Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Global Industrials & Basic Materials Conference 2013 (Deutsche Bank)
48 slides from Outokumpu Oyj's conference presentation, Jun 13, 2013
Slide 1: A new vision for advanced materials
A new vision for advanced materials. Global Industrials & Basic Materials Conference, arranged by Deutsche Bank Reinhard Florey EVP – Integration and Strategy Outokumpu One-on-one meetings June 13, 2013
Slide 2: Disclaimer
Disclaimer The following presentations contain, 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 t
Slide 3: Economic uncertainty in Europe continues
Economic uncertainty in Europe continues Region GDP % GDP % Industrial Industrial Stainless Stainless 2012 2013 production production steel % steel % % 2012 % 2013 2012 2013 Europe1) -0.3 -0.2 -2.1 -1.2 -2.8 -1.1 China 7.8 8.2 10.0 11.3 5.4 6.8 NAFTA 2.3 2.1 3.6 1.9 4.4 2.5 Global 2.4 2.4 3.7 4.7 2.
Slide 4: Nickel price decline has affected negatively our performance
Nickel price decline has affected negatively our performance Nickel price: Jan 2011 – May 2013 6/13/2013 4
Slide 5: Challenging market environment has resulted in weak financial performance
Challenging market environment has resulted in weak financial performance Q1/13 Q4/12 EUR million comparable Sales 2,221 2,067 EBIT, underlying 1) -77 -162 Net interest-bearing debt (end of period) 2,891 2,620 Equity (end of period) 2,799 2,952 Debt-to-equity ratio (gearing), % (end of period) 103.3
Slide 6: Outokumpu
Outokumpu New Outokumpu 2012 Sales 1,2) • Outokumpu is the new global leader in stainless steel and high performance alloys • 16,000 employees with state-of-the-art EUR 9,400 million production facilities as well as broad service center and sales office presence globally • Broadest product portfolio
Slide 7: Outokumpu Strategy Roadmap
Outokumpu Strategy Roadmap Restructuring + Growth = Perfor- mance Deliver on New Transform Ensure Ramp-up Full integration Expand Leverage Develop synergies efficiency company financial US Ferrochrome and new HPSA APAC culture (EUR 200mn) projects structure stability presence Mill closures P150 proj
Slide 8: Balanced customer base across industries
Balanced customer base across industries Sales by customer segment Sales by end-customer segment Healthy balance between end-customer segments across both investment and consumer driven industries Other Consumer Distributors 12 % goods & Medical 41% Heavy 17 % industries 8% Automotive 9% Architectur
Slide 9: Management compensation elements well aligned with strategic priorities
Management compensation elements well aligned with strategic priorities Short term incentive • EBITDA • Synergy savings • Inventory days • Capex Long term incentive • EBITDA • Synergies • Share price development CEO‟s opening remarks, Mika Seitovirta 6/13/2013 9
Slide 10: We offer sustainable materials
We offer sustainable materials Sustainability sets the basis for our long-term competitiveness and future growth and it is embedded in our products and operations: 1. 80% recycling content compared to industry average of 60% 2. Product carbon footprint decreased by over 40% in last 15 years 3. EUR 2
Slide 11: Our priorities in 2013
Our priorities in 2013 High quality service to the new Outokumpu Customer customers globally Implementation of the planned synergy benefits Synergy savings of EUR 200 million in full Calvert and Successful ramp-up of Calvert, US integrated mill ferrochrome ramp-up and ferrochrome operations Cash flo
Slide 12: Our transformation principles
Our transformation principles From volumes to Right volumes, with the right profitability profit Minimize money tied into inventories From production Set the benchmark for customer service in reliability, to customers technical expertise, flexibility Build trust across the company Working together A
Slide 13: Update synergy savings – EUR 16 million achieved in Q1 2013
