Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Investor Day (November 2018)
127 slides from Outokumpu Oyj's investor day presentation, Nov 20, 2018
Slide 1: Outokumpu Capital Markets Day 2018
Outokumpu Capital Markets Day 2018 November 20, 2018 London, UK
Slide 2: Program
Program Time Topic Presenter Page 12:30 Opening remarks Tommi Järvenpää, VP – Investor Relations 12:35 Delivering on our promises for 2020 Roeland Baan, President & CEO 7 13:10 We continue to unlock significant value Maciej Gwozdz, President – BA Europe 43 13:40 Break 14:00 Solid operational foundat
Slide 3: Speakers
Speakers Roeland Baan Christoph de la Camp President & CEO CFO Roeland joined the company in 2016 as the Chris is the Chief Financial Officer President & CEO. Roeland is the head of the and a member of the Outokumpu Leadership Team. Outokumpu Leadership Team. He joined the company in 2016. Maciej Gw
Slide 4: Speakers
Speakers Jan Hofmann Martin Mikiewicz EVP – Business Transformation & IT VP – Manufacturing Excellence Global Jan has been working for Outokumpu since 2005 in Martin joined the company in 2018 as the Head of different positions including several strategy and Global Manufacturing Excellence. financia
Slide 5: Follow the event on twitter #OutokumpuCMD18
Follow the event on twitter #OutokumpuCMD18 5
Slide 6: 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 7: Delivering on our promises for 2020
Delivering on our promises for 2020 Capital Markets Day 2018 Roeland Baan President & CEO
Slide 8: Best value creator in stainless steel by 2020
OUR VISION Best value creator in stainless steel by 2020 through customer orientation and efficiency 8
Slide 9: We introduced our vision in April, 2016
We introduced our vision in Adjusted EBITDA of €750 million We also announced several April, 2016. other targets Connected to the vision, we ROCE of 12% to force an immediate step announced our change in our cost financial targets and competitive for 2020: Gearing of <35% position 9
Slide 10: Total recordable injury frequency rate target
April, 2016: ”We will reduce In 2017, our total our TRIFR* was recordable injury frequency rate from 15.0 to < 5.0 by 2020” 4.4 10 * Total recordable injury frequency rate
Slide 11: Organizational Health Index target
April, 2016: ”We will bring In 2018, Organizational we are at Health Index* from the bottom to the top 2nd quartile by quartile 2020” 11 * McKinsey
Slide 12: Net Promoter Score improvement
April, 2016: ”We will be We have improved the best value Net Promotor Score creator to by over our customers by 2020” 30% 12
Slide 13: Net debt reduction promise
April, 2016: At the ”We will reduce end of 2017, our net debt our net debt was from €1.6 billion to <€1.2 billion by the end of 2017” €1.1 billion 13
Slide 14: SG&A cost reduction promise
April, 2016: ”We will reduce Our SG&A costs our SG&A costs were reduced by by 25% to €300 million by the end of 2017” 33% 14
Slide 15: Cumulative adjusted EBITDA of over €1.2 billion
Since the launch of the targets, we have achieved cumulative adjusted EBITDA of over €1.2 billion over the past 9 quarters 15
Slide 16: We have delivered on all of our promises
We have delivered on all of our promises… 16
Slide 17: Progressing well towards our 2020 EBITDA target
…and are progressing well towards our 2020 EBITDA target €165 €482 €750 million million million in 2015 LTM* in 2020 17 * Q4/17-Q3/18
Slide 18: Market volatility is visible in our earnings
Market volatility is visible in our earnings… €750 million Adjusted EBITDA Linear EBITDA €165 development to 2020 million target 2015 2016 2017 LTM* 2019 2020 18 * Q4/17-Q3/18
Slide 19: €100 million market headwind this year
…and we have had €100 million market headwind this year Ferrochrome price Graphite electrode prices Europe base price $0.27 Market 10 €53 Market /lb higher times higher /tonne lower tailwind of headwind of US base price €150 Ferrosilicon prices Truck freight prices in the US €250 $86 million 30% 15%
Slide 20: Real underlying progress excluding market noise
By excluding market noise, we see the real underlying progress in our performance €750 million Adjusted EBITDA with vision 2020 market assumptions Linear EBITDA €165 development to 2020 million target 2015 2016 2017 LTM* 2019 2020 20 * Q4/17-Q3/18
Slide 21: We expect markets to stabilize
We expect markets to stabilize Input cost levels are Safeguards are Ferrochrome remaining relatively expected to restore market is becoming high the market balance tighter in Europe 21
Slide 22: Our 2020 financial targets remain unchanged
Our 2020 financial targets remain unchanged Adjusted EBITDA ROCE Leverage €750 12% <35% million 22
Slide 23: How to close the gap?
