Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Investor Day (May 2021)
44 slides from Outokumpu Oyj's investor day presentation, May 6, 2021
Slide 1: Outokumpu Capital Markets Update 2021
Outokumpu Capital Markets Update 2021 Heikki Malinen PRESIDENT AND CEO Pia Aaltonen-Forsell CFO Tamara Weinert ACTING PRESIDENT, BUSINESS AREA AMERICAS Stefan Erdmann CHIEF TECHNOLOGY OFFICER & GROUP SUSTAINABILITY May 6, 2021
Slide 2: Speakers for today
Speakers for today Heikki Malinen Pia Aaltonen-Forsell Tamara Weinert Stefan Erdmann President and CEO CFO Acting president, Chief Technology business area Officer & Group Americas Sustainability 2 | May 6, 2021
Slide 3: Agenda for today
Agenda for today Strategy execution on track Q&A information Heikki Malinen, President & CEO • Questions can be submitted via webcast platform throughout the event On track to meet financial targets • Questions are only visible to the moderator, Pia Aaltonen-Forsell, CFO who will send them to the pr
Slide 4: 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 5: Strategy execution on track
Strategy execution on track Heikki Malinen President & CEO
Slide 6: Key strategy highlights
Key strategy highlights Strategy to de-risk the company launched 11/2020. Good first outcomes. Strong progress highlights the fundamental strength of our business: people, customers, operations, ability to turnaround, sustainability. De-risking the company for strong returns is our priority for 2021
Slide 7: Our strategy framework: De-risking remains our priority
Our strategy framework: De-risking remains our priority Phase 3: 2026– Customer’s Phase 2: first choice in 2023–2025 sustainable Phase 1: Investing in growth and sustainability stainless steel 2021–2022 Targeted productivity investments to improve Margin improvement margins. Additional and de-levera
Slide 8: Clear step forward in strategy execution
Clear step forward in strategy execution… Decisive first steps Successful Q1'21; Realistic program in taken across our strategy execution place to support strategy initiatives. supporting response strategy delivery. • Lean and Agile Organization to strong market. • Cost and Capital Discipline • Comm
Slide 9: …with sustained progress across all businesses
…with sustained progress across all businesses Group-wide • New organization with 479 lower headcount (1,000 headcount negotiated) • Program for 2021 – 2022 to support strategy delivery BA Europe BA Americas BA Ferrochrome BA Long Products • Strong Q1 volumes • Strong Q1 in • Efficient mining and •
Slide 10: Lean & agile organization: Step change in competitiveness
Lean & agile organization: Step change in competitiveness Headcount1 10,977 10,485 10,468 10,645 1,000 headcount 10,310 2 10,118 9,915 2 9,639 2 reduction by the end of 3 < 9,0003 2022 progressing as 3 3 planned. 3 Legal headcount trailing due to notice periods. Creating a de-layered and more agile
Slide 11: Business area Europe: Strategic initiatives contributing to a strong quarter
Business area Europe: Strategic initiatives contributing to a strong quarter • Focus on mix optimization Commercial excellence • Mix optimization enables higher margins 391 401 356 338 356 • Manufacturing excellence & digitalization: High Q1 deliveries with lower headcount Cost and capital • Mainten
Slide 12: Business area Americas: Successful turnaround over last 2 years
Business area Americas: Successful turnaround over last 2 years • Profitability focused commercial strategy – starting to deliver Commercial excellence • Ferritics investment completed to Full potential for strengthen business resilience business area Americas*: $150–200 million adjusted EBITDA Cost
Slide 13: Business area Ferrochrome: Invest for long-term competitiveness and sustainability
Business area Ferrochrome: Invest for long-term competitiveness and sustainability • Q1 focus on maximizing value creation in strong market 136 • Strategy implementation progressing with commercial 123 127 131 112 excellence and operational efficiency improvement 42 • Strategic investments for long-
Slide 14: Business area Long Products: Turnaround program progressing as planned