Update synergy savings – EUR 16 million achieved in Q1 2013 Synergy savings over time (cumulative) 250 • We are on track to reach Max 200 for targeted annual Min 150 savings of EUR 50 million in 2013 100 50 • Krefeld melt shop ramp- 50 16 down proceeding on plan, 0 melt shop closed by the Q1 13 2013
Slide 14: Short-term improvement programs
Short-term improvement programs • P150 is aiming an additional cost saving of EUR 150 million on EBITDA level • Full implementation and effective until end of 2014 Cost = P150 = • Considerable impact already in 2013 expected (EUR 30-50 million bottom line effect) • Global scope of program: all entit
Slide 15: The European restructuring
The European restructuring 6/13/2013 15
Slide 16: Continued growth for stainless steel globally – EMEA will decline in 2013
Continued growth for stainless steel globally– EMEA will decline in 2013 +7% +19% +8% -3% +6% +4% +4% -1% +3% EMEA APAC AMERICAS +9% +4% +2% Orange = Change 2010-2011 Green = Change 2011-2012 TOTAL WORLD Blue = Forecast 2013 Data source: SMR, Apr 2013, Real demand for total stainless (rolled & forge
Slide 17: Since 2007 cheap imports from Asia are impacting the European market
Since 2007 cheap imports from Asia are impacting the European market Cold rolled imports from 3rd countries into EU27 tonnes March 2013: 100 000 20% import share from Asia from Rest of World 80 000 60 000 40 000 20 000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Apr Apr Apr Apr Apr Apr Apr A
Slide 18: Facing the new reality
Facing the new reality I Stagnant demand and overcapacities in Europe II Increasing imports from non-European countries III Decreasing prices and volatile raw material markets IV Significant losses for all European producers in recent years Inoxum acquisition was starting point for restructuring of
Slide 19: Ferrochrome – competitive advantage
Ferrochrome – competitive advantage Outokumpu ferrochrome production • Unique low cost position as Europe‟s (1,000 tonnes) 600 only ferrochrome producer with access 500 to the only known chromite reserves in the EU 400 300 • Mineral resources to last for roughly 200 40 years 100 • Q4 2012: finalizat
Slide 20: Ferrochrome – competitive advantage
Ferrochrome – competitive advantage Ranking of major ferrochrome smelters for 2013 in order Ferrochrome market price development 2) of increasing total direct operating cost 1) US¢/lb contained Cr USD/lb 1,3 100 1,3 80 1,2 Q2’2013 1.27 USD/lb 1,2 60 1,1 40 1,1 1,0 Apr 23 20 1.06 USD/lb 1,0 0 0,9 Sep
Slide 21: Tornio works: Highly competitive cost position
Tornio works: Highly competitive cost position • Tornio is the most integrated stainless steel plant in the world • Highly efficient through large economies of scale • Own chrome ore – safe supply and stable ferrochrome quality • State-of-the-art technology (RAP line producing new 2E semi CR product
Slide 22: Medium and long term actions well on track
Medium and long term actions well on track • Developing alternative price models to allow Pricing structure In introduction quicker response to raw material price changes project • From volumes to profit principle phase • Optimize costs and quality by specialization Production swaps • Improved flexi
Slide 23: Overcapacity of melting capacity in stainless production
Overcapacity of melting capacity in stainless production– prior to planned Bochum melt shop closure (May 2013) EMEA Coil HPSA Americas Coil APAC Total Finland Germany 1) Sweden UK & USA Calvert Shanghai San Luis Potosí Melting 2) 4,300 1,600 800 500 500 900 3,970 HR 1,600 800 700 870 3,055 CR 750 86
Slide 24: Balanced stainless production structure after Bochum melt shop closure
Balanced stainless production structure – after the planned Bochum melt shop closure (May 2013) EMEA Coil HPSA Americas Coil APAC Total Finland Germany 1) Sweden UK & USA Calvert Shanghai San Luis Potosí Melting 2) 3,500 1,600 500 500 9006 3,170 HR 1,600 700 870 3,055 CR 750 865 425 105 350 270 290
Slide 25: The Americas: Calvert, a game changer?
