Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Technical Presentation (April 2019)
31 slides from Outokumpu Oyj's technical presentation, Apr 2, 2019
Slide 1: Calvert site visit
Calvert site visit Calvert investor site visit, April 2, 2019
Slide 2: Program
Program Time Topic Presenter Page 10:30 am Opening remarks Tommi Järvenpää, VP – Investor Relations 10:35 am Decisive actions taken in the Americas Roeland Baan, President & CEO 4 11:05 am Solid operational foundation enabling commercial growth Michael S. Williams, President – BA Americas 9 11:35 am
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: Decisive actions taken in the Americas
Decisive actions taken in the Americas Calvert investor site visit, April 2, 2019 Roeland Baan – President & CEO
Slide 5: Our development stagnated in 2018
Our development stagnated in 2018 BA Americas’ adjusted EBITDA, € million Positive development continues… • Cost-efficient operations • Delivery reliability 21 • Product quality -27 -5 …but was overshadowed in 2018 -120 • Input and freight cost headwinds of over €40 million • Weaknesses in commercia
Slide 6: We have been slow to react to changes in the market
We have been slow to react to changes in the market Misalignment Disconnected Untimely Under- between sales and market and developed business supply chain sales sales targets and processes intelligence organization incentives 6 | April 2, 2019
Slide 7: Work has started in all areas, results expected as the year progresses
Work has started in all areas, results expected as the year progresses Finalized Ongoing • CCO Olli-Matti Saksi took over • Recruitment to strengthen the commercial responsibility sales team • Commercial organization • Implementing best-in-class structure S&OP process • New target setting and • Adap
Slide 8: Unique assets with further growth potential
Unique assets with further growth potential Most modern US cold-rolled assets in Widening demand North America product increasing with growth portfolio potential 8 | April 2, 2019
Slide 9: Solid operational foundation enabling commercial growth
Solid operational foundation enabling commercial growth Calvert investor site visit, April 2, 2019 Michael S. Williams – President, BA Americas
Slide 10: Leading safety and employee satisfaction
Leading safety and employee satisfaction performance in the Group Safety 20% Organizational health 2nd reduction on incidents since 2015 quartile 10 | April 2, 2019
Slide 11: Calvert has established its market share
Calvert has established its market share Stable operational >20% market share performance gained Calvert as the most Improved regional and efficient mill in the product mix Group 11 | April 2, 2019
Slide 12: Year 2018 was disappointing for the Americas
Year 2018 was disappointing for the Americas Adjusted EBITDA year-on-year comparison1, EUR million Includes 1. Strong operational Mainly driven input and freight performance continues and by improved costs increase of product mix ~€40 million our reliability has improved significantly €6 million acc
Slide 13: Solid operational foundation enables profitability improvement of €100 million
Solid operational foundation enables profitability improvement of €100 million Commercial growth Efficiency gains €60m • Customer & product mix €40m • Mexinox restructuring • Market share in Mexico • Logistics cost reduction • New products • Raw material optimization • Delivery reliability 13 | Apri
Slide 14: New distribution strategy implemented to offset increased truck transport costs
New distribution strategy implemented to offset part of increased truck transport costs Planned distribution central >€15 New distribution central million negative impact in 2018 vs 2017 Planned distribution central Calvert 14 | April 2, 2019
Slide 15: Our raw material sourcing is efficient
Our raw material sourcing is efficient 1/3 Ferro- from chrome 1/3 from from within Houston Tornio 150 km area Calvert 15 | April 2, 2019
Slide 16: Our regional mix is developing according to plans
Our regional mix is developing according to plans… 2017 2018 14% improvement Export Domestic 16 | April 2, 2019
Slide 17: …and our customer mix continues to improve gradually
…and our customer mix continues to improve gradually TIER 4 TIER 3 TIER 2 TIER 1 • Market entrant • Established • Acceptance as • Complete market • Limited portfolio position quality leader acceptance • New workforce • Integrated • Leading portfolio • Customer operations • Increased satisfaction • C
Slide 18: NAFTA cold-rolled market is approx. 220,000 tonnes per month
NAFTA cold-rolled market is approx. 220,000 tonnes per month 98% of NAFTA CR consumption 85% of the market is owned is commodity grade by TOP10 distributors (200, 300, 400 series) USA 77% Mexico 15% Canada 8% 18 | April 2, 2019
Slide 19: Demand growth prospects remain healthy
Demand growth prospects remain healthy NAFTA flat product demand by segment*, million tonnes Consumer goods & +10% medical Automotive & heavy transport Chemical, +16% +3% 12% total demand petrochemical & energy growth by 2024 ABC & infrastructure +28% Industrial & 2018 +9% heavy industries 2024 0.0
Slide 20: Improving product mix provides substantial potential
Improving product mix provides substantial potential Americas product mix split1 43% cold rolled prime €60 million volume further profitability improvement improvement since 2015 potential2 2015 2016 2017 2018 Hot band black CMP & Hot band white Cold rolled 1. Calvert & Mexinox 20 | April 2, 2019 2.
