Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Investor Day (November 2017)
101 slides from Outokumpu Oyj's investor day presentation, Nov 14, 2017
Slide 1: Outokumpu Capital Markets Day 2017
Outokumpu Capital Markets Day 2017 November 14, 2017 London, UK
Slide 2: Program
Program Time Topic Presenter Page 12:30 Opening remarks Tommi Järvenpää, VP – Investor Relations 12:35 Driving topline growth and efficiency Roeland Baan, President & CEO 6 13:05 Delivering solid cash flow Chris de la Camp, CFO 29 13:45 Break 14:00 Tangible growth potential in Europe Roeland Baan, P
Slide 3: Speakers
Speakers Roeland Baan Chris de la Camp President & CEO CFO Roeland joined the company in 2016 as the Chris is the Chief Financial Officer President & CEO. He is also President of and a member of the Outokumpu business area Europe and head of the Leadership Team. He joined the Outokumpu Leadership Te
Slide 4: Speakers
Speakers Liam Bates Maciej Gwozdz EVP – Supply Chain Europe EVP – Operations Europe Liam joined the company in 1993 and Maciej joined Outokumpu as the he has been the head of Supply Chain head of Operations Europe and a Europe since 2016. He has been member of the Outokumpu a member of the Outokumpu
Slide 5: 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 6: Driving topline growth and efficiency
Driving topline growth and efficiency Roeland Baan President & CEO
Slide 7: Driving topline growth and efficiency
Driving topline growth and efficiency Key investment Our must-win Our 2020 financial projects are battles are yielding targets are firmly securing our tangible results within our reach long-term efficiency 7
Slide 8: Best value creator in stainless steel by 2020 through customer orientation and efficiency
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 8
Slide 9: Best value creator for our customers
Best value creator for our customers Satisfaction among 1,222 of our customers in 45 countries Tremendous potential 2% 2% to improve and 5% 4% differentiate from competition 35% 45% Dissatisfied Less satisfied 45% Satisfied 41% 58% of our customers Very satisfied are absolutely 13% 8% Absolutely or
Slide 10: Best value creator for our shareholders
Best value creator for our shareholders Relative share price since the beginning of 2016 +180% 400 300 200 100 0 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Outokumpu ATI Acerinox Aperam 10
Slide 11: Best value creator for our employees
Best value creator for our employees 2017 OHI* completed: Response rate at 80.4% Scores improved in all practices 2016 2017 2020 target *Organizational health index, McKinsey&Company 11
Slide 12: Best-in-class safety correlates with improved quality and operational efficiency
Best-in-class safety correlates with improved quality and operational efficiency Total recordable incident frequency, TRIF We have reduced the number of accidents 15,0 We are implementing 7,4 4,8 4,5 Standardized Safety Processes 2015 2016 9M/17 2020 We are developing safety culture target and conse
Slide 13: Stainless steel demand continues to grow
Stainless steel demand continues to grow Other Consumer goods +19% Expected global & Medical stainless steel +26% real demand in 2020 46.2 Global Automotive stainless steel +21% real demand in 2015 +23% 37.4 million tonnes Chemical, Architecture, Petrochemical Building & million tonnes and Energy Co
Slide 14: Stainless steel demand is growing faster than industrial production
Stainless steel demand is growing faster than industrial production… 4.6 4.9 4.3 3.4 3.3 3.0 2.6 2.3 2017 2018 2019 2020 World industrial production growth, % Stainless steel demand growth, % Source: SMR Oct 2017, Oxford Economics Sep 2017 14
Slide 15: …and overcapacity is expected to diminish
…and overcapacity is expected to diminish Asian cold rolling capacity & European cold rolling capacity & American cold rolling capacity demand, million tonnes demand, million tonnes & demand, million tonnes 40 5 5 30 4 4 3 3 20 2 2 10 1 1 0 0 0 2012 2016 2020 2012 2016 2020 2012 2016 2020 Cold rolle
Slide 16: Our financial targets are based on conservative market assumptions
Our financial targets are based on conservative market assumptions EBITDA ROCE Gearing EUR 750 million 12% <35% 16