How to €110 close €160 million from million from commercial growth the gap? efficiency gains 23
Slide 24: €110 million from commercial growth
Europe €50 million €110 • Higher deliveries • Value-added products • Service solutions million from commercial Americas growth €60 million • Customer & product mix • Market share in Mexico • New products 24
Slide 25: €160 million from efficiency gains
Europe €100 million • Raw material optimization • General procurement €160 • 3% annual productivity increase • Digital manufacturing Americas million from €40 million efficiency gains • Mexinox restructuring • Logistics costs reduction • Raw material optimization • Delivery reliability 25
Slide 26: Adjusted EBITDA bridge to €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 LTM* Efficiency Commercial 2020 gains growth gains growth target * Q4/17-Q3/18 26 Approximate figures, based on management estimates
Slide 27: We are operating in a growing industry
We are operating in a growing industry… • Global cost pressure persists • Intensifying competition from low-cost producers • Volatility increasing due to heightened political risks • Rising middle-class • Infrastructure investments • Industrial production growth • Climate change driving need for sus
Slide 28: Growth supporting stainless steel demand
…and this growth is supporting stainless steel demand Other Consumer goods +21% & Medical Expected global +18% stainless steel Global real demand in 2023 Automotive 47.3 stainless steel +13% real demand in 2018 43.4 Chemical, Petrochemical & Energy +10% million tonnes Architecture, Building & Constr
Slide 29: Our competitive advantages will secure long-term growth
Our competitive advantages will secure our long-term growth Sustainable Customer Digitalization solutions satisfaction 29
Slide 30: Case: Myllysilta bridge with stainless steel cladding
Case: Myllysilta -- a collapsed bridge re-built with stainless steel cladding Lifecycle carbon footprint*, tonnes >60% 300 200 Savings lower lifecycle 100 End-of-life carbon footprint 0 recycling Manufacture, Maintenance Replacement Net lifecycle surface impacts -100 treatment & installation -200 St
Slide 31: World leader in sustainable steel production
Energy intensity1 CO2 emissions Recycled content, % intensity2, 89 We are the 11.3 85 84 87 87 87 world leader 11.1 in 0.51 0.42 0.39 sustainable 10.5 0.31 0.32 steel 9.8 production 9.3 Estimated global 0.54 0.48 0.47 0.41 0.40 recycled content * Q1/18-Q3/18 1. GJ per tonnes crude steel 31 2. Direct
Slide 32: We have the lowest carbon footprint
Our We have the ferrochrome lowest carbon operations’ CO2 footprint footprint is only ferrochrome in the world 42% of industry average* 32 * Source: ICDA LCI
Slide 33: Leading the digitalization of the stainless industry
We are leading in the the digitalization of stainless industry Electric Digital AI and Safety and vehicles and processes robotics cybersecurity other new and services applications 33
Slide 34: Digitalization will unlock significant potential
Over the next 5 years, digitalization will unlock significant potential… Release Free up over days of inventories 100,000 by over tonnes of capacity 20 days 34
Slide 35: Ensuring superior customer experience
…and ensure superior customer experience Increased Faster service Shorter lead delivery through digital times reliability channels Higher customer satisfaction 35
Slide 36: Best value creator to our customers
We are the best value creator to our customers and we are aiming higher Percentage of absolutely or very satisfied customers* Outokumpu 63% Competitors 58% 36 * Outokumpu customer satisfaction survey 2018
Slide 37: Best value creator to our employees
We are the best value creator to our employees OHI* in 2016 OHI in 2018 4th 2nd quartile quartile 37 * Organizational Health Index, McKinsey
Slide 38: Best value creator to our shareholders
We are the best value creator to our shareholders Total shareholder return since beginning of 2016* Outokumpu Aperam -13% +42% Acerinox +9% 38 * 1.1.2016-15.11.2018
Slide 39: We have delivered on all of our promises
We have delivered on all of our promises… 70% 2 30% SAFETY ORGANIZATION HEALTH CUSTOMER SATISFACTION €500m 30% €1.2b NET DEBT SG&A COSTS ADJUSTED EBITDA 39
Slide 40: Determined execution
…and by €110 determined €160 million from million from commercial growth execution… efficiency gains 40
