Outokumpu conference call. Mika Seitovirta, CEO Feb

Transcription

1 Outkumpu cnference call Mika Seitvirta, CEO Feb

2 Disclaimer This presentatin has been prepared by, and the infrmatin cntained herein (unless therwise indicated) has been prvided by Outkumpu Oyj (the Cmpany ). By attending the meeting where this presentatin is made, r by reading the presentatin slides, yu agree t be bund by the fllwing limitatins. This presentatin is being furnished t yu slely fr yur infrmatin n a cnfidential basis and may nt be reprduced, redistributed r passed n, in whle r in part, t any ther persn. This presentatin des nt cnstitute an ffering circular in whle r part and any decisin t invest in the ffering f new shares (the ffer shares ) with pre-emptive subscriptin rights (the subscriptin rights, tgether with the ffer shares, the securities ) shuld be made slely n the basis f infrmatin t be cntained in the actual ffering circular related t the securities and n an independent analysis f the infrmatin cntained therein. 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This presentatin must nt be acted n r relied n by persns wh are nt relevant persns. In any Eurpean Ecnmic Area Member State, that has implemented Directive 2003/71/EC, as amended (tgether with any applicable implementing measures in any Member State, the "Prspectus Directive"), this presentatin is nt a prspectus fr the purpse f the Prspectus Directive. This presentatin includes frward-lking statements. These statements cntain the wrds "anticipate", will, "believe", "intend", "estimate", "expect" and wrds f similar meaning. All statements ther than statements f histrical facts included in this presentatin, including, withut limitatin, thse regarding the Cmpany s financial psitin, business strategy, plans and bjectives f management fr future peratins (including restructuring and synergy csts savings) are frward-lking statements. Such frward-lking statements invlve knwn and unknwn risks, uncertainties and ther imprtant factrs that culd cause the actual results, perfrmance r achievements f the Cmpany t be materially different frm future results, perfrmance r achievements expressed r implied by such frward-lking statements. Such frward-lking statements are based n numerus assumptins regarding the Cmpany's present and future business strategies and the envirnment in which the Cmpany will perate in the future. These frward-lking statements speak nly as at the date f this presentatin. The Cmpany expressly disclaims any bligatin r undertaking t disseminate any updates r revisins t any frward-lking statements cntained herein t reflect any change in the Cmpany's expectatins with regard theret r any change in events, cnditins r circumstances n which any such statement is based. The Cmpany cautins yu that frward-lking statements are nt guarantees f future perfrmance and that its actual financial psitin, business strategy, plans and bjectives f management fr future peratins may differ materially frm thse made in r suggested by the frward-lking statements cntained in this presentatin. In additin, even if the Cmpany's financial psitin, business strategy, plans and bjectives f management fr future peratins are cnsistent with the frward-lking statements cntained in this presentatin, thse results r develpments may nt be indicative f results r develpments in future perids. Neither the Cmpany nr any ther persn undertakes any bligatin t review r cnfirm r t release publicly any revisins t any frward-lking statements t reflect events that ccur r circumstances that arise after the date f this presentatin. This presentatin includes estimates relating t restructuring and synergy benefits. Such estimates are based n a number f assumptins that are based n currently available infrmatin and judgments based n such infrmatin. These assumptins present the expected curse f actin and the estimated future impact f the cntemplated actins. Hwever, these assumptins are inherently uncertain and subject t a wide variety f significant business, ecnmic and cmpetitive risks and uncertainties that culd cause actual results t materially differ frm thse cntained in the synergy benefit estimates. Further, there can be n certainty that the transactin will be cmpleted in the manner described in this presentatin, r at all. Each f Danske Bank A/S, Helsinki Branch, Nrdea Bank Finland Plc, Skandinaviska Enskilda Banken AB (publ) Helsinki Branch, BNP Paribas, Crédit Agricle Crprate and Investment Bank, J.P. Mrgan Securities plc and Swedbank AB (publ) (tgether, the Banks ) and their respective affiliates are acting exclusively fr the Cmpany and n ne else in cnnectin with the matters referred t in the presentatin and will nt regard any ther persn as their respective clients in relatin t such matters and will nt be respnsible t any ther persn fr prviding the prtectins affrded t their respective clients, r fr prviding advice in relatin t such matters. 2