Slide 17: Raw material prices have supported our earnings in 2017
Raw material prices have supported our earnings in 2017 European US Nickel price, Ferrochrome price, average base price, average base price, USD/tonne USD/lb EUR/tonne USD/tonne 1,374 1.43 1,122 1,063 1,286 10,014 9,600 0.96 2016 9M/17 2016 9M/17 2016 9M/17 2016 9M/17 Sources: Base prices: CRU, Oct
Slide 18: We continue to create value through our must-win battles
We continue to create value through our must-win battles 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 Performing World Class Manufacturing Comme
Slide 19: Topline growth and cost reductions will deliver EBITDA of EUR 750 million
Topline growth and cost reductions will deliver EBITDA of EUR 750 million Remaining TOP LINE GROWTH 55% Realized COST REDUCTION Remaining 45% Realized Baseline: adjusted EBITDA of EUR 165 million in 2015. Target: EBITDA of EUR 750 million in 2020. 19
Slide 20: Rigorous cost management is yielding tangible results
Rigorous cost management is yielding tangible results Ongoing • Achieve 3% annual productivity Procurement improvement SG&A costs Variable costs costs reduced • reduced by EUR per tonne* EUR 100 million by EUR 90 lower SG&A cost 85 million down by 4% million run rate to be achieved by the end of 201
Slide 21: Commercial initiatives are progressing according to plan
Commercial initiatives are progressing according to plan Ongoing • Increase volume Mix through efficiency Increased We have the and debottlenecking improvement Americas’ best customer • Richer mix through and pricing deliveries satisfaction in enhanced capability excellence in and selective sales by
Slide 22: Stainless profitability has improved as a result of self-help
Stainless profitability has improved as a result of self-help Adjusted EBITDA, EUR million 161 European US 80 base price base price 388 +6.3% +1.9% 107 229 58 2015 2016 9M/17 Stainless Ferrochrome 22
Slide 23: New business area structure improves visibility in stainless development
New business area structure improves visibility in stainless development Long Europe Ferrochrome Europe Americas Products 23
Slide 24: Integrated ferrochrome operations bring significant strategic advantages
Integrated ferrochrome operations bring significant strategic advantages Our ferrochrome operations rank in top 10 among major ferrochrome smelters Production costs, USD/lb Profitability value from integrated mine Outokumpu and smelting operations One of the most cost competitive ferrochrome produce
Slide 25: Kemi mine expansion will secure ore supply for coming decades
Kemi mine expansion will secure ore supply for coming decades • Current mining area to be exhausted early 2020’s • Expansion extends the underground mining activities to 1,000 meters • Ensuring safe, profitable and long-term mining process chrome feed • Supporting the continuation of the integrated
Slide 26: We are harmonizing our business and culture through project Chorus…
We are harmonizing our business and culture through project Chorus… Increased Local New organization, efficiency processes, Roll out of global processes and transparency, fragmented new integrated tools and ways of best customer systems and and processes working experience, data unified platform 201
Slide 27: …which creates opportunities beyond 2020
…which creates opportunities beyond 2020 Integrated Significantly Higher share systems with shorter of automation customers and lead times and robotics suppliers 27
Slide 28: Driving topline growth and efficiency
Driving topline growth and efficiency Key investment Our must-win Our 2020 financial projects are battles are yielding targets are firmly securing our tangible results within our reach long-term efficiency 28
Slide 29: Delivering solid cash flow
Delivering solid cash flow Chris de la Camp CFO
Slide 30: Delivering solid cash flow
Delivering solid cash flow Strengthening of Solid cash flow Significant balance sheet generation will contribution from remains a key open options for self-help priority future 30
Slide 31: 2020 financial targets are firmly within our reach
2020 financial targets are firmly within our reach EBITDA ROCE Gearing EUR 750m 12% <35% 9M/17: 9M/17: 9M/17: EUR 549m 12.4% 44.4% 31