Slide 41: Adjusted EBITDA of €750 million in 2020
…we will achieve an adjusted EBITDA of €750 million in 2020 41
Slide 42: We deliver
We deliver outokumpu
Slide 43: We continue to unlock significant value
We continue to unlock significant value Capital Markets Day 2018 Maciej Gwozdz President – BA Europe
Slide 44: Underlying business performance has improved
Balance in the We are on our way to Underlying business European stainless deliver €150 million performance has steel market is annual EBITDA improved expected to be improvement restored 44
Slide 45: We have delivered on our promises
We have delivered on our promises Safety 50% Organization health to 2nd reduction on incidents* since 2015 quartile Scrap ratio of 89% Production cost savings ** €90 million since 2015 * Lost time injury frequency rate 45 ** fixed and variable cost savings
Slide 46: We have had a tough market this year
We have had tough market this year… Import Base prices penetration down by over In 2018, we have had market up to over €160 headwind of over 30% /tonne Graphite electrode prices 10 Ferrosilicon prices up by over 20% €200 times higher million compared to 2017 46 Q4/17-Q3/18 average compared to FY2017
Slide 47: Underlying performance has improved
…but our underlying performance has improved Market headwind 404 Adjusted EBITDA 295 253 203 2015 2016 2017 LTM* 47 * Q4/17-Q3/18
Slide 48: Safeguards to restore balance in Europe
We expect cost pressure to continue but safeguards to restore balance in Europe Average monthly stainless steel imports into the EU, kt Stainless steel deliveries into the EU, kt 100 400 80 300 60 200 40 100 20 0 0 2015 2016 2017 H1/18 EC preliminary quota level Imports EU Mills 48 Sources, Imports:
Slide 49: European market is expected to grow
European market is expected to grow Europe flat product demand by segment, million tonnes Consumer goods & medical +3% ABC & infrastructure Chemical, petrochemical & energy +19% +3% 7% total demand Automotive & improvement by +11% heavy transport 2023 Industrial & +5% 2018 2023 heavy industries Othe
Slide 50: On our way to deliver €150 million EBITDA improvement
Commercial We are on our way to deliver growth €150 million €50 million annual EBITDA improvement Efficiency gains by 2020 €100 million 50
Slide 51: Increasing sales of value-added products
We are increasing the sales of value-added products Excellent Long-term State of art steel solutions commercial facilities know-how efforts 51
Slide 52: Share of premium pro and supra grades has increased
The share of premium pro and supra grades has increased 29% in 2015 31% in 2017 33% in 2018 52
Slide 53: Benefit from improved mix and service solutions
The benefit from …our service solutions improved mix does are delivering not come only from additional value. higher margins but… 53
Slide 54: Future growth has dual path
Future growth has dual path Premium Commodity • Technical expertise • Cost competitiveness • Supporting customers in • Leverage of local footprint extreme environments • Superior quality and delivery • R&D involvement in customers’ performance product development • Lowest carbon footprint 54
Slide 55: Our efficiency gains are based on
Our efficiency gains are based on General 3% annual Digital Raw material procurement productivity manufacturing optimization savings increase and sales 55
Slide 56: Raw material optimization brings €40 million savings
Optimizing raw material usage brings €40 million cost savings opportunities Optimizing Optimizing scrap value ferronickel portfolio Savings Increasing Using nickel €40 million use of pig iron alternative nickel units Scrap Alt. nickel units FeNi NPI Others 56
Slide 57: Reducing general procurement costs by another €50 million
We are aiming • Leveraging our global presence • Supplier consolidation to reduce our • Joint effort between procurement general and operations procurement • Standardization of consumables costs by another • Discretionary spend control €50 million 57
Slide 58: 3% annual productivity increase from local projects
3% annual productivity increase is based on numerous local projects Benefit outlook 2019, € million Continuous Net working debottlenecking capital of key reduction equipment Single Reliability operating system implementation 58
Slide 59: Case: Increasing Tornio meltshop #2 capacity
