Slide 1: Interim report Q3/2017
Interim report Q3/2017 CEO Roeland Baan CFO Chris de la Camp October 26, 2017
Slide 2: Today's attendees from Outokumpu
Today’s attendees from Outokumpu Roeland Baan Chris de la Camp Tommi Järvenpää CEO CFO Director Investor Relations 2
Slide 3: 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 4: Best value creator in stainless steel by 2020
Best value creator in stainless steel 1. Customers by 2020 through 2. Shareholders customer orientation 3. Employees and efficiency Time bound: Back to basics sense of urgency 4
Slide 5: Q3 earnings burdened by raw material-related losses
Q3 earnings burdened by raw material- related losses Adjusted EBITDA, EUR million • Safety: TRIFR further improved to 4.8 (9M/17) • Significant y-o-y improvement with ~EUR 550 294 million adjusted EBITDA in 9M/17 • Successful cost reductions continued in Q3 • Europe’s profitability improved y-o-y 19
Slide 6: European base prices were trending down
European base prices were trending down European base prices1 (Germany), Third-country cold rolled imports2 into Europe, EUR/tonne 1,000 tonnes 1.200 100 50 Import 80 40 penetration 1.150 60 30 slightly up to 29.4% in Q3 40 20 1.100 20 10 1.050 0 0 1.000 From rest of world From China 2013 2014 2015
Slide 7: Imports to the US increased
Imports to the US increased US base prices1, Third-country cold rolled imports2 into the US, USD/tonne 1,000 tonnes 1.450 40 40 Import penetration of 1.400 30 30 24.8% in Q3 1.350 20 20 10 10 1.300 0 0 1.250 1.200 From rest of world From China 2013 2014 2015 2016 2017 From rest of Asia Import penetr
Slide 8: Key financials
Key financials Increase mainly driven by Key figures III/17 III/16 2016 record-high deliveries in the Americas Stainless steel deliveries, 1,000 tonnes 623 608 2,444 Sales, EUR million 1,482 1,419 5,690 • Includes net of timing & hedging of Adjusted EBITDA, EUR million 56 116 309 EUR -41 million • Q
Slide 9: Europe – good results despite seasonality
Europe – good results despite seasonality Deliveries, 1,000 tonnes Adjusted EBITDA, EUR million • Underlying demand remained strong • Base prices under pressure due to 421 413 415 257 distributor destocking 396 398 397 395 • Q3/17 average base price increased by 178 EUR 35/tonne compared to Q3/16 •
Slide 10: Americas' earnings burdened by one-offs
Americas’ earnings burdened by one-offs Deliveries, 1,000 tonnes Adjusted EBITDA, EUR million • Healthy underlying demand in Q3/17 29 27 • Distributor demand was negatively 203 12 impacted by low raw material prices 177 185 182 186 1 161 167 • Distributor inventories remained at long- -3 term averag
Slide 11: Americas' earnings burdened by ~EUR 30 million one-offs
Americas’ earnings burdened by ~EUR 30 million one-offs Adjusted EBITDA, EUR million Release of accruals in Q2 of Higher production Record-high EUR 6 million costs and weaker delivery volumes mix Raw-material costs increased as a result ~30 million of the hurricanes 27 21 -34 Third-party Net of Dela
Slide 12: Long Products was impacted by typical seasonality
Long Products was impacted by typical seasonality Deliveries, 1,000 tonnes Adjusted EBITDA, EUR million • Underlying demand remained strong 75 9 70 65 68 during Q3/17 7 59 50 51 • Base prices relatively stable in Europe 2 2 and the US compared to Q3/16 • Negative net of timing and hedging impact of
Slide 13: Strong cash generation
Strong cash generation EUR million III/17 III/16 2016 • Net working capital decreased by EUR 81 million during Q3 mainly driven by an increase Net cash from operating in trade and other payables 126 61 389 activities • Q3/17 financing costs of EUR 32 million of which interest expenses EUR 23 million
Slide 14: Net debt target of <EUR 1.1 bn firmly in reach
Net debt target of <EUR 1.1 bn firmly in reach Net debt and gearing Debt maturity profile, EUR billion 188% 1,2 9.8 4.0 93% 2.4 0,8 1.8 3.56 69% 1.7 55% 51% 48% 44% 0,4 1.97 1.61 1.24 1.38 1.24 1.13 0 2013 2014 2015 2016 I/17 II/17 III/17 2017 2018 2019 2020 2021 2022+ Net debt, EUR billion Gearing
Slide 15: Business and financial outlook for Q4/2017
Business and financial outlook for Q4/2017 • Underlying stainless steel demand is expected to remain healthy in both Europe and the US in Q4 • Typical seasonal slowdown in the US market is expected to have a negative impact on Americas’ deliveries in Q4 • Europe’s deliveries are expected to remain r
Slide 16: We are solidly on track
We are solidly on track We are driving The EUR 500 We have improved topline growth and million by 2020 our profitability efficiency through EBIT target is firmly through self-help our must-win within our reach battles 16
Slide 17: Appendix
Appendix
Slide 18: Income statement
