Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Investor Day (June 2022)
43 slides from Outokumpu Oyj's investor day presentation, Jun 16, 2022
Slide 1: Outokumpu Capital Markets Day 2022
Outokumpu Capital Markets Day 2022 Heikki Malinen, President and CEO Tamara Weinert, President – Business area Americas Pia Aaltonen-Forsell, CFO June 16, 2022
Slide 2: Agenda and speakers for today
Agenda and speakers for today Creating value through sustainability, 1 cost competitiveness, and value-added growth Heikki Malinen, President and CEO Heikki Malinen Business area Americas: Outlining milestones to reach full potential 2 Tamara Weinert, President – BA Americas Business area strategy v
Slide 3: Creating value through sustainability, cost competitiveness, and value-added growth
Creating value through sustainability, cost competitiveness, and value-added growth 2 June 16, 2022
Slide 4: Key messages – CEO
Key messages – CEO Phase 1: Objective of strengthening the balance sheet has been successfully completed. Strong starting point for Phase 2 Phase 2: Objective to strengthen the core – prioritizing sustainability, growth from productivity and customer-focused steering Target to deliver €200 million E
Slide 5: Our three-phase strategy framework now enables a strong focus on shareholder returns
Our three-phase strategy framework now enables a strong focus on shareholder returns Phase 3: Strong sustained performance Phase 2: 2026– Strengthen the core 2023–2025 Phase 1: Investing in growth Strengthen the balance sheet and sustainability OUR VISION 2021–2022 Targeted productivity Customer’s f
Slide 6: Phase 1 successfully completed – significantly improving our cyclical resilience
Phase 1 successfully completed – significantly improving our cyclical resilience Objective Priorities on track Targets delivered achieved Commercial excellence EBITDA run-rate improvement Strengthen the Cost and capital discipline • Target: €250 million balance sheet • Actual to date: €250 million L
Slide 7: Concrete progress made on our Phase 1 priorities
Concrete progress made on our Phase 1 priorities Phase 1 priorities Examples of achievements • Enhanced product mix • Offering flexibility widened in pro grades Commercial • Specialty grades leadership • Salesforce executing on portfolio's competitiveness excellence • Improved margin management • St
Slide 8: We have built a solid foundation for Phase 2: strengthening the core
We have built a solid foundation for Phase 2: strengthening the core Sustainability Cost leadership Market leadership leadership in high-volume products in advanced products 7 June 16, 2022
Slide 9: Our holistic sustainability strategy continues to be industry leading
Our holistic sustainability strategy continues to be industry leading Customer’s first choice in sustainable stainless steel Reduce emissions and provide Health and safety of our Ensure transparency solutions for a sustainable future people in everything we do and compliant processes Sustainability
Slide 10: Sustainability leadership: Strong focus on safety, diversity, equity and inclusion
Sustainability leadership: Strong focus on safety, diversity, equity and inclusion Safety performance further strengthened, TRIFR 2.0 in 2021 Strong progress in diversity: Strong focus on safety, • 31% of senior leaders are female diversity, equity and inclusion • 5 different nationalities among sen
Slide 11: Sustainability leadership: Steps taken to strengthen sustainable sourcing
Sustainability leadership: Steps taken to strengthen sustainable sourcing Sustainable sourcing team established Systematic compliance review started throughout entire supplier Lessons learnt after 2021 base incidents and actions taken Actions to improve sustainability in high-risk countries: Relatio
Slide 12: Sustainability leadership: We are the carbon footprint benchmark in stainless steel
Sustainability leadership: We are the carbon footprint benchmark in stainless steel… 7.4 Value chain emissions, tCO2/t of stainless steel 6.1 6,5 5,2 2.8 1.8 2,0 1,2 0.2 0.4 0.5 0.5 0.4 0.4 0.4 0.4 Outokumpu European peer avg. Industry avg. China & Indonesia peer avg. Outokumpu Scope 1&2 also includ
Slide 13: …with a uniquely competitive position in the market
…with a uniquely competitive position in the market Scope 1 Scope 2 Scope 3 1.2 Outokumpu CO2 emissions Transport (tCO2 / t of steel) Other (raw materials, services etc.) 0.4 0.2 Coke & internal CO gas Electricity for FeCr Nickel Nat gas & fossil fuels Electricity for stainless Despite Ferrochrome p
Slide 14: Phase 2: Two customer differentiated strategies in business area Europe
Phase 2: We are launching two customer differentiated strategies in business area Europe Outokumpu focus High-volume stainless products Advanced products Nickel A-CrNiMo Marten- A-CrNi Titanium Cobalt A-CrNi A-CrNiMo Ferritics Duplex alloys High sitic Heat&Creep alloys alloys Outokumpu Outokumpu rel