Case: Increasing • Higher scrap utilization allowed • Raw material and product mix improved Tornio meltshop #2 capacity by over Annual financial 100,000 impact of over tonnes/year €10 million 59
Slide 60: Tornio to become most cost competitive mill by 2020
Tornio is targeted to become the most cost competitive stainless steel mill globally by 2020 Digitalization Tornio to Concept will Increased of the entire become the be efficiencies production first fully implemented by higher system in digitalized in all throughput Tornio stainless Outokumpu and lo
Slide 61: Evaluating further opportunities
We are evaluating Improving metal recovery further from our own waste opportunities to • A roadmap to maximize process improve our cost recycling and environmental • Customer cooperation and logistics position • EU workstream on carbon footprint 61
Slide 62: We continue to unlock significant value
We continue to unlock significant value Commercial growth Efficiency gains €50m • Higher deliveries €100m • Raw material optimization • Value-added products • General procurement • Service solutions • 3% annual productivity increase • Digital manufacturing 62
Slide 63: Solid operational foundation enabling commercial growth
Solid operational foundation enabling commercial growth Capital Markets Day 2018 Michael S. Williams President – BA Americas
Slide 64: Solid and efficient operational foundation established
Commercial Solid and efficient Streamlining of our development unlocks operational foundation operations continue substantial value established potential 64
Slide 65: We have delivered on our promises
We have delivered on our promises Safety 20% Organizational health to 2nd reduction on incidents since 2015 quartile Production cost savings * €60 Adjusted EBITDA €140 million since 2015 million since 2015 65 * fixed and variable cost savings
Slide 66: We have increased our deliveries by 65%
We have While increased our • reducing headcount by 38% deliveries by • improving talent 65% • reducing exposure to low profitability products vs. 2015 66
Slide 67: Significant cost pressure in 2018
Despite significant cost pressure in 2018… Graphite Truck electrodes transport costs - €15 - €15 million million 67
Slide 68: Continued to improve our performance
…we have continued to improve our performance 21 Market headwind 17 -27 -120 Adjusted EBITDA 2015 2016 2017 LTM* 68 * Q4/17-Q3/18
Slide 69: Demand growth prospects remain healthy
Demand growth prospects remain healthy Americas flat product demand by segment*, tonnes Consumer goods & +8% medical Automotive & heavy transport Chemical, +7% 10% total demand +5% petrochemical & energy improvement by 2023 ABC & infrastructure +25% Industrial & +4% 2018 2023 heavy industries 0.0 0.
Slide 70: Section 232 brings short-term advantages in the US
Section 232 Stainless steel Base price in the imports have US has increased brings decreased by over by over short-term advantages in the US 7 $100 percentage points /tonne 70 Source: CRU
Slide 71: €100 million EBITDA improvement by 2020
Healthy market together with Commercial efficient operations form growth foundation for €60 million €100 million Efficiency gains EBITDA improvement €40 million by 2020 71
Slide 72: Streamlining of our operations continue
Streamlining of our operations continue Utilize the full Reduce Optimize raw benefit of Improve logistics material Mexinox reliability costs usage restructuring 72
Slide 73: Sustainable gains in Mexinox restructuring
Sustainable Phase 1 completed • No supply chain Phase 2 underway • Increase reliability gains in impairments and throughput on Mexinox • Culturally no impact • Conversion costs bottleneck units • Focus on advanced restructuring reduced by over maintenance strategies and 15% operational excellence 73
Slide 74: New distribution strategy to offset truck transport costs
New distribution strategy to be implemented in Q1/19 to offset large part of increased truck transport costs - €15 New distribution central million negative impact YTD Calvert 74
Slide 75: Securing scrap availability brings savings potential
Securing scrap availability brings significant savings potential We are increasing Cost benefit of Calvert scrap ratio by 3 €25 percentage points /tonne by 2020 75
Slide 76: Delivery reliability is key to improve mix
