Slide 1: Q2 2019 results
Q2 2019 results CEO Roeland Baan CFO Pia Aaltonen-Forsell August 1, 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 Pia Aaltonen-Forsell Tommi Järvenpää President & CEO CFO Vice President, Investor Relations 3 | August 1, 2019
Slide 4: Best value creator in stainless steel by 2020
OUR VISION Best value creator in stainless steel by 2020 through customer orientation and efficiency 4 | August 1, 2019
Slide 5: Strong operational execution secured satisfactory performance in the second quarter
Strong operational execution secured satisfactory performance in the second quarter Negative Other operations’ result partly offset by Group adjusted EBITDA, Adjusted EBITDA quarter-on-quarter comparison1, EUR million reversal of currency derivative losses EUR million Better product and customer mix
Slide 6: No significant changes in the stainless steel markets in Q2
No significant changes in the stainless steel markets in Q2 European US Average nickel price, Ferrochrome average base price, average base price, USD/tonne benchmark price, EUR/tonne* USD/tonne USD/lb. 796 790 1,433 1,433 12,369 12,258 1.20 1.12 -0.8% 0% -0.9% Q1/19 Q2/19 Q1/19 Q2/19 Q1/19 Q2/19 Q1/
Slide 7: Europe continues to battle with cheap Asian imports
Europe continues to battle with cheap Asian imports... Third-country cold rolled imports1 into Europe, Third-country cold rolled imports2 into the US, 1,000 tonnes 1,000 tonnes 100 50 50 50 80 30% 40 40 40 23% 60 30 30 30 16% 16% 40 20 20 20 20 10 10 10 0 0 0 0 From rest of world From China From res
Slide 8: Keeping European base prices at low levels
…keeping European base prices at low levels European base prices1 (Germany)*, US base prices1, Transaction prices 304 stainless, EUR/tonne USD/tonne USD/tonne 1,200 1,500 3,400 1,100 1,400 2,900 1,000 900 1,300 2,400 800 1,200 1,900 700 600 1,100 1,400 Europe USA China 1. 2mm sheet cold rolled 304 g
Slide 9: More pronounced Q3 dip in demand expected in Europe
More pronounced Q3 dip in demand expected in Europe EMEA total stainless steel real demand1 Americas total stainless steel real demand1 2,500 1,000 2,000 750 1,500 500 1,000 250 500 0 0 1) Total stainless = rolled & forged products, excl. 13Cr tubes, profiles 9 | August 1, 2019 Source: SMR July 2019
Slide 10: Key figures
Key figures Q2/19 Q2/18 Q1/19 Stainless steel deliveries 1,000 tonnes 584 668 621 Sales EUR million 1,701 1,883 1,715 Adjusted EBITDA EUR million 91 136 54 EBITDA EUR million 91 136 40 Net result EUR million 6 25 -39 Earnings per share EUR 0.01 0.06 -0.09 Operating cash flow EUR million 177 71 39 Ne
Slide 11: Strong product mix in BA Europe
Strong product mix in BA Europe Europe adjusted EBITDA, Adjusted EBITDA quarter-on-quarter comparison1, EUR million EUR million Improved customer & product mix and raw material optimization Reversal of currency derivative losses in Q1/19 73 73 60 42 33 Net of Pricing timing Q2/18 Q3 Q4 Q1 Q2/19 Q1/1
Slide 12: BA Americas suffering from continuous distributor destocking
BA Americas suffering from continuous distributor destocking Americas adjusted EBITDA, Adjusted EBITDA quarter-on-quarter comparison1, EUR million EUR million Lower truck freight costs in the US 10 13 -8 -22 -18 Net of Pricing timing Q2/18 Q3 Q4 Q1 Q2/19 Q1/19 Deliveries Costs Others Q2/19 & mix and
Slide 13: Long products' demand weakening in Europe
Long products’ demand weakening in Europe Long Products adjusted EBITDA, Adjusted EBITDA quarter-on-quarter comparison1, EUR million EUR million Reversal of Q1 FX losses Improved customer and 13 product mix 9 6 -3 -1 Net of Pricing timing Q2/18 Q3 Q4 Q1 Q2/19 Q1/19 Deliveries Costs Others Q2/19 & mi
Slide 14: Ferrochrome deliveries remained at a high level, costs increased
Ferrochrome deliveries remained at a high level, costs increased due to planned maintenance Ferrochrome adjusted EBITDA, Adjusted EBITDA quarter-on-quarter comparison1, EUR million EUR million Planned maintenance shutdown 83 46 39 30 31 FeCr Q2/18 Q3 Q4 Q1 Q2/19 Q1/19 Deliveries Costs Others Q2/19 p
Slide 15: Strong cash generation
Strong cash generation Q2/19 cash flow, EUR million CAPEX estimate 2019, EUR million 250 200 150 Expansion, digitalization & other Kemi mine Annual maintenance 100 50 0 Provisions, Working pensions, Operating Net cash Cash EBITDA from flow capital financial cash flow investing before charges activit
Slide 16: Net debt decreased due to continued focus on net working capital
Net debt decreased due to continued focus on net working capital Net debt, EUR billion Net debt/LTM adjusted EBITDA IFRS 16 impact* EUR 131 million <1.0 1.61 1.24 1.09 1.24 1.37 1.31 9.8 4.0 1.7 2.6 3.4 3.6 2015 2016 2017 2018 Q1/19 Q2/19 2015 2016 2017 2018 Q1/19 Q2/19 Target 16 | August 1, 2019 *
Slide 17: New term loan signed to extend debt maturities
New term loan signed to extend debt maturities • EUR 400 million secured Debt structure*, % Debt maturity profile*, EUR million term loan • Signed in June • Matures in 2023 17% 800 • Refinancing short term debt • Available in July 32% • Drawn latest in Q4/19 600 16% 400 0% 200 6% 14% 15% 0 2019 2020