Slide 32: Solid EBITDA development due to self-help measures and supportive market
Solid EBITDA development due to self-help measures and supportive market… Adjusted EBITDA, EUR million 549 • Rigorous cost management 309 • Good progress with commercial initiatives 165 • Supportive market environment 2015 2015 2016 9M/17 32
Slide 33: … with all business areas improving significantly
… with all business areas improving significantly Europe adjusted EBITDA, Americas adjusted EBITDA, Long Products adjusted EBITDA, EUR million EUR million EUR million Stainless 13 Ferrochrome 22 10 161 80 -27 107 367 295 203 -1 -120 2015 2016 9M/17 2015 2016 9M/17 2015 2016 9M/17 33
Slide 34: Annual capex stable at slightly above EUR 200 million
Annual capex stable at slightly above EUR 200 million Capex cash flow estimates, EUR million 250 Chorus EUR ~100 million 200 Growth opportunities Chorus 150 Kemi mine EUR ~250 million Kemi mine 100 Expansion and other Maintenance 50 Annual maintenance EUR 80-90 million 0 2017 2018 2019 2020 34
Slide 35: Chorus enables efficiency improvements throughout the organization
Chorus enables efficiency improvements throughout the organization Reduced SG&A Reduced IT Creating platform costs through costs through for future centralization of simplification digitalization shared services 35
Slide 36: Halving interest expenses by 2020
Halving interest expenses by 2020 Debt structure*, % Net interest expenses, EUR million • 2017: • 2019 bond called Interest expenses • 2021 bond partly repaid 33% 33% 120 down 50% by 2020 • Reduction of factoring • Pension loan refinanced 100 • Prepayment of debt by disposal proceeds 80 • Further co
Slide 37: Tax-loss carry forwards will keep cash taxes moderate
Tax-loss carry forwards will keep cash taxes moderate Example: • Remaining unutilized tax loss carry Tax loss carry forwards of EUR 100 million in country A forwards amount to EUR 2,546 million, mainly from Germany and the US Sufficient taxable income generated in country A Tax loss carry forwar
Slide 38: Aiming to reduce leverage to below 1.0
Aiming to reduce leverage to below 1.0 Net debt and gearing 188% Net debt / LTM adjusted EBITDA 4,0 3,0 93% 9.8 4.0 1.7 2,0 69% 3.56 51% 44% 1,0 1.97 1.61 <1.0 1.24 1.13 0,0 2013 2014 2015 2016 III/17 2020 Net debt, EUR billion Gearing 38
Slide 39: Targeting solid cash flow generation by 2020
Targeting solid cash flow generation by 2020 Potential free cash flow, EUR million 750 750 Cash utilization options: 1. Shareholder return 2. Investment projects Dividend policy: • 1/3 of net profit over a business cycle • Aim of stable annual payments EBITDA Capex Interest Cash taxes Potential targ
Slide 40: Delivering solid cash flow
Delivering solid cash flow Strengthening of Solid cash flow Significant balance sheet generation will contribution from remains a key open options for self-help priority future 40
Slide 41: Tangible growth potential in Europe
Tangible growth potential in Europe Roeland Baan President & CEO
Slide 42: Our successful strategy execution paves the way for future growth
Our successful strategy execution paves the way for future growth HIGH PERFORMING MANUFACTURING WORLD CLASS COMMERCIAL SAFETY ORGANIZATION EXCELLENCE SUPPLY CHAIN EXCELLENCE 3% annual Lean and flat Significant savings in TRIF* down to 5.6 productivity Mix improved organization procurement costs impr
Slide 43: Stainless profitability has significantly outperformed the market
Stainless profitability has significantly outperformed the market Europe adjusted EBITDA, EUR million Profitability boosted by self-help, index Stainless +80% Ferrochrome 220 161 180 +6% 80 140 107 100 -15% 367 60 295 203 2015 2016 9M/17 Europe stainless adjusted EBITDA European average base price 2
Slide 44: Completed restructuring creates solid basis for Europe
Completed restructuring creates solid basis for Europe We have kept Ferritics Delivery stable market share optimization performance of our We have realized despite the closure investment in Krefeld German mills has >EUR 50 million of Benrath mill in was completed increased from SG&A cost savings 201
Slide 45: Healthy market environment continues in Europe