Delivery reliability is the key to improve mix <70% 80% 85% SOTIF* SOTIF SOTIF in 2017 in Q3/18 target 76 * Shipped on time in full, business area Americas
Slide 77: Our commercial efforts focus on
Our commercial efforts focus on Enhancing Regaining Introducing customer and market share new products product mix in Mexico 77
Slide 78: Regional mix is developing according to plans
Our regional mix is developing according to plans… 2017 2018* 14% improvement Export Domestic 78 * FY2018 based on Q1-Q3 actuals, Q4 management estimate
Slide 79: Improving product mix provides further potential
…and improving product mix provides substantial further potential Americas production mix split1 42% cold rolled prime €60 million volume further profitability improvement improvement since 2015 potential2 2015 2016 2017 2018* Semi-finished products Cold rolled secondary Cold rolled prime 1. Calvert
Slide 80: We are regaining our market share in Mexico
We are Automotive is the fastest Import pricing is below We are targeting: regainining growing domestic • Distribution our market market with three pricing • Appliances share in manufacturers • Coins/ Industrial Mexico 80
Slide 81: Product development strengthening commercial effectiveness
Product development is strengthening our commercial effectiveness… We are We are We are We are introducing NAFTA offering introducing duplex grade market product new polish 2205 in leader with substitutions surface to Calvert painted utilizing our expand our stainless technical portfolio services an
Slide 82: Increasing ferritic capabilities in Calvert
…and to ensure continuous portfolio expansion, we are increasing ferritic capabilities in Calvert Strengthen Expand position in current Annual profitability impact of US ferritic product segments portfolio €40 million offerings Improve Improve the production route-to- efficiencies market and strateg
Slide 83: Solid operational foundation enabling commercial growth
Solid operational foundation enabling commercial growth Commercial growth Efficiency gains €60m • Customer & product mix €40m • Mexinox restructuring • Market share in Mexico • Logistics cost reduction • New products • Raw material optimization • Delivery reliability 83
Slide 84: We remain committed to our financial targets
We remain committed to our financial targets Capital Markets Day 2018 Christoph de la Camp CFO
Slide 85: Financial targets: EBITDA, ROCE, Gearing
adj. EBITDA ROCE Gearing €750 12% <35% million 85
Slide 86: We have delivered on our promises
We have delivered on our promises Adjusted EBITDA €300 SG&A costs €130 million since 2015 million since 2015 Cash flow* €550 Gearing 25 million cumulative since 2015 percentage points since 2015 86 * Cash flow before financing activities
Slide 87: Clear progress in all business areas
We have made clear progress in all business areas… Adjusted EBITDA, € million Europe Americas Long Products Ferrochrome 21 17 -27 404 29 -120 217 295 16 183 253 10 203 107 80 -1 2015 2016 2017 LTM* 2015 2016 2017 LTM* 2015 2016 2017 LTM* 2015 2016 2017 LTM* 87 * Q4/17-Q3/18
Slide 88: Reduced our costs significantly
Adjusted EBITDA, € million ...and reduced +110 our costs +100 -100 +160 significantly +320 through self- help 2015 Efficiency Commercial Market LTM* Efficiency Commercial 2020 gains growth gains growth target * Q4/17-Q3/18 88 Approximate figures, based on management estimates
Slide 89: SG&A costs continue to decline
SG&A costs continue to decline SG&A costs, € million Centralizing Simplifying IT services 400 331 307 Standardizing Tight control of 271 processes administrative costs 2015 2016 2017 LTM* 89 * Q4/17-Q3/18
Slide 90: Our capex remains conservative
Our capex remains conservative Capex cash flow estimated to stay at the Annual Expansion, level of €220 million maintenance digitalization €90-100 projects and 250 million other 200 150 Kemi mine Growth 100 ~€250 opportunities million 50 0 2018 2019 2020 2021 90
Slide 91: We continue to reduce interest expenses
We continue to reduce interest expenses... Interest expenses, € million Revolving Convertible credit notes due facility February refinanced 2020 130 101 92 2019 notes 2021 notes 75 prepaid refinanced <50 2015 2016 2017 LTM* 2020 target 91 * Q4/17-Q3/18
Slide 92: Extending our debt maturities
…and to extend our debt maturities Debt maturity profile*, € million 1,000 800 600 400 200 0 2018 2019 2020 2021 2022 2023 2024+ Current debt Non-current debt Unutilized facilities Called 7.250% 2021 notes New 4.125% 2024 notes 92 * September 30, 2018
