Outokumpu Oyj · OMXHEX:OUT1V
Outokumpu Oyj — Shareholder Meeting (March 2018)
62 slides from Outokumpu Oyj's shareholder meeting presentation, Mar 22, 2018
Slide 1: Outokumpu Oyj Annual General Meeting 2018
Outokumpu Oyj Annual General Meeting 2018 March 22, 2018
Slide 2: Opening of the Annual General Meeting
Opening of the Annual General Meeting Item 1 on the agenda Jorma Ollila, Chairman of the Board of Directors
Slide 3: Calling the Meeting to order
Calling the Meeting to order Item 2 on the agenda
Slide 4: Election of persons to scrutinize the minutes and supervise vote counting
Election of persons to scrutinize the minutes and to supervise the counting of votes Item 3 on the agenda Recording the legality of the meeting Item 4 on the agenda
Slide 5: Notice to the AGM 2018
Notice to the AGM 2018 • Notice published as a stock exchange release on January 31, 2018. • Notice published on Outokumpu’s website from January 31, 2018 onwards.
Slide 6: Recording the attendance and adoption of the list of votes
Recording the attendance at the meeting and adoption of the list of votes Item 5 on the agenda
Slide 7: Presentation of the annual accounts, board review and auditor's report 2017
Presentation of the annual accounts, the review of the Board of Directors and the auditor’s report for the year 2017 Item 6 on the agenda
Slide 8: Presentation of the annual accounts, board review and auditor's report 2017
Presentation of the annual accounts, the review of the Board of Directors and the auditor’s report for the year 2017 • Review by the Chief Executive Officer, Roeland Baan. • Presentation of the auditor’s report, APA Janne Rajalahti, PricewaterhouseCoopers Oy.
Slide 9: Review by the CEO
Review by the CEO Roeland Baan President & CEO
Slide 10: Best value creator in stainless steel by 2020
Best value creator in stainless steel 1. Customers by 2020 through 2. Shareholders customer orientation 3. Employees and efficiency Time bound: Back to basics sense of urgency 10
Slide 11: Best value creator for our customers
Best value creator for our customers Satisfaction among 1,222 of our customers in 45 countries Tremendous potential 2% 2% to improve and 4% Dissatisfied 5% differentiate from 35% competition 45% Less satisfied Satisfied 45% 41% Very satisfied 58% of our customers are absolutely 13% 8% Absolutely or
Slide 12: Best value creator for our shareholders
Best value creator for our shareholders Relative share price since the beginning of 2016 400 +130% 300 200 100 0 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Outokumpu Acerinox Aperam Share prices on March 19, 2018 12
Slide 13: Best value creator for our employees
Best value creator for our employees 2017 OHI* completed: Response rate at 80.4% Scores improved in all practices 2016 2017 2020 target *Organizational health index, McKinsey&Company 13
Slide 14: Best-in-class safety correlates with improved quality and operational efficiency
Best-in-class safety correlates with improved quality and operational efficiency Total recordable incident frequency rate, TRIFR We have reduced the number of accidents 15.0 We are implementing 7.4 Standardized Safety Processes 4.4 3.5 We are developing safety culture 2015 2016 2017 2020 and consequ
Slide 15: Stainless steel demand continues to grow
Stainless steel demand continues to grow Other Consumer goods +3% Expected global & Medical stainless steel +25% real demand in 2020 46.1 Global Automotive stainless steel +20% real demand in 2015 +23% 37.5 million tonnes Chemical, Architecture, Petrochemical Building & million tonnes and Energy Con
Slide 16: Stainless steel demand is growing faster than industrial production
Stainless steel demand is growing faster than industrial production… 5.5 4.5 3.4 3.7 3.0 3.1 2.6 2.3 2017 2018 2019 2020 World industrial production growth, % Stainless steel demand growth, % Source: SMR Jan 2018, Oxford Economics Sep 2017 16
Slide 17: Overcapacity is expected to diminish