Business area Long Products: Turnaround program progressing as planned • First step to lower fixed costs: Headcount reductions of 100 FTEs (~12%) • Manufacturing excellence: Focus on improving availability & fixed cost reduction, shift models & maintenance optimization • First steps taken to expand
Slide 15: Strategy execution on track
Strategy Headcount reduced as planned execution Significant progress in other cost savings on track Strengthened customer relationships rewarded with strong volumes
Slide 16: On track to meet financial targets
On track to meet financial targets Pia Aaltonen-Forsell CFO
Slide 17: Our strategy execution is delivering
Our strategy execution is delivering On track to reach > €200 million EBITDA run-rate improvement by end of 2022. Realistic program in place to support strategy delivery. Lean & Agile Organization and Cost & Capital initiatives driving the impact. In addition, strategy execution has supported extrac
Slide 18: Recap: Target to deliver €200 million EBITDA run-rate improvement
Recap: Target to deliver €200 million EBITDA run-rate improvement • Enhanced product mix in all business areas Commercial • Growth in selected segments excellence • Leverage specialty grades leadership Cost and • • Increased raw material efficiency Maintenance optimization €200 million capital • Str
Slide 19: Realistic program in place to support strategy delivery
Realistic program in place to support strategy delivery 2050 initiatives in 2021 – 2022 All business agendas focused on three key areas: • Lean and Agile Organization • Cost and Capital Discipline • Commercial Excellence 540 655 Initiatives Initiatives in implemented progress Increased accountabilit
Slide 20: €84 million realized impact, on-track to meet target
€84 million realized impact, on-track to meet target Gross run-rate EBITDA improvement (€ million) • Strategy on track to meet Q4'22 target of 200 €200 million annualized run-rate impact. Realized • Majority of improvement from Lean & agile Illustrative plan organization and Cost & capital disciplin
Slide 21: Program on track to meet our financial targets
Program on track to meet our financial targets Financial target Outcome after Q1 €200 million EBITDA run-rate improvement €84 • • On track to meet target Measured as gross-run rate impacts from strategy million implementation actions by end of 2022 • Current net debt €1,073 million • Capital discipl
Slide 22: On track to meet financial targets
On track to Successful start to strategy implementation aiming at de-risking the company. meet financial Reaching targets builds confidence on targets execution success. Updated sustainability strategy important step to becoming customer’s first choice. 22 | May 6, 2021
Slide 23: Business area Americas – From turnaround to full potential
Business area Americas – From turnaround to full potential Tamara Weinert Acting president, business area Americas
Slide 24: Key messages – Business area Americas
Key messages – Business area Americas Successful turnaround over the past two years and very strong Q1’21. Positive outlook supported by executing our strategy in a healthy market. Strategy execution supported by a pipeline of concrete actions for further profitable growth.
Slide 25: Calvert facility: Modern, fully integrated site now with upgraded ferritics capabilities
Calvert facility: Modern, fully integrated site now with upgraded ferritics capabilities What is Calvert Fully integrated, modern site with comprehensive product portfolio. Most technically advanced mill in the USA1 • Stainless melt shop capacity 900kt • CR capacities 350kt in Calvert & 250kt Mexino
Slide 26: Successful 2-year turnaround and strong Q1'21
Successful 2-year turnaround and strong Q1'21 Adjusted EBITDA, € million Already 6 consecutive quarters of 89 positive adjusted EBITDA. Q1 profitability supported by high utilization & favorable grade mix. 55 54 Strong Q1 supported by our own commercial push and improved 21 20 18 cost levels. 10 14
Slide 27: Turnaround actions undertaken since 2019
Turnaround Commercial turnaround actions Systematic work to improve raw material undertaken efficiency and lower fixed costs in operations. since 2019 Strengthening resilience with ferritic investment.
