Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Q3 2016 Earnings Presentation
31 slides from Outokumpu Oyj's earnings presentation, Nov 3, 2016
Slide 1: Interim report Q3/2016
Interim report Q3/2016 CEO Roeland Baan CFO Chris de la Camp November 3, 2016
Slide 2: Today's attendees of Outokumpu
Today‘s attendees of Outokumpu Tommi Järvenpää Roeland Baan Chris de la Camp Director CEO CFO 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: Our vision: best value creator in stainless steel by 2020
Our vision To be the best value creator in stainless steel by 2020 through customer orientation and efficiency. 4
Slide 5: Group underlying EBIT clearly positive
Group underlying EBIT clearly positive Underlying EBIT, EUR million • Continuing improvement 32 • Great progress in Americas • Europe’s profitability improved • NWC release of EUR 149 million YTD -5 • Positive cash flow -11 -20 • Further net debt reduction • Long Products’ underlying EBIT still -67
Slide 6: ~2% demand growth expected for 2016
~2% demand growth expected for 2016 Americas Europe APAC Global +9% +7% +7% +6% +5% +5% +5% +4% +4% +3% +0% +3% +3% +2% +1% +1% +2% +3% +1% +2% -3% -3% 0% -1% 13 14 15 16f 17f 18f 13 14 15 16f 17f 18f 13 14 15 16f 17f 18f 13 14 15 16f 17f 18f USA OTHER AMERICAS OTHER EMEA CHINA OTHER APAC +12% +8% +
Slide 7: European base prices edging up
European base prices edging up European base prices1, EUR/tonne Third-country imports2 into Europe, 1,000 tonnes % 1,250 100 50 Germany 80 40 1,200 Import 60 30 penetration increased to 1,150 24.2% in Q3 40 20 1,100 20 10 0 0 1,050 2009 2011 2013 2015 Q2 1,000 From rest of world From China 2012 2013
Slide 8: Substantial increases in US base prices year-to-date
Substantial increases in US base prices year-to-date US base prices1, USD/tonne Third-country imports2 into the US, 1,000 tonnes % 1 450 40 40 Import 1 400 30 30 penetration slightly up to 23.2% in 20 20 Jul-Aug’16 1 350 10 10 Imports from 1 300 China into the US decreased 0 0 significantly 1 250 20
Slide 9: Q3 key financials
Q3 key financials Deliveries declined driven by seasonality in Europe and in Long Products Key figures Q3/16 Q2/16 2015 Stainless steel deliveries, 1,000 tonnes 608 629 2,381 Sales increased by 2.9% driven mainly by Sales, EUR million 1,419 1,379 6,384 higher deliveries and Underlying EBITDA, EUR mi
Slide 10: Europe's profitability improved
Europe’s profitability improved Europe deliveries, Europe underlying EBIT, • Overall stainless steel demand healthy 1,000 tonnes EUR million • Market impacted by seasonality 45 • Inventories declined slightly, thus 421 413 42 396 keeping inventory levels below long- 381 33 375 29 term averages • Bas
Slide 11: Americas achieved another record-high quarter
Americas achieved another record-high quarter Americas deliveries, Americas underlying EBIT, • Positive momentum in the American 1,000 tonnes EUR million stainless steel market continued 185 • In September, the US Commerce 177 Department set preliminary 161 144 -7 antidumping duties against Chinese
Slide 12: Long Products' earnings impacted by seasonality
Long Products’ earnings impacted by seasonality Long Products deliveries, Long Products underlying EBIT, • Markets remained relatively stable 1,000 tonnes EUR million • Oil & Gas related project activity 70 remained subdued 58 59 3 • Base prices remained flat in both 50 Europe and the US 42 • Adjust
Slide 13: Positive operating cash flow
Positive operating cash flow EUR million Q3/16 Q2/16 2015 • Net working capital release of EUR 149 million during 9M/16 (excluding Net cash from operating provisions and pension obligations) 61 54 -34 activities • Net cash from investing activities was positively impacted in Q3 by EUR 49 Net cash fr
Slide 14: Net debt decreased to below EUR 1.4 billion
Net debt decreased to below EUR 1.4 billion Net debt and gearing Debt maturity profile, EUR billion 188% 1,2 0,8 93% 3,56 69% 70% 69% 65% 0,4 1,97 1,61 1,55 1,49 1,40 0 2013 2014 2015 Q1/16 Q2/16 Q3/16 2016 2017 2018 2019 2020 2021+ Net debt, EUR billion Gearing, % Current debt Non-current debt Unut
Slide 15: Business and financial outlook for Q4/2016
Business and financial outlook for Q4/2016 Market commentary Outokumpu estimates for Q4 Underlying stainless steel With the seasonal slowdown in the US, Q4 stainless steel demand is expected to deliveries of business area Americas are expected to be remain healthy in both significantly lower compare
Slide 16: Appendix
Appendix 16