…and overcapacity is expected to diminish Asian cold rolling capacity & European cold rolling capacity & American cold rolling capacity demand, million tonnes demand, million tonnes & demand, million tonnes 40 5 5 30 4 4 3 3 20 2 2 10 1 1 0 0 0 2012 2016 2020 2012 2016 2020 2012 2016 2020 Cold rolle
Slide 18: We continue to create value through our must-win battles
We continue to create value through our must-win battles VISION 2020: To be the best value creator in stainless steel by 2020 through customer orientation and efficiency. The best value in the industry for customers, shareholders and employees through: High World Class Manufacturing Commercial Safet
Slide 19: Our financial targets are based on conservative market assumptions
Our financial targets are based on conservative market assumptions Adjusted ROCE Gearing EBITDA 12% <35% EUR 750 million 19
Slide 20: 2017 delivered significant improvements
2017 delivered significant improvements 2016 2017 2017 2020 target target Safety (TRIFR) 8.7 4.4 <8.0 ✓ <3.5 Target update Adj. EBITDA (mEUR) 309 631 750 Well on track SG&A (quarterly run-rate, mEUR) 80 67 75 ✓ ROCE (%) 2.6 11.3 12 Well on track Gearing (%) 51 40 <35 Well on track Net debt (mEUR) 1,
Slide 21: Our profitability improved as a result of self-help and favorable markets
Our profitability improved as a result of self-help and favorable markets Key figures 2017 2016 Stainless steel deliveries, 1,000 tonnes 2,448 2,444 Sales, EUR million 6,363 5,690 The Board of Directors proposes a dividend of Adjusted EBITDA, EUR million 631 309 EUR 0.25 per share for 2017 Net resul
Slide 22: Step-change in earnings in all business areas
Step-change in earnings in all business areas Europe1 Americas Long Products Adj. EBITDA, 217 Adj. EBITDA, Adj. EBITDA, EUR million EUR million 21 EUR million - 16 80 10 107 404 -120 295 203 -1 2015 2016 2017 2015 2016 2017 2015 2016 2017 Stainless Ferrochrome 1. Restated numbers do not add up to hi
Slide 23: Aiming to reduce leverage to below 1.0
Aiming to reduce leverage to below 1.0 Net debt and gearing 188% 4 3 9.8 93% 4.0 69% 1.7 2 3.56 51% 40% 1 1.97 <1.0 1.61 1.24 1.09 0 2013 2014 2015 2016 2017 2020 Net debt, EUR billion Gearing Net debt / LTM adj. EBITDA 23
Slide 24: We invest in growth and competitiveness
We invest in growth and competitiveness Capex cash flow estimates, EUR million 250 Chorus EUR ~100 million 200 Growth opportunities Chorus 150 Kemi mine Kemi mine 100 EUR ~250 million Expansion and other Maintenance 50 Annual maintenance 0 EUR 80-90 million 2017 2018 2019 2020 24
Slide 25: Kemi mine expansion will secure ore supply for coming decades
Kemi mine expansion will secure ore supply for coming decades • Current mining area to be exhausted early 2020’s • Expansion extends the underground mining activities to 1,000 meters • Ensuring safe, profitable and long- term mining process chrome feed • Supporting the continuation of the integrated
Slide 26: We are harmonizing our business and culture through project Chorus
We are harmonizing our business and culture through project Chorus… Increased New Local efficiency organization, processes, Roll out of and global fragmented new integrated tools transparency, processes systems and and processes best customer and ways of data experience, working unified platform 201
Slide 27: Creating opportunities beyond 2020
…which creates opportunities beyond 2020 Integrated Significantly Higher share systems with shorter of automation customers and lead times and robotics suppliers 27
Slide 28: Driving topline growth and efficiency
Driving topline growth and efficiency Key investment Our must-win Our 2020 financial projects are battles are yielding targets are firmly securing our tangible results within our reach long-term efficiency 28
Slide 29: Presentation of the annual accounts, board review and auditor's report 2017
Presentation of the annual accounts, the review of the Board of Directors and the auditor’s report for the year 2017 • Review by the Chief Executive Officer, Roeland Baan. • Presentation of the auditor’s report, APA Janne Rajalahti, PricewaterhouseCoopers Oy.