3 Tday s news Clsing f the Terni&VDM divestiture Cmpletin f the financing package Launch f the rights issue 2/14/2014 3

4 Rights ffering summary Transactin structure Size Rights ffering based n sharehlders pre-emptive subscriptin rights Existing sharehlders and ther investrs may subscribe fr shares withut subscriptin rights (secndary subscriptin) Rights ffering size abut EUR 665 millin Subscriptin rati Subscriptin price Subscriptin perid Subscriptin cmmitments Use f prceeds 4 new shares fr 1 existing share held n the recrd date f March 5, 2014 Subscriptin price f EUR 0.08 per new share Subscriptin perid begins n March 10 and ends n March 26, % f the ffering (Slidium and ther sharehlders) Remaining 47.2% underwritten by the Jint Bkrunners T strengthen Outkumpu s financial psitin and enable cmpletin f its turnarund plan t return t sustainable prfitability and create sharehlder value as a leading stainless steel prducer March

5 Rights ffering timetable March 3 March 5 March 10 March 19 March 26 March 27 March 31 (n r abut) April 3 (n r abut) April 4 (n r abut) Ex-rights date Recrd date Subscriptin perid and trading f rights cmmences Trading f rights ends Subscriptin perid ends Trading f interim shares cmmences Preliminary result f the ffering Final result f the ffering Trading in ffer shares cmmences Offer shares registered in the trade register March

6 Strengthened balance sheet, enhanced liquidity Divestment f Terni and VDM t ThyssenKrupp EUR 1,283 millin (Dec. 31, 2013) TK lan nte as cnsideratin Reduces Outkumpu net debt by apprx. EUR 1.3 billin Cnstitutes the final settlement f all remedy related bligatins between Outkumpu and ThyssenKrupp Transactin was clsed n Further strengthening f balance sheet New EUR 500 millin cmmitted syndicated secured liquidity facility, maturity in 2017 New secured revlving credit facility f EUR 900 millin, maturity in 2017 (replaces the previus EUR 900 millin facility) Extensin and amendment f the bilateral lan prtfli f abut EUR 600 millin, maturity in 2017 Apprximately EUR 665 millin rights issue t further strengthen balance sheet and liquidity Attractive ttal valuatin fr VDM and Terni, eliminatin f EUR 1.3 billin f debt Lnger debt maturities, significantly enhanced liquidity, strnger balance sheet and credit prfile Strengthened and deleveraged balance sheet as well as enhanced liquidity enabling Outkumpu t execute its turnarund t prfitability 6

7 Significant reductin in gearing after Terni/VDM sale and the rights issue EUR millin 3,556 1,283 2, , , % -123pp 65% Reductin in net debt reflects - Deductin f TK lan nte f EUR 1.3 billin, used as cnsideratin (decrease in lng-term debt) - Net prceeds frm rights issue f EUR 640 millin (increase in cash and cash equivalents and increase in equity) - Others mainly include adjustments f transactin csts related t the Terni/VDM sale and the financial package (renewal f debt prtfli and securitizatin package) Q4/13 TK lan nte (used as cnsideratin) Net prceeds f rights issue Others Q4/13 Pr frma Net debt Equity Gearing Nte: Based n the pr frma Outkumpu figures published n Feb Net debt definitin changed in January Nt accunting fr any underlying perating develpment. 7

8 Key achievements and challenges in 2013 Synergies Efficiency prgrams Financial stability Ferrchrme ramp-up Krefeld melt shp clsure in December 2013 Synergy savings f EUR 95 millin in 2013 Reductin f 766 jbs P150 prgram: Savings f EUR 104 millin in 2013 P300 prgram: Wrking capital reductin f EUR 351 millin Capex reductin t EUR 183 millin in 2013 Annunced Terni/VDM sale, renewal f debt prtfli and rights issue t strengthen balance sheet Ramp-up f Ferrchrme prductin reached 434,000 t. Strng financial perfrmance, appraching full capacity Achievements Financial result clearly unsatisfactry in 2013 Challenges Weak ecnmy especially in Eurpe Stainless steel demand declined in Eurpe Decline in nickel price stretching ur margins Eurpean Cmmissin remedy requirement Challenges with the Calvert ramp-up 8

9 Levers t imprve prfitability and cash flw A B C D Calvert ramp-up EMEA restructuring Synergy savings and P150 savings Wrking capital and capex 9