The Americas: Calvert, a game changer? 6/13/2013 25
Slide 26: Americas stainless steel market overview
Americas stainless steel market overview Americas accounts for 11% of global World 2013 GDP Growth Forecast stainless steel market (2013) 21 % EMEA Americas 11 % APAC 68 % Stainless Coil Americas BA, Kari Parvento/Mick Wallis 6/13/2013 26
Slide 27: Americas stainless steel market overview
Americas stainless steel market overview Americas stainless steel consumption is Americas stainless steel market by country 1) expected to grow by 3% CAGR in 2013-2016 2) 1,000 tonnes 1%3% 4000 3800 11 % 3600 US 3400 Canada 8% 3200 Mexico 3000 8% Brazil 2800 69 % Argentina 2600 Others 2400 2200 2000
Slide 28: Stainless Coil Americas operations
Stainless Coil Americas operations Calvert, USA Sales, Chicago San Luis Potosí, Mexico Fully integrated mill with 900.000 hot band and 350.000 cold rolling Sales, capacity Sao Paulo Service center, Buenos Aires, Argentina Cold rolling mill with capacity of 270.000 tonnes Stainless Coil Americas BA,
Slide 29: Coil Americas financial highlights
Coil Americas financial highlights • Q1 2013 stainless steel deliveries from our NAFTA operations grew EUR million Q1/13 Q4/12 FY2012 comparable comparable by 2.000t to 101.000t compared to Q4 2012 Stainless steel 102 105 400 deliveries1) • Total coil deliveries from Outokumpu to customers in Sales
Slide 30: Calvert ramp-up: materials flow 2012-H1 2013
Calvert ramp-up in key role in materials flow simplification: 2012-H1 2013 – imports from Europe Americas Coil material flow H1 2013 • Hot band deliveries from Europe to Mexinox and Calvert cold rolling mills • High working capital • Long lead times • Lack of flexibility Avesta • Negative impact on
Slide 31: Calvert ramp-up: materials flow H2 2013 onwards
Calvert ramp-up in key role in materials flow simplification: H2 2013 onwards – “made in America” Americas Coil material flow H2 2013 • Calvert melt shop to supply hot band to Calvert and Mexinox cold rolling mills • Improved working capital management • Improved delivery reliability • Better custom
Slide 32: Expanded product portfolio through Calvert ramp-up
Expanded product portfolio through Calvert ramp-up 2010 NAFTA production portfolio (Mexinox) 2013 NAFTA production portfolio (Mexinox + Calvert) Stainless steel grades Stainless steel grades 300 Sheet 300 Coil 409 430 300 Sheet 300 Coil 409 430 Slabs Slabs Hot-rolled Hot-rolled black strip black str
Slide 33: The Only 72” Wide NAFTA Producer
The Only 72” Wide NAFTA Producer The only 72“ wide manufacturer in NAFTA • Cost effective version of 36” wide • Immediate process improvement for material applications • Significant handling, welding cost, and time advantages • Replacement of imported material • Completion of Outokumpu Americas broa
Slide 34: Calvert mill
• 1,500 hectares, 567 hectares footprint • 39 kilometers of roads Calvert mill • • Nearly 100,000 tons of steel erected – equivalent to 10 Eiffel Towers Over 6,500 construction workers on site during peak times Finishing Hot Annealing Line Connection Bay Carbon Hot Strip Mill Cold Annealing Line Sla
Slide 35: Calvert - fully integrated state of the art mill
Calvert - fully integrated state of the art mill Calvert mill strengths • Latest production technology and equipment • Full product range • High quality • High efficiency • Unique 72’ inch coil capability • Efficient logistics • Low energy costs • Good availability of scrap and other raw materials S
Slide 36: 72“ Capability Fully Established
72“ Capability Fully Established • First 72” coil produced in 2011 • 72” product cast, hot rolled and cold rolled at Calvert • Casting 72” material from melt shop since Q1 „13 36 Stainless Coil Americas BA, Kari Parvento/Mick Wallis 6/13/2013 36