Slide 30: Auditor's Report 2017
Auditor’s Report 2017 Annual General Meeting of Outokumpu Oyj PricewaterhouseCoopers Oy Authorised Public Accountants Janne Rajalahti Partner, Global Lead Partner 3/26/2018 30
Slide 31: What we have audited
What we have audited Group financial statements Key Audit Matters audit scope • Valuation of goodwill • Group financial statements • 9 group companies in 7 • Valuation of Property, Plant and Equipment countries, globally approx. 60 • Parent company financial PwC’s specialists participated • Valuatio
Slide 32: Auditor's opinion
Annual General Opinion - In our opinion Meeting of • the consolidated financial statements give a true and fair view of Outokumpu Oyj the group’s financial position and financial performance and cash flows in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU • t
Slide 33: Adoption of the annual accounts
Adoption of the annual accounts Item 7 on the agenda
Slide 34: Resolution on the use of profit and payment of dividend
Resolution on the use of the profit shown on the balance sheet and the payment of dividend Item 8 on the agenda
Slide 35: Proposal by the Board of Directors for a dividend
Proposal by the Board of Directors for a dividend • The Board proposes a dividend of EUR 0.25 per share based on the balance sheet adopted for the account period ending December 31, 2017. • The dividend will be paid to shareholders registered in the shareholders' register held by Euroclear Finland O
Slide 36: Resolution on the discharge of the Board members and the CEO from liability
Resolution on the discharge of the members of the Board of Directors and the CEO from liability Item 9 on the agenda
Slide 37: Resolution on the discharge of the Board members and the CEO from liability
Resolution on the discharge of the members of the Board of Directors and the CEO from liability • Board of Directors o Jorma Ollila, Chairman of the Board o Olli Vaartimo, Vice Chairman of the Board o Markus Akermann, Board member o Roberto Gualdoni, Board member o Stig Gustavson, Board member until
Slide 38: Review on the remuneration policy of the Company
Review by the Chairman of the Board on the remuneration policy of the Company Item 10 on the agenda Jorma Ollila, Chairman of the Board of Directors
Slide 39: The key principles of Outokumpu's remuneration philosophy
The key principles of Outokumpu’s remuneration philosophy Shareholder value Incentives Competitive in line with Pay for compensation the business performance strategy
Slide 40: The components of management compensation
The components of management compensation 50% 50% Competitive Short-term Performance Matching Share base salary and incentive plan Share Plan Plan fringe benefits in line with market practices Ownership culture Long-term strategic targets. Incentivizing Annual strategic targets. Performance against
Slide 41: Focus of the 2018 incentive plans
Focus of the 2018 incentive plans: improvement in safety, profitability and delivery reliability EBITDA trigger: If targeted level VISION 2020: is not reached, no short term To be the best value incentives will be paid. creator in stainless steel by 2020 through customer Performance orientation and
Slide 42: CEO compensation
CEO compensation Component Amount paid, EUR Note Base salary and benefits 1,073,219 Base salary of 988,257 + taxable benefits including housing, car, phone, health and life insurance, compensation for schooling costs. Short-term incentive 2016 947,629 2017 targets set for Safety, Underlying EBITDA a
Slide 43: Resolution on the remuneration of the members of the Board of Directors
Resolution on the remuneration of the members of the Board of Directors Item 11 on the agenda The Chairman of the Nomination Board Antti Mäkinen introduces the work of the Nomination Board and presents the proposals by the Nomination Board for the items 11 and 12 on the agenda.