Slide 93: Tax loss carry forwards keep cash taxes moderate
Tax loss carry forwards will keep cash taxes moderate Tax loss carry forwards, € million In Finland, we start 4,000 paying cash taxes in 2019 94% 3,000 2,000 1,000 Expire later than Deferred tax assets 0 in 5 years still to be recognized 2013 2015 2017 on the tax losses in the Finland Sweden US Germ
Slide 94: Resilient cash flow will strengthen our balance sheet
Resilient cash flow will continue to strengthen our balance sheet Shareholder Debt 220 return reduction ~50 ~70 Investing in Growth ~410 further opportunities efficiency EBITDA Capex Interest Cash Potential target expenses taxes and free others cash 94
Slide 95: Reducing net debt further remains a key priority
Reducing net debt further remains a key priority Net debt / LTM adjusted EBITDA Short-term fluctuations 9.8 in working capital 1.61 remain 1.24 1.21 1.09 2.5 <1.0 • Nickel prices 1.7 4.0 • Ferrochrome prices • Seasonality 2015 2016 2017 Q3/18 2020 target Net debt, € billion Net debt / LTM adjusted E
Slide 96: Dividend pay-out ratio approximately 30-50% of net income
Dividend pay-out ratio throughout a business cycle will be approximately 30-50% of net income Net income, € million Dividend per share, € 392 86 144 0.10 0.25 -439 -1,003 2013 2014 2015 2016 2017 96
Slide 97: Financial targets: EBITDA, ROCE, Gearing
adj. EBITDA ROCE Gearing €750 12% <35% million 97
Slide 98: Ready to capture potential from commercial growth
We are ready to capture significant potential from commercial growth Capital Markets Day 2018 Michael S. Williams President – BA Americas
Slide 99: NAFTA cold-rolled market approx. 220,000 tonnes per month
NAFTA cold-rolled market is approx. 220,000 tonnes per month Canada; 8% 98% 85% Mexico; 15% of NAFTA CR consumption of the market is owned is commodity grade by TOP10 distributors (200, 300, 400 series) USA; 77% 99
Slide 100: We have an efficient production setup
We have an efficient production setup ~70 kt cold rolled coils shipped to US (subject to 25% import tariff) Hot rolled coils shipped from Calvert to Mexinox Calvert (not subject to tariff) Mexinox 100
Slide 101: Drivers for our commercial growth
Drivers for our commercial growth Enhancing Improving Expanding customer and customer product product mix service portfolio 101
Slide 102: Our customer mix continues to improve gradually
Our customer mix continues to improve gradually TIER 4 TIER 3 TIER 2 TIER 1 • Market entrant • Established • Acceptance as • Complete market • Limited portfolio position quality leader acceptance • New workforce • Integrated • Leading portfolio • Customer operations • Increased satisfaction • Commod
Slide 103: We continue to improve our customer service
We continue to improve our customer service • New staff located to Calvert with direct contact SOTIF* with the producing mill improvement is • Geographic structure in the key to increase place customer • Market owners aligned satisfaction with key segments 103 * Shipped on time in full
Slide 104: Our product portfolio is expanding
Our product portfolio is expanding Painted Polish Ferritics 2205 duplex stainless surface 104
Slide 105: Ready to capture potential from commercial growth
We are ready to capture significant potential from commercial growth Enhancing customer Improving customer Expanding product and product mix service portfolio 105
Slide 106: Digitalization will boost our competitive position
Digitalization will boost our competitive position Capital Markets Day 2018 Jan Hofmann EVP – Business Transformation & IT
Slide 107: Digitalization: next step in our business transformation
Digitalization – Next step in our business transformation 2012 2013 – 2015 2016 – 2020 The best value creator in Restructuring Must-Win-Battles stainless steel Acquisition of Inoxum Transform the Transform the by 2020 through industrial platform operating model customer orientation and efficiency Di
Slide 108: Impact of digitalization is widely underestimated
The impact of digitalization on stainless steel industry is still widely underestimated Main Target Areas Impact Digital technology Admin Efficiency Asset-heavy and can unlock capital intense significant value industry from existing industrial assets Customer Experience “maximize output “with relati