Healthy market environment continues in Europe Cold rolled Imports have Stock levels are market expected increased at historical to grow by over particularly from averages 400,000 tonnes Korea & Taiwan in 2015-2020 Sources: SMR, Oct 2017 / Eurofer, Sep 2017 45
Slide 46: Our path to future growth
Our path to future growth Markets Operations Innovation Digitalization Strong market Global production Clear R&D focus on Unified tools and position secured standards in all mills solutions and processes through through higher & efficient inventory process Chorus efficiency and management technologi
Slide 47: Tangible growth potential in Europe
Tangible growth potential in Europe We have visible We are ready to We have become achievements from leverage our the best value restructuring and capabilities to meet creator in stainless efficiency further growth steel in Europe improvements opportunities 47
Slide 48: On track to solid profitability
On track to solid profitability Michael S. Williams President, Americas
Slide 49: We are on track to solid profitability
We are on track to solid profitability Higher margin Our market We continue to product mix and position improve yield increased volume strengthens and decrease boost topline further operating costs growth 49
Slide 50: Must win battles remain our core focus
Must win battles remain our core focus AMERICAS HIGH PERFORMING MANUFACTURING WORLD CLASS COMMERCIAL SAFETY ORGANIZATION EXCELLENCE SUPPLY CHAIN EXCELLENCE 50
Slide 51: High Performing Organization continues to improve efficiencies
High Performing Organization continues to improve efficiencies Organization fully engaged Organizational Organizational New top with safety: Health Index restructuring sales leaders 100% response rate underway in place participation in at 86% in Mexico SafeStart 51
Slide 52: Manufacturing Excellence continues to drive value growth
Manufacturing Excellence continues to drive value growth Variable costs 52% reduction in Sales volume up per tonne Lost Time by 10% reduced Incidents significantly Significant OEE* Higher improvement: Prime yield demonstrated 26% at melt improvement of capacity shop, 33% at 1.1% cold rolling *OEE: O
Slide 53: Operational efficiency leading to significant change and results
Operational efficiency leading to significant change and results OEE Melt shop Hot line slitter Targeted yield improvement raw material project to improvement to to maximize optimization decrease costs decrease costs contribution per bottleneck hour 53
Slide 54: Americas' stainless market is growing…
Americas’ stainless market is growing… Total Americas cold rolled market 2017: 2,600,000 tonnes Canada 2017-20: +7 ktons US 171 ktons CAGR: 1.2% 2017-20: +239 ktons 1,690 ktons CAGR: 4.5% Mexico 385 ktons 2017-20: +23 ktons South America CAGR: 2.0% 354 ktons 2017-20: +42 ktons CAGR: 3.9% Source: SMR
Slide 55: …and the US market demand is recovering
…and the US market demand is recovering Average prices rose in September Prices moved China imports Demand is Stock levels above historical replaced by recovering: below historical average in other Asia & +2% in 2017 averages September Taiwan Sources: SMR, Oct 2017 / MSCI, Sep 2017 / AISI, Aug 2017
Slide 56: Earning our fair share of the market in the Americas
Earning our fair share of the market in the Americas • Improving SOTIF* • Key focus in appliance and automotive segments Improving Improving product regional • Leading customer quality performance mix mix • New sales force dedicated to target growth areas • Earning back market share in Mexico IMPROV
Slide 57: Targeting for a more profitable mix
Targeting for a more profitable mix 10% volume improvement, 2% increase in cold 2016 rolled prime material 2017 Target Cold rolled Continuous mill plate Hot band white Hot band black 57
Slide 58: Higher market penetration in southeastern US adds to profitable growth
Higher market penetration in southeastern US adds to profitable growth 2016 2017 Southeast Southwest Midwest West Northeast 58
Slide 59: We have improved our EBITDA significantly…
We have improved our EBITDA significantly… Lean Americas adjusted EBITDA, New sales Improving manufacturing EUR million professionals customer principles dedicated to satisfaction – 22 incorporated into target growth sales back office onboarding areas transition process -27 Logistics All 26 operatin
