Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Q2 2016 Earnings Presentation
32 slides from Outokumpu Oyj's earnings presentation, Jul 26, 2016
Slide 1: Interim report Q2/2016
Interim report Q2/2016 CEO Roeland Baan CFO Chris de la Camp July 26, 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: To be the 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: Gaining momentum in Q2
Gaining momentum in Q2 Underlying EBIT, EUR million • Record-high deliveries and reduction in production costs in the Americas • Cost savings continued in Europe -5 • Net working capital released further -11 • Positive cash flow -20 -25 • Net debt reduced -67 • Low ferrochrome prices impacting Europ
Slide 6: ~1% demand growth expected for 2016
~1% demand growth expected for 2016 Americas Europe APAC Global +9% +7% +7% +6% +5% +5% +4% +4% +4% +4% +4% +2% +2% +2% +3% +1% 0% +1% +1% +1% -2% -3% +0% +0% 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 continued to be stable
European base prices continued to be stable European base prices1, EUR/tonne Third-country imports2 into Europe, 1,000 tonnes % 1,250 100 50 Germany 80 40 1,200 Import penetration 60 30 decreased to 21.1% in 1,150 April-May 40 20 1,100 20 10 0 0 1,050 2009 2011 2013 2015 Q2/16 1,000 From rest of wor
Slide 8: American base price increases gaining traction
American base price increases gaining traction US base prices1, USD/tonne Third-country imports2 into the US, 1,000 tonnes % 1,450 40 40 1,400 30 30 Import penetration 20 20 decreased to 1,350 21.0% in April-May 10 10 1,300 0 0 1,250 2009 2011 2013 2015 Q2/16 1,200 From rest of world From China 2012
Slide 9: Volatile nickel price still at low levels
Volatile nickel price still at low levels 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 9
Slide 10: Q2 key financials
Q2 key financials Deliveries grew driven by the Americas and Key figures Q2/16 Q1/16 2015 Long Products Stainless steel deliveries, 1,000 tonnes 629 610 2,381 Sales down by 0.5% Sales, EUR million 1,379 1,386 6,384 mainly due to lower deliveries Europe Underlying EBITDA, EUR million 51 38 196 Underl
Slide 11: Europe's profitability impacted by low ferrochrome prices
Europe’s profitability impacted by low ferrochrome prices Europe deliveries, Europe underlying EBIT, • Market relatively healthy 1,000 tonnes EUR million • Uncertainties in general investment climate impacting plate products 413 421 413 41 42 • Base prices remained flat 381 33 375 29 • Ferrochrome p
Slide 12: Americas achieved record-high deliveries and improved efficiency
Americas achieved record-high deliveries and improved efficiency Americas deliveries, Americas underlying EBIT, • Number of positive market 1,000 tonnes EUR million developments • Apparent consumption grew by 2.1% 177 161 • Ongoing antidumping investigation curbed 144 Chinese imports 139 • Distribut
Slide 13: Long Products' earnings impacted by derivative losses
Long Products’ earnings impacted by derivative losses Long Products deliveries, Long Products underlying EBIT, • Growing demand across all markets, 1,000 tonnes EUR million especially in Europe 70 • Oil & Gas related project activity 62 4 remained subdued 58 3 50 • Base prices remained at Q1 levels
Slide 14: Positive operating cash flow
Positive operating cash flow EUR million Q2/16 Q1/16 2015 • Net working capital release of EUR 117 million during H1/16 (excluding Net cash from operating activities 54 74 -34 provisions and pension obligations) • Financing costs of EUR 28 million Net cash from investing -22 -17 239 • Overall liquid
Slide 15: Net debt decreased to below EUR 1.5 billion