Slide 15: Cost leadership: High-volume stainless products from three strong production systems
Cost leadership: High-volume stainless products from three strong production systems with the industry’s highest circularity ratio Tornio, Finland Largest integrated stainless steel site in Europe with 20% lower conversion cost vs. market number #2, driven by port location, integration with Kemi min
Slide 16: Advanced product market leadership: Providing solutions for highly specialised products
Advanced product market leadership: Providing solutions for highly specialised products Avesta, Sweden Dahlerbruck, Germany Fully integrated mill for high-value Flexible and unique Precision Strip cold products and 2-meter-wide finishing. rolling mill, highly specialized in all products With the wor
Slide 17: Advanced products used in energy transition & decarbonization
Advanced product market leadership: Advanced products used in energy transition & decarbonization Marine scrubbers Hydrogen fuel cell EV batteries Forta H-series Ultra 654 SMO Cover Inlet Battery modules Cross & longitudinal beams Supra 316L (Precision strip) Ultra 254 SMO 200-400 bipolar plates For
Slide 18: Phase 2 starts now – main objective to strengthen the core
Phase 2 starts now – main objective to strengthen the core and build capabilities for Phase 3 Objective Priorities Operative targets Strengthen Sustainability CO2 reduction 14% in line the core with SBTi target Growth from productivity EBITDA run-rate Customer-focused steering improvement €200 milli
Slide 19: BA Americas: Outlining milestones to reach full potential
BA Americas: Outlining milestones to reach full potential Phase 1: successfully completed Continued strong market environment and demand for locally produced stainless steel Phase 2: execution ready to be launched. Objective to strengthen sustainability position and unlock 80kt volume growth through
Slide 20: Phase 1 executed with strong results across all prioritized areas
Phase 1 executed with strong results across all prioritized areas BA Americas key figures Commercial excellence: Revised commercial strategy focusing on 2017 2018 2019 2020 2021 portfolio optimization, tight contract execution & sales process effectiveness 297 Cost and capital discipline: Reduced EB
Slide 21: Market outlook continues to be positive, supporting strategy implementation
Market outlook continues to be positive, supporting strategy implementation… USMCA cold rolled stainless steel demand (Mt) Growth drivers: • Infrastructure investments +3% p.a. • Localization of supply chains 2.1 2.1 2.1 1.9 1.9 2.0 • Robust consumer demand 1.5 • Demand for locally produced and more
Slide 22: …and we are ready for Phase 2 execution
…and we are ready for Phase 2 execution Sustainability Growth from Customer-focused • Target significant CO2 reduction productivity steering • Optimized raw material mix • Increase cold roll volume by • Improved supply chain planning • Yield and efficiency 80kt with 6 small investments practices and
Slide 23: Deep-dive: Sustainability initiatives reducing CO2 emissions
Deep-dive: Sustainability initiatives reducing CO2 emissions Optimized raw material mix Increased share of rail transport Increase use of ferrochrome Increase share of rail transport from 6% to 25% internally from 68% to 100% 7-10% CO2 reduction 2-3% CO2 reduction 22 June 16, 2022 Note: Baseline yea
Slide 24: Deep-dive: Targeted productivity improvements yielding 80kt volume uplift
Deep-dive: Targeted productivity improvements yielding 80kt volume uplift Phase 2 productivity improvements 2022 2023 2024 2025 30kt 50kt 80kt Cumulative volume increase Calvert investments De-bottleneck Calvert with productivity investments Increase Mexinox cold rolling capacity with series of focu
Slide 25: Phase 2 deliverables: Target 80kt growth and $200M EBITDA level
Phase 2 deliverables: Target 80kt growth and $200M EBITDA level Phase 2 summary Phase 2 target Objective to strengthen 80kt volume growth sustainability position and unlock volume growth Supporting $200 million through productivity EBITDA in normalized improvements market conditions 24 June 16, 2022
Slide 26: BA Europe: Strengthen our position as customers' first choice
BA Europe: Strengthen our position as customers’ first choice in sustainable stainless steel Sustainability Growth from Customer-focused • Maximize output in Tornio to productivity steering fully utilize the site's • Unlock 100kt volume by • Launch new steering model to sustainability advantage opti
Slide 27: BA Ferrochrome: Towards carbon neutrality
BA Ferrochrome: Towards carbon neutrality Sustainability Growth from Customer-focused • Maximize value of most productivity steering sustainable ferrochrome to • New commercial strategy • Launch new customer Outokumpu by fulfilling to maximize value of service model to serve 100% of internal demand
Slide 28: BA Long Products: Turnaround program showing results