Slide 18: Outlook for Q3 2019
Outlook for Q3 2019 • The stainless steel market is expected to be challenging • Deliveries expected to be lower in Europe and Adjusted EBITDA remain at stable level in the Americas compared to Q2 is expected to be • Ferrochrome result will be negatively impacted by lower than in lower benchmark pri
Slide 19: Appendix
Appendix
Slide 20: 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 21: Our path to deliver an adjusted EBITDA of €750 million in 2020
Adjusted EBITDA, € million Our path to +110 deliver an +100 -100 +160 adjusted EBITDA +320 of €750 million in 2020 2015 Efficiency Commercial gains growth Market 2018 Efficiency Commercial gains growth 2020 target Approximate figures, based on management estimates 21 | August 1, 2019
Slide 22: How to close the gap to €750 million by 2020
How to close the gap to €750 million by 2020 Gains by Europe Americas Other Europe 20201 €150 million in total Commercial growth €50 €60 €110 • Higher deliveries • Value-added products • Customer & product mix • Market share in Mexico million • Service solutions • New products €110 million from comm
Slide 23: 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 24: We focus on growth segments
We focus on growth segments Consumer goods, automotive, architecture, building and construction Distributors End-customers Consumer goods & medical • Long term contracts • Spot contracts 9% Chemical, petrochem. and energy • Large quantities • Standard products and 2% Automotive grades 11% • Special
Slide 25: Broadest product portfolio globally
Broadest product portfolio globally Outokumpu stainless steel deliveries by product form Stainless steel is not a single Chrome is the most important raw product and there are thousands of material used in stainless steel different grades and product forms. Cold rolled 70% production. Outokumpu has
Slide 26: Continued cost efficiency improvements
Continued cost efficiency improvements Operative cost components* SG&A costs, € million SG&A (excl. personnel and D&A) Our target is to achieve further 354 342 D&A total €160 Other cost of 331 307 sales 275 Energy and consumables million Personnel from efficiency gains by 2020 2014 2015 2016 2017 20
Slide 27: We are the world leader in sustainable steel production
We are the world leader in sustainable steel production... CO2 footprint, index Recycled content, % Our 250 84 87 87 87 89 ferrochrome operations’ 200 CO2 footprint 150 is only 100 50 Estimated global recycled content in stainless steel 42% of industry 0 average* Outokumpu 2014 2015 2016 2017 2018 E
Slide 28: ...and we have ambitious targets
...and we have ambitious targets CO2 emissions intensity, tonnes per stainless Outokumpu’s emissions forecast under SBT steel conditions, tonnes of CO2 per tonne steel 1) 2 2.5 20% reduction by 2023 2.0 1.5 50% reduction 1.5 1 1.0 0.5 0.5 34% reduction 0 0.0 2014- 2017 2018 2023 2014- 2020 2025 2030
Slide 29: Stainless steel demand is growing
Stainless steel demand is growing Heavy industries Other +12% +11% Other Heavy industries Architecture, Building & Construction Architecture, Building Global +38% Expected global & Construction stainless steel stainless steel real demand in 2018 real demand in 2024 43.2 +21% Automotive million tonne
Slide 30: 2% demand growth expected for 2019
2% demand growth expected for 2019 Global Americas Europe APAC 5% 2% 2% 3% 4% 4% 4% 2% 2% 0% 2% 4% 4% 3% 1% -2% 2% 2% 3% 2% 2% 6% 3% 3% 3% 4% 5% 4% 18 19f 20f 21f 22f 23f 24f 18 19f 20f 21f 22f 23f 24f 18 19f 20f 21f 22f 23f 24f 18 19f 20f 21f 22f 23f 24f USA Other Americas Other EMEA China Other AP
Slide 31: 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 28.7 3.2 3.3 3.3 5.0 5.1 3.2 3.2 3.2 26.7 4.1 4.2 3.0 3.0 25.3 4.1 24.3 3.8 3.9 2.8 23.1 3.7 2.7 2.7 21.9 22.6 3.5 3.5 2.5 2.5 2.5 21.7
Slide 32: Raw materials - price development
Raw materials - price development Nickel1, USD / tonne Ferrochrome2, USD / lb. 17,000 2 European contract price European spot price 15,000 Q3/19 1.5 1.04 USD/lb. 13,000 11,000 17 Jul 19 1 17 Jul 19 0.88 USD/lb. 9,000 14,230 USD/t 7,000 0.5 Jan'17 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan'18 Fe
Slide 33: Balance sheet
Balance sheet Assets (EUR million) Q2/19 Q1/19 Equities and liabilities (EUR million) Q2/19 Q1/19 Non-current assets Equity attributable to the equity holders of the Company 2,624 2,656 Intangible assets 595 589 Non-current liabilities Property, plant and equipment 2,754 2,794 Non-current debt 710 7
Slide 34: Thank you!
For more information, call Outokumpu Investor Relations or visit www.outokumpu.com/investors Thank you! Tommi Järvenpää Päivi Laajaranta Vice President – Investor Relations Executive Assistant Phone +358 9 421 3466 Phone +358 9 421 4070 Mobile +358 40 576 0288 Mobile +358 400 607 424 E-mail: tommi.j