10 Stainless Cil Americas Strng market presence A Ttal stainless 2013, in thusand tnnes Outkumpu s Americas Set Up kt Melting Ht rlling 150 1) Cld rlling Calvert Mexinx Mexinx ,196 Specialized cld rlling mill in San Luis Ptsi, Mexic Chicag sales ffice Rest f SAM 179 Calvert Fully integrated, state f the art, cst cmpetitive prductin facility in Calvert, Alabama which is ramping up twards full cmmercial capacity in 2016 Outkumpu s strengths in the Americas Established market presence with lng-term custmer relatinships and market share f ~apprx. 20% in the NAFTA regin in 2013 Established sales team Prducts have a gd name in the market regardless f surce Outkumpu ffers widest prduct range and is the nly 72 inch wide manufacturer in NAFTA BRA 471 Service center, Buens Aires Surce: SMR Real Demand February Ttal stainless = rlled & frged 1) Sld t free market March

11 Calvert ramp-up and Stainless Americas turnarund A Stainless Americas material flw in 2013 Stainless Americas material flw 2014 Mexic Calvert >250 kt/a Terni Mexic Calvert Imprts frm Eurpe Cld rlled t market Americas deliveries 465,000 tnnes in 2013 Ht band frm Calvert Cld rlled t market Americas deliveries target 530,000 tnnes in 2014 Brad custmer base but high csts mainly due t deliveries frm Eurpe Full advantage f melted in America business mdel after the ramp-up 11

12 Calvert ramp-up and Stainless Americas turnarund A Stainless Americas EBITDA 1) Q1/2013 Q2/2013 Q3/2013 EURm Q4/2013 Stainless Americas expected t reach break-even EBITDA in 2014 Challenges in 2013 Imprt f ht band frm Eurpe (Terni) due t remedy requirements Ramp-up related prductin inefficiencies in bradening f the prduct prtfli Prfitability levers in 2014 N mre deliveries frm Eurpe higher utilizatin f wn melt shp in Calvert Increased vlumes: target f 530,000 tnnes in 2014 Cmments Bradening prduct prtfli and imprving quality Overall prcess stability 1) Excluding nn-recurring items 12

13 EMEA restructuring main activities B Clsures Bchum Bchum clsure expected in early 2015, negtiatins nging Vlume transfer and higher utilizatin in Trni and Avesta Capacity and service center ptimisatin NIFO prject Other measures Reductin f cld rlling in Benrath, and transfer f prductin frm Benrath t Krefeld. Clsure f Benrath. Capital expenditure in Krefeld t enable transfer (abut EUR 100 millin) Reductin f annealing and pickling capacity by 200,000t in Trni Clsure and further ptimisatin f service centres New targeted annual savings f mre than EUR 100m, fully visible in 2017 Headcunt and ther cst savings Up t 1,000 additinal jb reductins in Eurpe March

14 FINISHED GOODS (Cld rlled + HBW) HOT ROLLING MELTING Restructuring the prductin in Eurpe End-2013 state T-Be State 2015 B TORNIO 1,450 BOCHUM 800 AVESTA 450 TORNIO 1,450 AVESTA m 1.9m TORNIO 1,450 BOCHUM 1,260 AVESTA 900 TORNIO 1,450 AVESTA m 2.3m TORNIO KREFELD/BENRATH/ DILLENBURG 810 AVESTA NYBY 80 TORNIO KREFELD/ Dillenburg 500 AVESTA NYBY m 1.7m Tll Prcessing [ThyssenKrupp Steel Bchum] HBW Ht Band White Lw utilisatin rates and imbalance between melting and cld rlling capacities High utilisatin rates and healthy balance between melting and cld rlling capacities 14

15 Synergies P150 Synergy and cst savings C EURm Synergies and P150 savings in P150 99m Synergies perfrmance and future expectatin Gd prgress in prcurement savings, peratinal csts and administratin Target f 150m savings by end 2014 intact Additinal savings ptential currently being investigated Stainless scrap savings the main cntributr in 2013 > 170m synergies expected fr 2014, with higher share frm prductin ptimisatin Ttal target f 200m by the end f 2017 Ttal savings expected (incl. EMEA restructuring) EURm Original estimate Actual Synergy and P150 savings exceeded targets in 2013 Ttal targeted savings f 450m One-ff cash csts related t these savings prgrams is abut EUR 170 millin in ttal, ut f which EUR 54 millin was recrded by the end f