Slide 44: Shareholders' Nomination Board in 2017
Shareholders’ Nomination Board in 2017 • Antti Mäkinen, Managing Director, Solidium Oy • Pekka Pajamo, CFO, Varma Mutual Pension Insurance Company • Tuula Korhonen, Investment Director, the Finnish Social Insurance Institution • Timo Ritakallio, President and CEO, Ilmarinen Mutual Pension Insurance
Slide 45: Proposal by the Nomination Board for the remuneration of the Board
Proposal by the Nomination Board for the remuneration of the Board of Directors • The Nomination Board proposes the annual remuneration of the Board of Directors: o Chairman EUR 160,000 annual fee o Vice Chairman and Chairman of the Board Audit Committee EUR 90,000 annual fee o Board members EUR 70,
Slide 46: Election of Chairman, Vice Chairman and Board members
Election of Chairman, Vice Chairman and the members of the Board of Directors Item 12 on the agenda
Slide 47: Changes to the number of Board members and composition
Changes to the number of Board members and the Board composition • The Nomination Board proposes: o Six (6) members to be elected. o Kari Jordan and Pierre Vareille to be elected as new members. o Jorma Ollila, Markus Akermann and Roberto Gualdoni have announced that they are no longer available for
Slide 48: Proposed Board members (1)
Proposed Board members (1) Kati ter Horst • EVP, Head of Stora Enso Paper 2014– b. 1968, M.Sc. (Marketing), • SVP, Paper Sales, Printing and Living: Stora Enso 2013–2014 MBA (International Business) • Member of the Board: EURO-GRAPH asbl 2017– • Member of the Board: Finnish Forest Industries Federat
Slide 49: Proposed Board members (2)
Proposed Board members (2) Eeva Sipilä • Chief Financial Officer and Deputy to the CEO: Metso Corporation 2016– b. 1973, M.Sc. (Econ.), • EVP and Chief Financial Officer: Cargotec Corporation 2008–2016 CEFA (Svenska • Member of the Board 2012–2016 and Chairman of the Audit Committee 2014–2016: Metso
Slide 50: The proposed new Board members (3)
The proposed new Board members (3) Kari Jordan • Vice Chairman of the Board: Metsäliitto Cooperative 2005–31.3.2018 b. 1956, M.Sc. (Economy), • Chairman of the Board: Metsä Board Corporation 2005–27.3.2018 Vuorineuvos (Finnish • Member of the Board 2004–31.3.2018, Chairman of the Board 2006–31.12.20
Slide 51: Proposal for the election of Chairman and Vice Chairman of the Board
Proposal for the election of Chairman and Vice Chairman of the Board • Mr. Kari Jordan to be elected as Chairman of the Board. • Mr. Olli Vaartimo to be elected as Vice Chairman of the Board.
Slide 52: The proposed new Board members (3)
The proposed new Board members (3) Kari Jordan • Vice Chairman of the Board: Metsäliitto Cooperative 2005–31.3.2018 b. 1956, M.Sc. (Economy), • Chairman of the Board: Metsä Board Corporation 2005–27.3.2018 Vuorineuvos (Finnish • Member of the Board 2004–31.3.2018, Chairman of the Board 2006–31.12.20
Slide 53: Resolution on the remuneration of the auditor
Resolution on the remuneration of the auditor Item 13 on the agenda
Slide 54: Remuneration of the auditor
Remuneration of the auditor • The Board proposes on the recommendation of the Audit Committee that the elected auditor be reimbursed in accordance with the auditor’s invoice approved by the Board of Directors.
Slide 55: Election of auditor
Election of auditor Item 14 on the agenda
Slide 56: Election of auditor
Election of auditor • The Board proposes on the recommendation of the Audit Committee that accounting firm PricewaterhouseCoopers Oy be elected as the auditor for the term of office ending at the end of the next Annual General Meeting. • The auditor’s assignment also includes giving the auditor’s st
Slide 57: Authorizing the Board to decide on repurchase of own shares
Authorizing the Board of Directors to decide on the repurchase of the company’s own shares Item 15 on the agenda
Slide 58: Authorizing the Board to decide on repurchase of own shares
Authorizing the Board of Directors to decide on the repurchase of the company’s own shares • The Board of Directors proposes that the Board of Directors be authorized to resolve to repurchase a maximum of 40,000,000 of Outokumpu’s own shares, currently representing approximately 9.6% of Outokumpu’s
Slide 59: Authorizing the Board to decide on issuance of shares
Authorizing the Board of Directors to decide on the issuance of shares as well as other special rights entitling to shares Item 16 on the agenda
Slide 60: Authorizing the Board to decide on issuance of shares and special rights
Authorizing the Board of Directors to decide on the issuance of shares as well as special rights entitling to shares • The Board of Directors proposes that the Board of Directors be authorized to resolve to issue a maximum of 80,000,000 shares through one or several share issues and/or by granting o
Slide 61: Closing of the meeting
Closing of the meeting Item 17 on the agenda
Slide 62: Outokumpu
outokumpu working towards a world that lasts forever