda Calling the Meeting to order Item 2 on the agenda Jorma Ollila, Chairman of the Board of Directors 2/14/2014 2
Slide 3: Election of persons to scrutinize the minutes and supervise vote counting
Election of persons to scrutinize the minutes and to supervise the counting of the votes Item 3 on the agenda Recording the legality of the Meeting Item 4 on the agenda 2/14/2014 3
Slide 4: Recording the attendance and adoption of the list of votes
Recording the attendance at the Meeting and adoption of the list of votes Item 5 on the agenda 2/14/2014 4
Slide 5: Authorizing the Board of Directors to decide on a share issue
Authorizing the Board of Directors to decide on a share issue Item 6 on the agenda Mika Seitovirta, CEO 2/14/2014 5
Slide 6: Outokumpu strategy and measures to strengthen financial position
Outokumpu strategy and measures to strengthen financial position Mika Seitovirta CEO Extraordinary General Meeting February 14, 2014
Slide 7: Disclaimer
Disclaimer By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations. This presentation does not constitute or form part of and should not be constructed as, an offer to sell, or the solicitation or invitation
Slide 8: Contents
Contents 1. Stainless steel market 2. Outokumpu strategy 3. 2013 overview 4. Measures to improve profitability 5. Measures to strengthen the balance sheet 6. Summary 7. Authorizing the Board of Directors to decide on a share issue 2/14/2014 8
Slide 9: Stainless steel is a key enabler of sustainable, modern society
Stainless steel is a key enabler of sustainable, modern society Megatrends driving demand Quarto Plate to Stolt Tankers • Economic and population growth • Mobility and urbanization • Climate change and limited resources Key customer industries Laser surface to One World Trade Center • Consumer goods
Slide 10: Continued growth
Continued growth Europe, Middle East and Africa NAFTA 1) Asia Outokumpu’s 35% 22% 1% market share Share of net sales 2013 (estimate) 1) NAFTA: USA, Canada, Mexico. Source: SMR February 2014. Total stainless = rolled & forged 2/14/2014 10
Slide 11: Demand of stainless steel
Demand of stainless steel +4% +4% +8% +1% +6% +6% +6% +5% +4% +4% +4% -1% 2012 2013 2014F 2015F EMEA 2012 2013 2014F 2015F 2012 2013 2014F 2015F APAC AMERICAS +6% +5%+5% +4% 2012 2013 2014F 2015F TOTAL WORLD Data source: SMR, February 2014. Real Demand for Total Stainless Steel (rolled & forged) 2/1
Slide 12: Challenge: overcapacity
Challenge: overcapacity Overcapacity in Asia Capacity and imports in Europe Healthy situation in Americas 15% 28% 18% 24% % Share of imports Source: SMR Apparent Consumption 2005–13, SMR Real Demand 2014-15 February 2014; CRU Capacity November 2013; Eurofer Import share estimated for 2013, 2014, 201
Slide 13: Challenge: declining prices
Challenge: declining prices Transaction prices 304 stainless steel (USD) 1 Base prices 304 stainless steel (EUR) 1 Source: CRU January 2014 1) 2mm sheet cold rolled 304 grade 2/14/2014 13
Slide 14: Contents
Contents 1. Stainless steel market 2. Outokumpu strategy 3. 2013 overview 4. Measures to improve profitability 5. Measures to strengthen the balance sheet 6. Summary 7. Authorizing the Board of Directors to decide on a share issue 2/14/2014 14
Slide 15: Outokumpu: global leader in stainless steel
Outokumpu: global leader in stainless steel Sweden USA Specialty stainless production Cost efficient integrated mill units and an R&D center. (Calvert). High performance stainless plate, bar and pipe production units. Finland Modern fully integrated chrome mine, UK ferrochrome works and stainless st
Slide 16: Broadest product portfolio in the industry
Broadest product portfolio in the industry High temperature All product grades Special grades forms High alloyed austenitic grades Duplex grades Martensitic Standard grades grades Ferritic grades Standard austenitic Cr-Ni grades 2/14/2014 16
Slide 17: Outokumpu strengths
Outokumpu strengths Global leader in stainless steel Presence in key Global leader in stainless steel with local presence in key markets. markets Balanced customer base across all key industry sectors. Leading product Broadest product portfolio including both specialty and commodities. portfolio Lea
Slide 18: Focus areas
Focus areas Restructuring Deliver on Efficiency Transform Ensure financial synergies programs company stability Profitable growth Develop Ramp-up of Expansion of Develop Specialty Calvert ferrochrome APAC Stainless 2013/2014 14/2/2014 18
Slide 19: Contents
Contents 1. Stainless steel market 2. Outokumpu strategy 3. 2013 overview 4. Measures to improve profitability 5. Measures to strengthen the balance sheet 6. Summary 7. Authorizing the Board of Directors to decide on a share issue 2/14/2014 19
Slide 20: 2013: key achievements
2013: key achievements Synergies Efficiency Financial stability Ramp-ups programs • Krefeld meltshop • P150 program: • Capex reduction to • Ramp-up of Ferro- closure in December Savings of more than below EUR 183 chrome production 2013 EUR 104 million in million in 2013 reached 434,000 t., • Synergy