16 Imprving cash flw D Cash flw frm wrking capital change 1,2) Grup capital expenditure EUR millin target: EUR 300m 351 EUR millin riginal target: EUR 150m Q1-71 Q2 166 Q3 Q actual < F Imprvement in inventry days t 88 days in Dec-2013 vs. 104 in Dec-2012 Inventry days target fr 2014 is 91 days n average In 2013 EUR 351 millin released frm wrking capital Maintenance capex in 2014 expected t be arund EUR 70m Significant capital expenditure decrease since ) Graph shws change in accunts payables, accunts receivables and inventries and differs frm the change in wrking capital as presented in CF statement which als includes prvisins. Change in prvisins included in CF statement fr 2013 are EUR -54 millin (Q4 EUR -17 millin, Q3 EUR -14 millin, Q2 EUR -19 millin, Q1 EUR -4 millin). 2) Figures exclude FeCr peratins. 16

17 Business and financial utlk fr Q ) Outkumpu expects Mdest imprvement in the underlying market demand Sequentially higher delivery vlumes and sme imprvement in base prices The prgress in the cst efficiency initiatives and synergies t be steady Outkumpu estimates Underlying EBIT t be better than in Q4 2013, but still at a lss Operating cash flw t be negative during Q1 driven by an increase in inventries related t anticipated higher deliveries At current metal prices, marginal raw material-related timing gains, if any Operating result in Q1 culd be impacted by nn-recurring items assciated with the Grup s nging restructuring prgrams This utlk reflects the current scpe f cntinuing peratins f Outkumpu 1) Issued in cnnectin with the Q4/2013 and Annual Accunts Feb.13,

18 Summary Outkumpu is a glbal leader in stainless steel which has gd lng-term grwth utlk Actins t imprve prfitability and cash flw are nging Measures t deleverage and strengthen the balance sheet implemented Cmprehensive financial package including rights issue enable the executin f the transfrmatin t sustainable prfitability 18

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20 Pr frma incme statement fr 2013 EUR millin 2013 Pr frma 2013 Cmments Sales 6,745 6,745 Operating result Interest expenses Prfit befre taxes Net result fr the perid frm cntinuing activities Net result fr the perid frm discntinued activities Net result fr the financial year -1, Reductin in interest expenses reflect reversal f EUR 85 millin interest expenses related t the TK lan nte as well as EUR -16 millin higher interest expenses due debt renewal. Net result fr the perid frm discntinued peratins is reversed. Pr frma adjustments reflects Outkumpu s divestment f the Terni remedy assets and the VDM business t ThyssenKrupp, the impact arising frm the rights ffering n Outkumpu s cash and cash equivalents and sharehlders equity as well as the refinancing measures 20

21 Significantly strengthened balance sheet and liquidity EUR millin Dec 31, 2013 Pr frma adjustment I Pr frma adjustment II Pr frma adjustment III Pr frma Dec 31, 2013 Ttal assets 8,823-2, ,196 Of which cash and cash equivalents ,179 Of which assets held fr sale 2,200-2,200 0 Ttal equity and liabilities 8,823-2, ,196 Of which ttal equity 1, ,578 Of which lng-term interest-bearing debt 3,270-1, ,431 Of which current interest-bearing debt Of which liabilities directly attributable t assets held fr sale 1,048-1,048 0 Net interest-bearing debt 3,556 1,679 Debt-t-equity rati (gearing), % Liquidity 607 1,179 Pr frma adjustments reflects Outkumpu s divestment f the Terni remedy assets and the VDM business t ThyssenKrupp (I), the impact arising frm the rights ffering n Outkumpu s cash and cash equivalents and sharehlders equity (II) as well as the refinancing measures (III) 21

22 Debt maturity schedule as f EUR millin Debt maturity prfile reflects: Discntinuatin f the ThyssenKrupp facility as well as ThyssenKrupp EUR 1.3 billin lan nte New EUR 500 millin liquidity facility, maturity in 2017 New RCF f EUR 900 millin, maturity in 2017 (replaces the previus same amunt facility) Extensin and amendment f the bilateral lan prtfli f abut EUR 600 millin, maturity in 2017 Shrt-term debt* Lng-term debt Outstanding ntes Unutilized facilities * Shrt-term debt includes current prtin f lng-term debt (t be repaid within 12 mnths). 22