Slide 28: Commercial turnaround since 2019…
Commercial turnaround since 2019… • New commercial strategy • Systematic improvement in organizational maturity: targets, processes, steering and accountability • Increased market share driven by appliance, pipe & tube and large distributors • Cold-rolled market share improved from 21% in 2019 to 24
Slide 29: …with significant turnaround in operational efficiency
…with significant turnaround in operational efficiency • Raising operational maturity: Organization, processes, steering, continuous improvement 94 • Holistic slab cost optimization 29 • Fixed costs reduction and -6 -45 variabilization 2017 2018 2019 2020 • Improved planning and forecasting resultin
Slide 30: Investment in ferritic capabilities
Investment Improving business resilience from broader presence and product portfolio. in ferritic capabilities More competitive cost position in ferritics in the US. completed Stronger position especially in appliances and automotive. on time & on budget Ferritics market is ~600kt, long-term target
Slide 31: Positive outlook: executing our strategy in a healthy market
Positive outlook: executing our strategy in a healthy market Favorable Good position Strategy to drive market outlook in a healthy market profitable growth • Robust outlook driven by • Section 232 still in force • Commercial excellence: appliances and auto Improve service to key • Strong relationshi
Slide 32: Determined actions to reach full potential of $150–200 million adjusted EBITDA
Determined actions to reach full potential of $150–200 million adjusted EBITDA • Further strengthen and expand customer relationships by consistently improving service. Commercial excellence • Drive growth in selected segments distributors, appliances, auto, pipe & tube and in value added grades. Co
Slide 33: Setting a new standard for sustainability
Setting a new standard for sustainability Stefan Erdmann Chief Technology Officer & Group Sustainability 33 | May 6, 2021
Slide 34: Updated sustainability strategy reinforces our leadership position
Updated sustainability strategy reinforces our leadership position Strong demand for sustainable stainless steel driven both by customers and stakeholders. Outokumpu is the sustainability leader in stainless steel driven by our heritage, people and operations. We will further strengthen this leaders
Slide 35: Increasing demand for sustainable stainless steel
Increasing demand for sustainable stainless steel Customers Stakeholders • 18x increase in number of companies • Regulators: Outokumpu is well aligned with SBTi targets in the past 4 years. with EU Taxonomy requirements for • 60% of consumer durable OEMs high alloy steel in EAF with >70% scrap. comm
Slide 36: Strong current performance as a result of our heritage
Strong current performance as a result of our heritage Our heritage Our performance Focus on employee 70% reduction in TRIFR since 2016 Safety safety and well-being due to systematic improvements Own FeCr supply chain integrated 58% lower emissions from FeCr Supply chain with Tornio stainless steel
Slide 37: Outokumpu is the industry benchmark for stainless steel carbon footprint
Outokumpu is the industry benchmark for stainless steel carbon footprint Value chain emissions, tCO2-eq/t of stainless steel 7.8 5.4 2.8 1.5 2.0 0.8 0.8 0.7 China & Indonesia Industry mean Estimated European Outokumpu peer average Outokumpu scope 1 & 2 also includes FeCr, unlike peers Scope 1 & 2 Sc
Slide 38: Our Environmental, Social and Governance foundation
Our Environmental, Social and Governance foundation Customer’s first choice in sustainable stainless steel Environment Social Governance Reduce emissions and provide Health and safety of our people Ensure transparency solutions for a sustainable future in everything we do and compliant processes Sus
Slide 39: Our SBTi ambition raises the bar in green stainless steel…
Our SBTi ambition raises the bar in green stainless steel… Outokumpu's value chain emissions, tCO2-eq/t stainless steel • Commitment to the Business Ambition for 1.5 °C campaign Business Ambition for 1.5 °C of SBTi and partners 1.9 • Reporting emissions in 1.5 all scopes 1, 2 & 3 0.9 0.8 Scope 3 0.5
Slide 40: …on our roadmap towards carbon neutrality
…on our roadmap towards carbon neutrality Outokumpu’s greenhouse gas emission reduction roadmap 20% GHG reduction Emission reduction Targeted investments Commitment to the Commitment towards from 2014-2016 with technologically to low emission Business Ambition carbon neutrality baseline will be prov
Slide 41: Tracking & transparency is a part of our ESG strategy
Tracking & transparency is a part of our ESG strategy Environment Social Governance GHG emissions Safety Share of local suppliers Scopes 1-3 Fatalities, LTIFR, restricted work injuries, Share of suppliers in countries with medically treated injuries, first-aid treated significant production sites Me
Slide 42: Updated sustainability strategy
Updated • Our holistic sustainability strategy will set a new benchmark for the industry. sustainability • Our commitment to the Business Ambition strategy for 1.5°C and we are ramping-up towards that. launched "Customer’s first choice in sustainable stainless steel" 42 | May 6, 2021
Slide 43: Outokumpu Capital Markets Update 2021 – Questions & Answers
Outokumpu Capital Markets Update 2021 Questions & Answers May 6, 2021
Slide 44: For more information, call Outokumpu Investor Relations
For more information, call Outokumpu Investor Relations or visit www.outokumpu.com/investors Linda Häkkilä Head of Investor Relations Mobile: +358 40 071 9669 E-mail: [email protected] Päivi Laajaranta Executive Assistant Phone +358 9 421 4070 Mobile +358 40 060 7424 E-mail: paivi.laajaran