Slide 21: 2013: major challenges
2013: major challenges 1 Weak economy especially in Europe 2 Stainless steel demand declined in Europe 3 Decline in nickel price stretching our margins 4 European Commission remedy requirement 5 Challenges with the Calvert ramp-up 2/14/2014 21
Slide 22: 2013: heavy losses
2013: heavy losses • Achieved savings almost EUR million 2013 2012 comparable doubled compared to original Stainless steel deliveries 1) 2,585 2,723 targets Sales 6,745 7,961 • Positive cash flow Underlying EBITDA 2) -32 -66 • Deliveries declined 5% and sales 15% EBIT -510 -754 • Reduced losses, but
Slide 23: 2013 by Business Areas
2013 by Business Areas EBIT excluding non-recurring items, EUR million 1) EMEA Americas APAC Specialty Q1/13 Q2/13 Q3/13 Q4/13 2013 1) Excl. discontinuing operations (Terni remedy assets, VDM business and certain service centers) 2/14/2014 23
Slide 24: Balance sheet at the end of 2013
Balance sheet at the end of 2013 Q4/13 Q3/13 EUR million Net interest-bearing debt 3,556 3,861 Equity 1,891 2,262 Equity-to-assets ratio, % 21.5 25.0 Debt-to-equity ratio (gearing), % 188,0 170.7 Profitability to be improved Clear plan already is in execution Balance sheet to be strengthened Com
Slide 25: Contents
Contents 1. Stainless steel market 2. Outokumpu strategy 3. 2013 overview 4. Measures to improve profitability 5. Measures to strengthen the balance sheet 6. Summary 7. Authorizing the Board of Directors to decide on a share issue 2/14/2014 25
Slide 26: Levers to improve profitability
Levers to improve profitability A Calvert ramp-up B Synergy savings and restructuring in Europe C Ferrochrome ramp-up D Cash flow 2/14/2014 26
Slide 27: Calvert ramp-up and Stainless Americas turnaround
Calvert ramp-up and A Stainless Americas turnaround Stainless Americas EBITDA1) Comments • Challenges in 2013 o Import of hot band from Europe (Terni) due to remedy requirements o Technical quality issues due to new product rollouts – corrective actions in progress Q1/2013 Q2/2013 Q3/2013 Q4/2013 •
Slide 28: Calvert ramp-up and Stainless Americas turnaround
Calvert ramp-up and A Stainless Americas turnaround Stainless Americas material flow in 2013 Stainless Americas material flow 2014 Calvert Calvert Terni Mexico Mexico Imports from Europe Cold Rolled to market Hot band from Calvert Cold Rolled to market Broad customer base but high costs due to Busin
Slide 29: Synergy and cost savings
B Synergy and cost savings 2013 synergies and cost-efficiency measures Total annual savings expected1) EUR EUR million million €99m Original estimate Actual 2014 2015 2016 2017 Synergy savings targets Total targeted EUR 450 million cost- exceeded in 2013 efficiency savings by 2017 In total, planned
Slide 30: Restructuring the production in Europe
B Restructuring the production in Europe Status in January 2013 thousand tonnes million t Finland Germany Sweden Total Tornio Krefeld/Benrath Dillenburg Bochum Avesta Nyby Melting 3) 1,450 600 800 3.3 450 Hot Rolling 1,450 600 300 1) 3.2 800 CR + HBW Coil 750+350 660 2.2 220 50+120 80 Low utilizatio
Slide 31: Restructuring the production in Europe
B Restructuring the production in Europe Planned status in 2015 thousand tonnes million t Finland Germany 2) Sweden Total Tornio Krefeld/Benrath Dillenburg Bochum Avesta Nyby Melting 3) 1,450 X X 450 1.9 Hot Rolling 1,450 500 1) 2.0 CR + HBW Coil 750+150 350 1.7 150 50+120 80 High utilization rates
Slide 32: Ferrochrome ramp-up proceeds, good profitability
Ferrochrome ramp-up proceeds, C good profitability Ferrochrome volumes (1,000 tonnes) Comments • The only ferrochrome producer in Europe with access to a chrome mine • The proved chrome ore reserves amount to 50 million tonnes, enabling long term operations. • Cost efficient production • Ramp-up pro
Slide 33: Improving cash flow
D Improving cash flow Cash flow from working capital change 1,2) Group capex per year 351 271 300 166 150 2012 2013 2014F In 2013 EUR 351EURm million released from Significant capital expenditure working capital decrease since 2012 1) Graph shows change in accounts payables, accounts receivables and
Slide 34: Contents
Contents 1. Stainless steel market 2. Outokumpu strategy 3. 2013 overview 4. Measures to improve profitability 5. Measures to strengthen the balance sheet 6. Summary 7. Authorizing the Board of Directors to decide on a share issue 2/14/2014 34
Slide 35: Strengthening the balance sheet
Strengthening the balance sheet Divestiture of Terni and VDM Measures to strengthen to ThyssenKrupp capital structure 2/14/2014 35
Slide 36: Terni and VDM divestiture to ThyssenKrupp
Terni and VDM divestiture to ThyssenKrupp – good solution in the current environment • Terni integrated mill in Italy and service centers in Germany, France, Italy, Spain and Turkey Terni divestiture • Operations have been clearly loss-making recently • Terni has been for sale since the completion o
Slide 37: Why did ThyssenKrupp have to sell their Outokumpu shares?