Income statement (MEUR) July-Sept 2017 July-Sept 2016 Sales 1,482 1,419 Cost of sales -1,406 -1,301 Gross margin 76 117 Other operating income 9 4 SG&A costs -69 -56 Other operating expenses -6 -26 EBIT 9 40 Share of results in associated companies and joint ventures -1 2 Financial income and expens
Slide 19: Balance sheet
Balance sheet Assets (MEUR) Sept 30, 2017 Dec 31, 2016 Equity and liabilities (MEUR) Sept 30, 2017 Dec 31, 2016 Non-current assets Total equity 2,543 2,416 Intangible assets 489 504 Non-current liabilities Property, plant and equipment 2,675 2,874 Non-current debt 919 987 Investments in associated O
Slide 20: Our strategic plan
Our strategic plan VISION 2020: To be the best value creator in stainless steel by 2020 through customer orientation and efficiency. The best value in the industry for customers, shareholders and employees through: High World Class Manufacturing Commercial Safety Performing Americas Supply Chain Exc
Slide 21: Improving performance
Improving performance Financial targets for 2020 EBIT ROCE Gearing EUR 500 million 12% <35% 21
Slide 22: Our must-win battles deliver EUR 500 million in 2020
Our must-win battles deliver EUR 500 million in 2020 Topline growth and cost efficiency based on self-help TOP LINE GROWTH • Increase volume through • Achieve 2-3% annual efficiency and productivity improvement debottlenecking 55% • Achieve 15% savings in • Richer mix through procurement improved ca
Slide 23: We focus on growth segments
We focus on growth segments Consumer goods, automotive, architecture, building and construction Distributors End-customers 17% Consumer goods & medical 15% Automotive Architecture, building & construction 45% 23% Chemical, petrochem. and energy 55% Metal processing & tubes 18% Heavy industries 18% 5
Slide 24: 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 10-15% of the total operative costs • Other cost of sales includes e.g. freight, maintenance
Slide 25: Broadest product portfolio across stainless steel
Broadest product portfolio across stainless steel Deliveries by product grade in 2016 Outokumpu product forms Other Duplex 3% 4% Hot rolled Ferrochrome Slab Quarto plate black coil Ferritic Austenitic 19% (CrNi) 57% Hot and cold rolled Rolled and Precision strip Cast semis white coil forged billet A
Slide 26: 5% demand growth expected for 2017
5% demand growth expected for 2017 Americas Europe APAC Global +6% +5% +5% +5% +4% +4% +4% +4% +4% +5% +5% +4% +3% +2% +2% +3% +2% +1% +2% +4% +1% +1% -4% -3% 15 16f 17f 18f 19f 20f 15 16f 17f 18f 19f 20f 15 16f 17f 18f 19f 20f 15 16f 17f 18f 19f 20f USA OTHER AMERICAS OTHER EMEA CHINA OTHER APAC +7
Slide 27: Q4'17 real demand expected to increase by 5%
Q4’17 real demand expected to increase by 5% q/q in EMEA and by 1% q/q in Americas EMEA total stainless steel real demand1 Americas total stainless steel real demand1 1,000 tonnes 1,000 tonnes +5% 2.000 1.000 +1% 1.950 950 1.900 900 1.850 850 1.800 800 1.750 750 1.700 700 1.650 650 600 1.600 550 1.5
Slide 28: Low capacity utilization in China, healthier in Europe and Americas
Low capacity utilization in China, on healthier level in Europe and Americas Asia Europe Americas [CR, Mtonnes] 27,3 27,7 [CR, Mtonnes] [CR, Mtonnes] 25,7 4,9 4,9 4,6 4,6 4,7 4,6 4,5 4,6 3,2 23,9 3,2 3,2 3,2 22,8 22,8 4,2 3,0 3,0 3,0 3,0 21,7 4,0 4,1 21,3 3,9 2,8 20,6 3,7 3,8 2,7 19,2 19,6 3,5 2,5 2
Slide 29: Transaction price development
Transaction price development Nickel price, USD/tonne Transaction prices 304 stainless, USD/tonne 60.000 5.000 50.000 4.000 40.000 30.000 3.000 20.000 10.000 2.000 0 2 2 2 2 2 2 2 2 2 2 2 2 1.000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 2011 2012 2013 2014 2015 2016 2017 6 7 8 9 0 1 2 3 4 5 6
Slide 30: Raw materials - price development
Raw materials - price development 13,000 Nickel1 1,9 Ferrochrome2 European contract price U 12,000 U 1,7 Q4/17 S S 1,5 1.39 USD/lb 11,000 European spot price D D 1,3 / 10,000 / t l 1,1 6 Oct 17 9,000 1.00 USD/lb o b 0,9 24 Oct 17 n 8,000 11,950 USD/t 0,7 7,000 0,5 Jan'16 Feb Mar Apr May Jun Jul Aug
Slide 31: Fully integrated production asset base
Fully integrated production asset base Europe Americas Long Products Total Krefeld + Tornio Avesta + Nyby Degerfors Calvert Mexinox Sheffield Richburg Degerfors Wildwood 1,000 tonnes Dillenburg Finland Sweden Sweden USA Mexico UK USA Sweden USA Germany Melting 1,450 450 900 450 3,250 Hot rolling 1,4
Slide 32: For more information, call Outokumpu Investor Relations
For more information, call Outokumpu Investor Relations or visit www.outokumpu.com/investors Tommi Järvenpää Director– Investor Relations Phone +358 9 421 3466 Mobile +358 40 576 0288 E-mail: tommi.jarvenpaa@outokumpu.com Simone Cujai Investor Relations Manager Phone: +49 2151 83 4226 Mobile: +49 17