Slide 37: Calvert ramp-up - improved profitability through higher volumes
Calvert ramp-up - improved profitability through higher volumes and capacity utilization Calvert delivery volumes 2011 - 2013 150 000 Hot band to Mexinox Cold Rolled to customers Calvert capacities (annual): 100 000 • Melt shop 900.000 t • Hot rolling 870.000t Tonnes • Cold rolling 350.000 t 50 000
Slide 38: Coil Americas market approach – dedicated teams for key customer segments
Coil Americas market approach – dedicated teams for all of the key customers segments Americas stainless steel channel structure Americas stainless steel market by segment (2012) Heavy Service industries Centers 62% 15 % Consumer Tubes and goods & Metal Medical processing 35 % 9% Chemical, petrochem
Slide 39: The numbers
The numbers 6/13/2013 39
Slide 40: EBITDA and EBIT by Business Areas
EBITDA and EBIT by Business Areas EBITDA excl. NRI per Business Area EBIT excl. NRI per Business Area EUR million EUR million 35 20 4 4 14 0 0 -2 -12 -28 -27 -38 -44 -58 -59 -55 EMEA Americas APAC HPSA EMEA Americas APAC HPSA Q4/12 Q1/13 6/13/2013 40
Slide 41: EBITDA / tonne by grade
Profitability and capital employed from a grade perspective1) (excl FeCr oper.) Part of HPSA VDM stainless EMEA stainless assets, Coil Americas and part of and APAC HPSA and APAC Bulk of the Group’s capital High alloyed material that employed is tied in standard offers better corrosion grades, where
Slide 42: Cost analysis FY 2012
Cost analysis FY 2012 Operative cost 1) 2) components Comments • Raw materials account for around 60- 65% of the total operative costs of the Group • Share of Ni from total raw material cost is around 60% Raw materials • Share of Cr from total stainless raw Personnel material cost is around 15-20%,
Slide 43: Outokumpu balance sheet
Outokumpu balance sheet Assets (MEUR) 31.03.13 31.12.12 • Goodwill is unchanged at EUR 469 million Non-current assets (including the Inoxum transaction goodwill of EUR 7 million). Intangible assets 630 629 Property, plant and equipment 3,694 3,697 • Assets held for sale and liabilities related Other
Slide 44: Outokumpu balance sheet
Outokumpu balance sheet Equity and liabilities (MEUR) 31.03.13 31.12.12 • The total non-current interest Total equity 2,799 2,952 bearing liabilities of EUR 3,019 million include the Non-current liabilities ThyssenKrupp loan note of EUR IB1) liabilities 3,019 2,974 1,242 million. Deferred tax liabil
Slide 45: Liquidity and maturity profile of debt
Liquidity and maturity profile of debt Liquidity and refinancing Debt maturities March 31, 2013, MEUR 1400 • As at March 31, 2013 the amount of liquidity reserves (i.e. cash, available long-term 1200 committed facilities and pension loan capacity) was approximately EUR 1 billion 1000 • Refinancing o
Slide 46: Cash flow a key priority
Cash flow a key priority 2012 Q1 2013 EUR million Net cash generated from operating activities 120 -46 Net cash from investing activities) 821 1) -186 • Cash flow is our key priority. • Stringent control on both working capital and capex • P300 launched in February to reduce working capital by EUR 3
Slide 47: Capital expenditure development
Capital expenditure development 1) 900 821 • Big investment programs 800 largely finalized by 2012 700 • Capital expenditure in 600 566 2013 targeted to be EUR 500 472 350 million 400 350 • From 2014 onwards 300 target to remain clearly 200 below the 2013 capital expenditure level 100 0 2010 2011 20
Slide 48: Q&A
Q&A Outokumpu Experience 2013 May 22-23, 2013 Old Billingsgate, London, UK
Outokumpu — Global Industrials & Basic Materials Conference 2013 (Deutsche Bank) on 6ix