Slide 109: Manufacturing: potential to free up 100,000 tonnes of capacity
Manufacturing: Potential to free up over 100,000 tonnes of blocked capacity over the next 5 years MAIN LEVERS ASSET AVAILABILITY QUALITY ASSURANCE LEAD TIME Minimize standstills and Avoid quality defects … Minimize waiting times … maintenance shutdowns … … by predicting equipment … by detecting them
Slide 110: Case Study: AI stabilized FeCr smelter #3 performance
Case Study: AI stabilized FeCr smelter #3 performance with immediate financial benefits ELECTRODE STABILITY CONTROL MODEL MODEL Boost resource Predict efficiency failures 4x 3.1% furnace lifetime throughput increase 110
Slide 111: Joining forces with Microsoft
We are joining forces with Microsoft to boost our digital transformation in manufacturing Outokumpu and Microsoft establishing Building a a new benchmark for the process industry. leading edge industrial digital platform Together. Multi-year strategic cooperation and co-investment Combining digital
Slide 112: Tornio to become most digitized stainless mill by 2020
Tornio to become most digitized and cost-competitive stainless mill by 2020, roll out to other mills by 2023 Tornio 2018 2019 2020 2021 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Cold rolling works Hot rolling mill Steel melting shop Ferrochrome Transparency > Analytics > Simulation > Digital Twin > Close Loo
Slide 113: Digitalization will boost our competitive position
Digitalization will boost our competitive position We are taking the lead Digital manufacturing Potential to free up in digital implemented at over 100,000 tonnes transformation of the all mills by 2023 of blocked capacity stainless steel industry 113
Slide 114: Manufacturing excellence delivering reliability
Manufacturing excellence delivering reliability Capital Markets Day 2018 Martin Mikiewicz VP – Manufacturing Excellence Global
Slide 115: Trinity of excellence
Trinity of excellence Safety Quality Reliability 115
Slide 116: What is the most unreliable kind of car?
What is the most unreliable kind of car? 116
Slide 117: Why?
Why? 117
Slide 118: Why?
Why? No real Almost a Don’t care owner commodity Refuel with Drive it like No need for cheapest you stole it maintenance fuel possible 118
Slide 119: Reliable and stable processes deliver consistent results
Reliable and stable processes deliver consistent results Traditional Unreliable Unreliable = process results People doing whatever they can to get the results Best Practice Reliable = Reliable desired People using process results standard processes to get the results 119
Slide 120: Journey towards reliability is a long one
Journey towards reliability is a long one and has prerequisites Organizational Leadership allignment All functions Operational working together culture 120
Slide 121: What can we expect when we get it right?
What can we expect when we get it right? OEE* 80% Delivery performance 95% SAFETY PRODUCTION CAPACITY Quality COSTS QUALITY 121 * Overall equipment effectiveness
Slide 122: Our journey towards operational reliability
Our journey towards operational reliability Preparation Deployment Implementation Q1 & Q2 2018 Q3 & Q4 2018 2019 thru 2020 122
Slide 123: Reliability contributes to our €750 million EBITDA target
Deploying reliability contributes to our €750 million EBITDA target Throughput • More uptime • Improved quality • Better maintenance planning • Less scrap RELIABILITY Costs • Higher equipment utilization • Spare part optimization 123
Slide 124: Reliability gains from improvement projects at all sites
Reliability gains consist of numerous improvement projects at all sites ANNEAL AND HOT ROLL CUT PICKLE COIL BILLET SHEET Nyby Sheffield Terneuzen Reduce total Reduce roughing Reduce speed throughput time mill scrap losses and variation 7,000t >65% +20% production increase reduction already line spee
Slide 125: Reliability works but implementing is not easy
Reliability works but implementing is not easy 125
Slide 126: Manufacturing excellence delivering reliability
Manufacturing excellence delivering reliability Clear project pipeline Solid plan for each with allocated Experienced people to plant responsibilities and ensure success resources 126
Slide 127: Stay tuned and follow us on www.outokumpu.com
Stay tuned and follow us on www.outokumpu.com 127