Slide 17: Improving competitiveness and financial performance
Improving competitiveness and financial performance To be the best value Financial targets for 2020 creator in stainless steel by 1 2020 through customer orientation and EBIT efficiency. EUR 500 million The best value in the industry for 2 customers, shareholders and employees ROCE through: 12% HIGH
Slide 18: Ongoing actions for a step change in cost and competitive position
Or ongoing actions for a step change in cost and competitive position 1 New organizational set-up SG&A cost reduction Net debt 2 EUR 100 million by end of 2017 EUR 1.2 billion by end of 2017 NWC reduction 3 At least EUR 200 million by end of 2016 18
Slide 19: Income statement
Income statement (MEUR) July-Sept Apr-June 2016 2016 Sales 1,419 1,379 Cost of sales -1,301 -1,287 Gross margin 117 92 Other operating income 4 36 SG&A costs -56 -112 Other operating expenses -26 -10 EBIT 40 6 Share of results in associated companies and joint ventures 2 1 Financial income and expen
Slide 20: Balance sheet
Balance sheet Assets (MEUR) Sept 30, 2016 June 30, 2016 Non-current assets Intangible assets 494 495 Property, plant and equipment 2,890 2,911 Investments in associated companies 64 62 and joint ventures Other financial assets 48 46 Deferred tax assets 25 21 Defined benefit plan assets 20 23 Trade a
Slide 21: Balance sheet
Balance sheet Equity and liabilities (MEUR) Sept 30, 2016 June 30, 2016 Total equity 2,137 2,148 Non-current liabilities Non-current debt 1,109 1,162 Other financial liabilities 4 7 Deferred tax liabilities 9 9 Defined benefit and other long-term 424 413 employee benefit obligations Provisions 126 1
Slide 22: Cost analysis
Cost analysis Operative cost components in 2015 Comments • 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 incl
Slide 23: Headcount reductions
Headcount reductions Total headcount reduction Personnel per business area at the end Q3/16 14 000 13 327 766 13 000 436 1 123 12 000 290 640 217 11 000 1 485 Europe 2 209 Americas 10 000 9 300 Long Products 9 000 Other operations 7 646 8 000 23
Slide 24: Balanced customer base across industries
Balanced customer base across industries Distributors End-customers Consumer goods & medical Automotive 20% 15% Architecture, building & construction 44% 17% 56% Chemical, petrochem. and energy 22% 5% Metal processing & tubes 4% 17% Heavy industries Other Figures for full year 2015 24
Slide 25: Broadest product portfolio across stainless steel
Broadest product portfolio across stainless steel Deliveries by product grade in 2015 Outokumpu product forms Other Duplex 3% 4% Ferrochrome Slab Quarto plate Austenitic (CrNi) Ferritic 56% 21% Hot rolled Hot and cold rolled Precision strip black coil white coil Austenitic (CrNiMo) Rolled and Cast s
Slide 26: Fully integrated production asset base
Fully integrated production asset base Europe Americas Long Products Total Avesta + Krefeld + Tornio Degerfors Calvert Mexinox New Castle Sheffield Richburg Degerfors Wildwood Nyby Dillenburg Finland Sweden USA Mexico USA UK USA Sweden USA Sweden Germany Melting 1,450 450 900 450 3,250 Hot rolling 1
Slide 27: 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] [CR, Mtonnes] [CR, Mtonnes] 26 26 25 4,9 4,9 4,6 4,6 4,7 4,6 4,5 4,6 3,2 24 3,2 3,2 3,2 23 3,0 3,0 3,0 3,0 21 21 3,8 3,8 3,8 3,9 20 3,7 3,8 2,7 19 20 3,5 2,6 2,6 2,5 2,6 18 19 3,5 2,4 2,5
Slide 28: Real demand grows only moderately in Q4 in EMEA and Americas
Real demand grows only moderately in Q4 in EMEA and Americas EMEA total stainless steel real demand1 Americas total stainless steel real demand1 1,000 tonnes 1,000 tonnes 1 950 1 000 +3% 1 900 +1% 950 1 850 900 850 1 800 800 1 750 750 1 700 700 1 650 650 1 600 600 1 550 550 1 500 500 Q1 2016 Q2 Q3 Q
Slide 29: Stainless prices rising on the back of higher nickel prices
Stainless prices rising on the back of higher nickel prices 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 2 000 10 000 0 1 000 2011 2012 2013 2014 2015 2016 Europe USA China 29
Slide 30: Nickel price development
Nickel price development 60,000 600 [Ktonnes] [USD/t] LME stocks (rhs) SHFE stocks (rhs) 50,000 500 LME cash price (lhs) 40,000 400 30,000 300 20,000 200 10,000 100 ,0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 • Nickel prices were rallying in the beginning of the quarter on worri
Slide 31: 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: [email protected] Simone Cujai Investor Relations Manager Phone: +49 2151 83 4226 Mobile: +49 17