Slide 21: Investment in ferritic capabilities in Calvert enables further product mix improvement
Investment in ferritic capabilities in Calvert enables further product mix improvement Strengthen Expand position in current Annual profitability impact of US ferritic product segments portfolio €40 million offerings Improve Improve the production route-to- efficiencies market and strategy from 2021
Slide 22: We are optimizing our production setup
We are optimizing our production setup Cold rolled coils shipped to the US subject to 25% Hot rolled coils shipped from import tariff Calvert to Mexinox are not subject to tariff Calvert Ferritic capabilities in Calvert will help us increase share of domestic deliveries in both countries Mexinox 22
Slide 23: Solid operational foundation enabling commercial growth
Solid operational foundation enabling commercial growth We have Demand Improving established growth product mix efficient and prospects provides reliable remain substantial operations healthy potential 23 | April 2, 2019
Slide 24: Efficient and reliable operations established
Efficient and reliable operations established Calvert investor site visit, April 2, 2019 Tim Lynch – Vice President Operations, BA Americas
Slide 25: Americas’ operational platform
Americas’ operational platform Calvert Mexinox 25 | April 2, 2019
Slide 26: We achieved a step change in reliability in 2018…
We achieved a step change in reliability in 2018… Average asset Mean-time- Total maintenance spend as % availability between-failures on replacement asset value (RAV) improved to bottleneck units improved 8 96.4% 30% 6 2nd quartile Top quartile External services 4 reduced by • Velocity Outokumpu • Q
Slide 27: …and we are aiming higher
…and we are aiming higher <70% 82% 85% SOTIF* SOTIF SOTIF in 2017 in Q4 2018 target * Shipped on-time in full uses the weighted average deliveries multiplied by 27 | April 2, 2019 the SOTIF of each business line, business area Americas
Slide 28: Mexinox restructuring unlocks further potential
Mexinox restructuring unlocks further potential Mexinox CCC1 Yield FTE improvement Key investments 13% 10% 2.6% points reduction reduction • Automated Vision Systems Contractor OEE2 Daily SOTIF3 FTE capacity • STL 10 tooling • Wet Polish Line 40% 17% 8% reduction increase improvement 1) Cash convers
Slide 29: Majority of ferritic investment enhances annealing and pickling processes
Majority of ferritic investment enhances capabilities of annealing and pickling processes 30% Hot Annealing & Pickling Line 60% Cold Annealing & Pickling Line 29 | April 2, 2019
Slide 30: State-of-the-art operational platform
State-of-the-art operational platform Capacity Capacityincreases of 1% 17% increasesof Continuous improvement CCC CCCreductions of 20% reductionsof 20% mindset Rejects Rejectsimprovement of 5%5% improvementof Highly skilled Reworksimprovement of 22% improvementof Reworks 22% workforce SOTIFimproveme
Slide 31: Thank you!
Thank you!