Slide 60: …but there is still runway left
…but there is still runway left COST IMPROVEMENTS WILL CONTINUE TOPLINE GROWTH IS OUR BIGGEST LEVER • Positive market share development • ~3% yield improvement in both Calvert • Profitable sales development and Mexinox • Product mix • Variable cost improvements continue • Production capability • Sig
Slide 61: We are on track to solid profitability
We are on track to solid profitability Higher margin Our market We continue to product mix and position improve yield increased volume strengthens and decrease boost topline further operating costs growth 61
Slide 62: Capturing significant growth opportunities
Capturing significant growth opportunities Kari Tuutti President – Long Products
Slide 63: Capturing significant growth opportunities
Capturing significant growth opportunities Continue to grow Grow in Europe – Targeting cost our US both in standard leadership long products and special business products 63
Slide 64: We have made great progress since 2016
We have made great progress since 2016 1 Returned to healthy profitability in 2017 2 Divested Stainless Pipe in US with high valuation 3 Continued cost reduction We have grown US bar volumes by 20% with 4 100% profit growth We have grown special shapes bar volumes in Europe 5 by 100% with excellent
Slide 65: We have ~10% share in Europe and NAFTA
We have ~10% share in Europe and NAFTA Stainless long products demand Core markets: Europe and NAFTA by region (2017) NAFTA Germany EMEA 19% 21% 22% Asia, excl. China NAFTA 34% 6% Italy Other 19% Other 1% Europe 22% China Sweden Spain France 38% 4% 9% 5% TOTAL: 6.0 mtonnes TOTAL: 1.6 mtonnes Source:
Slide 66: Positive demand outlook in key segments: 4% growth during 2017-2020
Positive demand outlook in key segments: 4% growth during 2017-2020 End-customer industries Growth by segment (2017-2020) Automotive & Other Heavy Transport Industrial & Heavy Industry Chemical, ABC & Petrochemical Chemical, Petrochem. and Energy Infrastructure & Energy Consumer Goods and Medicals A
Slide 67: Solid profit growth in 2017…
Solid profit growth in 2017… Long Products Long Products adjusted deliveries, 1,000 tonnes EBITDA, EUR million • Strong growth both in 40 248 245 Europe and in the US 213 43 65 • Improved margins in all 42 product categories 13 205 194 10 • Ramp-up of new special 171 180 bar line in the US progressi
Slide 68: …driven by significant improvements in cost competitiveness
…driven by significant improvements in cost competitiveness Long Products fixed costs, index (2015=100) 100 • Improved operational performance through manufacturing excellence 76 67 • Reduced SG&A costs • Increased capacity utilization • Weakening of GBP vs. EUR and USD 2015 2016 2017 68
Slide 69: Long Products' contributing to must-win battles
Long Products’ contributing to must-win battles HIGH PERFORMING MANUFACTURING SAFETY ORGANIZATION EXCELLENCE WORLD CLASS COMMERCIAL AMERICAS SUPPLY CHAIN EXCELLENCE 69
Slide 70: Driving growth through World Class Supply Chain
Driving growth through World Class Supply Chain Ongoing • Develop manufacturing excellence to Our SOTIF* Our inventory High customer increase production is at 90% rotation is below satisfaction at reliability and 60 days 79% maintain low inventories • Maintain SOTIF at >90% • Develop inventory manag
Slide 71: Driving growth in Americas
Driving growth in Americas We have grown Established New special bar volumes by over rebar go-to- line is in full 20% and profit market production by 100% partnerships 71
Slide 72: Driving growth in Americas
Driving growth in Americas Outokumpu Stainless Bar selected as the supplier of the year 2017 (stainless category) by ThyssenKrupp Materials NA Copper & Brass 72
Slide 73: Driving growth in Americas
Driving growth in Americas Ongoing • Expand geographical reach We have grown Established with key service New special bar volumes by over rebar go-to- center partners line is in full 20% and profit market • Expand rebar production business with key by 100% partnerships fabricator partners both in th
Slide 74: Driving growth through Commercial Excellence