BA Long Products: Turnaround program showing results and continuing to deliver Successful profitability turnaround: Adjusted EBITDA €24 million in Q1/22 vs. €11 million in Q1/21, driven by • Commercial repositioning with a new product-led sales organization resulting in 9% growth in deliveries • Ope
Slide 29: Key operational priorities in Phase 2
Key operational priorities in Phase 2 Phase 2 priorities • Green premium across product portfolio • Address coke and fuel use by preparing investment to Biocoke production Sustainability • Sustainable raw materials e.g. internal use of ferrochrome • Further accelerating DEI and sustainable sourcing
Slide 30: Strong foundation to create value over the cycle
Strong foundation to create value over the cycle 29 June 16, 2022
Slide 31: Key messages – CFO
Key messages – CFO Strong current performance Successful Phase 1 strategy execution has clearly improved our resilience in all market conditions Phase 2 objective to strengthen the core - capital allocation plan updated accordingly After successfully strengthening the balance sheet, focus increasing
Slide 32: Long-term market growth creates opportunities for value creation
Long-term market growth creates opportunities for value creation Global cold rolled stainless steel demand (Mt) Significant growth in global stainless steel market over the last decade +6% p.a. Long-term outlook remains positive due 30 CAGR 28 28 to increasing need for long-lasting and 26 28 Region
Slide 33: Maintaining a level playing field remains very important
Maintaining a level playing field remains very important Cold rolled imports (monthly average in kt) Stainless steel import pressure from Asia to Imports into Europe Imports into the US Europe and US is 35% 26% increasing 29% 28% 27% 128 18% 79 74 11% 11% Asian produced stainless 65 39 steel has ove
Slide 34: Outokumpu is more resilient in a cyclical market
Outokumpu is more resilient in a cyclical market… Stainless steel market development in downturns Stainless steel volume Stainless steel base price 140 140 120 120 0% 100 100 80 -4% 80 -12% T=0 = 100 -34% 60 60 decline compared to 40 pre-downturn 3 year avg. 40 20 20 0 0 T-2y T-1y T=0 T+1y T+2y T+3y
Slide 35: …and we have increased resilience for all market conditions
… and we have increased resilience for all market conditions Strong starting point Playbook to ensure positive cash flow Stronger commercial steering proven by Latest 2020 improved margins, even with high-cost figures inflation Increased flexibility and variabilization of cost Adjusted EBITDA 250 1,
Slide 36: Strong current performance and expectations of continuing good performance
Strong current performance and expectations of continuing good performance in normal market conditions Adjusted EBITDA (€ million) Strong 2021 performance: • Strong utilization 1.021 • Successful strategy execution • Base price 67% above 5-year average, partly offset by inflation • €76 million inven
Slide 37: Capital allocation supports shareholder value creation
Capital allocation supports shareholder value creation Phase 1: Phase 2: Phase 3: Strengthen the Strengthen Strong sustained balance sheet the core performance Strong balance sheet priority Maintain Improved core & priority priority Maintain Capital sustainability allocation priorities Stable, growi
Slide 38: Updated financial targets reflect capital allocation priorities
Updated financial targets reflect capital allocation priorities Phase 2 financial targets 2023-2025 CAPEX, over 3 years Net debt to EBITDA <1.0x €600 million €330 million in maintenance and replacement €85 million in ongoing strategic projects in normal market conditions €185 million in small expans
Slide 39: Targeting top tier TSR from stronger core
Targeting top tier TSR from stronger core Total shareholder return drivers Phase 2 targets Profit growth • Increased profitability with €200 million EBITDA improvement Cash flow • Stable and increasing dividend contribution • Limited cash flow required for interest payments • Lower risk investment d
Slide 40: Closing remarks
Closing remarks 39 June 16, 2022
Slide 41: The same leadership team continues to Phase 2
The same leadership team continues to Phase 2 Heikki Malinen Pia Aaltonen-Forsell Tamara Weinert Niklas Wass President & CEO CFO President, business President, business area Americas line, Stainless Europe Thomas Anstots Martti Sassi Johann Steiner Stefan Erdmann President, business line, President,
Slide 42: Creating value through sustainability, cost competitiveness, and value-added growth
Creating value through sustainability, cost competitiveness, and value-added growth Stainless steel is a healthy Well-defined Improved financial and market strategy risk profile Stainless steel is a light, strong and We focus on strengthening the core by We have improved profit generation, endlessly
Slide 43: Thank you!
Thank you!