Why did ThyssenKrupp have to sell their Outokumpu shares? European Share buyers/ Commission ThyssenKrupp Banks investors As a condition for the Was obliged to find The banks solicited Terni divestment, buyers to all its by ThyssenKrupp demanded The buyers shares within the looked for buyers disconti
Slide 38: Comprehensive financial plan to strengthen balance sheet and liquidity
Comprehensive financial plan to strengthen balance sheet and liquidity • New EUR 500 million liquidity facility, maturity in 2017 • New revolving credit facility of EUR 900 million, maturity in 2017 (replaces the previous EUR 900 million facility) • Extension and amendment of the bilateral loan port
Slide 39: Stronger financial position
Stronger financial position 1 Elimination of 1.3 billion euro debt 2 Longer debt maturities 3 Stronger balance sheet and better credit profile 4 Significantly enhanced liquidity Financing and balance sheet that enable Outokumpu to execute its turnaround to profitability 2/14/2014 39
Slide 40: Divestitures and planned rights issue to strengthen balance sheet
Divestitures and planned rights issue to strengthen Outokumpu balance sheet Illustrative gearing impact of Terni and VDM divestment: VDM and Terni divestment: • Net debt expected to decrease by EUR 1.3 billion (the amount of the TK loan note) Further influencing factors on gearing: • Planned rights
Slide 41: Proposed rights issue in brief
Proposed rights issue in brief Size • Approximately EUR 650 million • Issue of new ordinary shares with pre-emptive subscription rights for existing shareholders Transaction structure • Existing shareholders and other investors may subscribe for shares without subscription rights (secondary subscrip
Slide 42: Rights issue process
Rights issue process • According to the Finnish Companies Act, a rights issue requires a decision by the shareholders • The proposed amount of max. 65 billion shares has been set to ensure that the rights issue can be implemented in all circumstances o Thus, no conclusions to the subscription price
Slide 43: Contents
Contents 1. Stainless steel market 2. Outokumpu strategy 3. 2013 overview 4. Measures to improve profitability 5. Measures to strengthen the balance sheet 6. Summary 7. Authorizing the Board of Directors to decide on a share issue 2/14/2014 43
Slide 44: Summary
Summary Outokumpu is a global leader in stainless steel in an industry with good growth outlook Current profitability and balance sheet are weak Actions to improve profitability are ongoing Measures to strengthen the balance sheet enable the execution of the transformation 2/14/2014 44
Slide 45: Contents
Contents 1. Stainless steel market 2. Outokumpu strategy 3. 2013 overview 4. Path to profitability 5. Financial plan 6. Summary 7. Authorizing the Board of Directors to decide on a share issue 2/14/2014 45
Slide 46: Proposal by the Board of Directors to undertake a share issue
Proposal by the Board of Directors to undertake a share issue • The Board of Directors proposes that the Extraordinary General Meeting authorizes the Board of Directors to undertake a share issue for consideration in which shareholders have the right to subscribe for new shares in proportion to thei
Slide 47: Authorizing the Board of Directors to decide on a share issue
Authorizing the Board of Directors to decide on a share issue Item 6 on the agenda 2/14/2014 47
Slide 48: Closing of the Meeting
Closing of the Meeting Item 7 on the agenda 2/14/2014 48
Slide 49: Outokumpu Oyj Extraordinary General Meeting 2014
Outokumpu Oyj Extraordinary General Meeting 2014 February 14, 2014