Driving growth through Commercial Excellence Ongoing • Grow sales of high value added We have grown Increased Expanded specialty products to special shapes Prodec high large bar most demanding bar volumes by machinability capabilities customers over 100% bar sales and business • Leverage reduced cos
Slide 75: Capturing significant growth opportunities
Capturing significant growth opportunities Continue to grow Grow in Europe – Targeting cost our US both in standard leadership long products and special business products 75
Slide 76: Establishing seamless, fully integrated processes
Establishing seamless, fully integrated processes Liam Bates EVP – Supply Chain Management Europe
Slide 77: World Class Supply Chain
World Class Supply Chain 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 Performing World Class Manufacturing Commercial Safety Americas Organizati
Slide 78: Moving to fully integrated processes
Moving to fully integrated processes Efficiency Key actions • Understanding cost Establishing one curves on through • Optimize routings route costs • with least resources seamless, fully (NWC) integrated sales and • Ad hoc work assessing • and lowest cost operations planning variations process • Pla
Slide 79: Case: Dillenburg delivery performance improvements are clearly visible
Case: Dillenburg delivery performance improvements are clearly visible Dillenburg delivery performance, % 100% • Clear reduction of process complexity 90% • Higher flexibility to cover unplanned production losses 80% • Delivery performance in Dillenburg has increased 70% clearly above 90% • Order ba
Slide 80: Targeting EUR 150 million in procurement cost savings
Targeting EUR 150 million in procurement cost savings Direct efforts Key actions • Reorganization of Establishing one procurement • Raw material • seamless, fully Focus on buying optimization matched pair concept integrated sales and (mix / production) • Administration centralized operations plannin
Slide 81: Case: Challenging the status quo saves money
Case: Challenging the status quo saves money Single biggest material handling contract renegotiated 13.5% with should-cost model and annual savings renewal of 15-year contract with improved Bid included eight biggest payment terms service providers from Europe and Americas 81
Slide 82: Case: We achieved significant savings from a supplier change
Case: We achieved significant savings from a supplier change Bidding major Stevedoring 26% agreement and changing annual savings 10+ year old incumbent with improved supplier to a new supplier with payment terms better industry references 82
Slide 83: Case: We renegotiated take-or-pay deal in energy
Case: We renegotiated take-or-pay deal in energy Long-term fixed contract for electricity became ~4% non-sustainable with savings current energy prices with improved With right partnership payment terms approach, we renegotiated the remaining deal 83
Slide 84: Chorus enables us to move from fragmented processes to integrated funnel
Chorus enables us to move from fragmented processes to integrated funnel Opportunities: • Eliminate suboptimization • Reduce NWC • Lowest cost per route 84
Slide 85: Establishing seamless, fully integrated processes
Establishing seamless, fully integrated processes Chorus enables We are reducing We are aiming to integration of the lead time through achieve industry supply chain streamlined leading delivery management planning performance planning processes 85
Slide 86: Delivering 3% annual productivity improvement
Delivering 3% annual productivity improvement Maciej Gwozdz EVP – Operations Europe
Slide 87: This is our roadmap for global manufacturing
This is our roadmap for global manufacturing Outokumpu Production System • Consistent manufacturing excellence 1. People blueprint to drive operational efficiency 2. Culture • Based on Lean Six Sigma 3. Tools & Methods • Outokumpu Production Index (OPI) 4. Processes measures Manufacturing Excellence
Slide 88: We are on track to deliver 3% productivity improvement in 2017
We are on track to deliver 3% productivity improvement in 2017 Since the All 11 start of 2017, Financial manufacturing Six-week 92 projects project locations have Black Belt closed, 172 tracker in completed the training projects are place leadership delivered ongoing training 88
Slide 89: Case: Reduce working capital in Germany