Net debt decreased to below EUR 1.5 billion Net debt and gearing Debt maturity profile, EUR billion 188% 1.2 EUR 250 million senior secured bond issued and maturities of 0.8 Finnish pension loans extended 93% 3.56 69% 70% 69% 0.4 1.97 1.61 1.55 1.49 0 2013 2014 2015 Q1/16 Q2/16 2016 2017 2018 2019 2
Slide 16: Real demand in Q3 expected to slow down in EMEA and Americas
Real demand in Q3 expected to slow down in EMEA and Americas EMEA total stainless steel real demand1 Americas total stainless steel real demand1 1,000 tonnes 1,000 tonnes 1,900 -5% 950 -4% 900 1,800 850 800 750 1,700 700 650 1,600 600 550 1,500 500 Q1 2016 Q2 Q3 Q4 Q1 2016 Q2 Q3 Q4 SMR Feb'16 SMR Ap
Slide 17: Business and financial outlook for Q3/2016
Business and financial outlook for Q3/2016 Market commentary Outokumpu estimates for Q3 In Europe • Stock levels among distributors at Delivery volumes to be sequentially flat historical averages Pace of the efficiency improvements to • Underlying demand in key sectors is continue and the Group’s un
Slide 18: 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 19: Immediate actions for a step change in cost and competitive position
Immediate 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 19
Slide 20: Save the date
Save the date Outokumpu Capital Markets Day on November 29 in Helsinki 20
Slide 21: Appendix
Appendix 21
Slide 22: Income statement
Income statement (MEUR) Apr-June Jan-Mar 2016 2016 Sales 1,379 1,386 Cost of sales -1,287 -1,309 Gross margin 92 76 Other operating income 36 26 SG&A costs -112 -104 Other operating expenses -10 -11 EBIT 6 -12 Share of results in associated companies and joint ventures 1 -1 Financial income and expe
Slide 23: Balance sheet
Balance sheet Assets (MEUR) June 30, 2016 Mar 31, 2016 Non-current assets Intangible assets 495 496 Property, plant and equipment 2,911 2,924 Investments in associated companies 62 62 and joint ventures Other financial assets 46 45 Deferred tax assets 21 22 Defined benefit plan assets 23 47 Trade an
Slide 24: Balance sheet
Balance sheet Equity and liabilities (MEUR) June 30, 2016 Mar 31, 2016 Total equity 2,148 2,229 Non-current liabilities Non-current debt 1,162 870 Other financial liabilities 7 9 Deferred tax liabilities 9 16 Defined benefit and other long-term 413 388 employee benefit obligations Provisions 114 111
Slide 25: 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 26: Headcount reductions
Headcount reductions Total headcount reduction Personnel per business area at the end Q2/16 14,000 13,327 766 13,000 436 1,123 12,000 280 634 357 11,000 1,345 Europe 2,170 Americas 10,000 9,300 Long Products 9,000 Other operations 7,561 8,000 26
Slide 27: 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 27
Slide 28: 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 29: Fully integrated production asset base
Fully integrated production asset base Europe Americas Long Products Total Tornio Avesta Krefeld Degerfors Calvert Mexinox New Castle Sheffield Richburg Degerfors Wildwood Finland Sweden Germany Sweden USA Mexico USA UK USA Sweden USA Melting 1,450 450 900 450 3,250 Hot rolling 1,450 900 870 3,220 F
Slide 30: Low capacity utilization in China, on healthier level 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 25 4.7 4.6 4.5 4.6 3.2 3.3 3.3 3.3 3.2 3.2 3.2 23 3.1 22 21 3.9 4.0 20 3.7 3.7 3.8 2.7 2.7 19 19 3.5 3.6 2.6 2.6 2.6 2.6 18 19 3.5 2.4
Slide 31: Nickel price development
Nickel price development 60,000 500 [Ktonnes] [USD/t] LME stocks (rhs) 450 50,000 400 LME cash price (lhs) 40,000 350 300 30,000 250 200 20,000 150 10,000 100 50 ,0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 • Nickel prices rallied in April on signs of Chinese manufacturing recove
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: [email protected] Päivi Laajaranta Executive Assistant Phone +358 9 421 4070 Mobile +358 400 607