Case: Reduce working capital in Germany OPPORTUNITY ACTIONS IMPACT • Work in progress • Process mapping handling causes a • Target state definition disturbed production • Gap analysis Inventories reduced flow • Setting the metrics for • High inventories, by 50% sustainable increased lead time perfor
Slide 90: Case: Eliminate processing speed loss in Sweden
Case: Eliminate processing speed loss in Sweden OPPORTUNITY ACTIONS IMPACT • Six Sigma methodology to 20% line speed • Scale formation on increase increase process black hot band stability reduces processing • Optimized furnace 1,000 tonnes/month speed (quality issue) times and acid additional capac
Slide 91: Case: Reduce idle time in Finland
Case: Reduce idle time in Finland OPPORTUNITY ACTIONS IMPACT • Lean Tools applied Idle time down • Improve Operating through a set of by 30% Equipment Efficiency workshops (OEE) by reducing • Standardized process OEE up by 1.6 process idle time in place for each product change percentage points 91
Slide 92: Delivering 3% annual productivity improvement
Delivering 3% annual productivity improvement We provide the roadmap for global Numerous local manufacturing – Sustainable projects build up Individual sites financial impact cost improvements drive the transformation 92
Slide 93: Creating value through customer orientation
Creating value through customer orientation Olli-Matti Saksi Head of Sales Europe
Slide 94: Creating value through customer orientation
Creating value through customer orientation To be the best value VISION 2020 creator in stainless steel by 2020 through customer orientation and efficiency Improve profitability Customer Commercial targets by >EUR 200 million satisfaction to reach by the end of 2020 75% by 2020 Customer Sales Main K
Slide 95: We have improved margins through self-help
We have improved margins through self-help Index 130 +20% Improvement in contribution 120 margin driven by 110 • Value selling 100 • Pricing excellence and mix improvement 90 • Efficiency improvements 2014 2015 2016 2017 • New sales organization Contribution margin European base price 95
Slide 96: We are improving customer satisfaction
We are improving customer satisfaction Global account Sales academy Chorus management One face to the customer To create best performing Supporting tools to ensure to make Outokumpu sales force in stainless best in class customer preferred supplier steel industry service Start Nov 2017 2017-2018 Rol
Slide 97: Case: Focused customer support led to significant profitability improvement
Case: Focused customer support led to significant profitability improvement Background: Customer expansion into new products to become leading high-tech supplier Actions: Extensive global R&D and technical support and close cooperation with +100% customer to achieve the right product mix Outcome: Pr
Slide 98: Case: We have increased our negotiation result by mix optimization
Case: We have increased our negotiation result by mix optimization Analysis phase Volume Target setting 2017 Grade Grade B C Contr. Margin €/t Grade Grade B Grade A Grade Grade Grade A A B C Grade C with highest profitability but 2016 volume was zero Negotiation result + >100 EUR/t 98
Slide 99: Duplex delivers high value performance and differentiates us from competition
Duplex delivers high value performance and differentiates us from competition Oil Storage Tanks Forta LDX 2101 Antwerp, Belgium “More and more duplex stainless steels are chosen because of the very good price-performance ratio. Duplexes have a similar corrosion resistance as the Market austenitic st
Slide 100: We provide state of the art knowhow of production and application
We provide state of the art knowhow of production and application Ping An International Supra 316L/ Finance Center 4404 Shenzhen, China “Outokumpu stood out for its rich global experience and highly efficient and customized products. Outokumpu’s Product World vision, ‘a world that lasts forever', an
Slide 101: Creating value through customer orientation
Creating value through customer orientation Our product Improving We are improving portfolio and profitability customer technical expertise by more than satisfaction translate into EUR 200 million customer value 101