Outokumpu Capital Markets Day 2020

Outokumpu Capital Markets Day 2020

Outokumpu will host a Capital Markets Day today, March 18, 2020 starting at 2.30 pm EET. The event is arranged as a conference call. 

In today’s event, Outokumpu’s top management will discuss Outokumpu’s progress during the past few years, with focus on developments within the business areas Europe and the Americas as well as the Group’s financial performance.

Steady progress towards vision 2020 slowed down by tough market environment

During the past four years, Outokumpu has gone through a major transformation which has significantly strengthened the company’s position in the stainless steel industry. In 2016, Outokumpu announced a bold vision, “to be the best value creator in stainless steel through customer orientation and efficiency”, coupled with key financial targets.

Roeland Baan, President and CEO: “As we all know, the market environment has changed dramatically since we launched our 2020 vision and related financial targets four years ago. Despite the notable headwind and market turbulence during the past two years, we have been able to reduce our net debt by 36% (excl. IFRS 16 effect), improve gearing by 35% and generate adjusted EBITDA of 1.7 billion euros during 2016–2019. At the same time, we have reduced our SG&A costs by 30% as a result of outright cost control, and in 2019, we achieved over 4% productivity improvement compared to the previous year.”

Since the implementation of article 232 the market environment has been especially challenging in Europe due to low demand, high import penetration and heavy price pressure. We have mitigated these negative market impacts through our own actions, such as increased raw material efficiency and effective working capital management. Continued productivity improvements and a richer product mix will support us to secure our competitiveness in the European market.

In the Americas, our underlying financial performance has been improving as a result of tight cost control, reliable operations and efficient inventory management. With the new commercial strategy, better customer and product mix and enhanced logistics, business area Americas is well positioned for profitable growth. 

A major contributor to the successful transformation of Outokumpu has been the major step-change in the company culture and ways of working. As measured by the Organizational Health Index the company is just a notch away achieving first quartile status, the global benchmark, and the key measure for our safety performance – total recordable injury frequency rate (TRIFR) – is at 3.2, well ahead of both the original target set for 2020 and the industry benchmark. Furthermore, based on our latest customer satisfaction survey, we are the best value creator for our customers with 72% of them giving us the highest rates.

Sustainability is at the core of our strategy

Outokumpu is the leading producer of sustainable stainless steel. Our carbon footprint is less than 30% of the global industry average, and the recycled content in our production is close to 90%. We continuously develop our processes and energy efficiency to further lower our environmental impacts and improve our sustainability performance. We are on track to reduce our carbon footprint by 20% per ton of stainless steel by the end of 2023, and our new target is to become carbon neutral by 2050, aligned with the EU green deal.

Sustainability is a competitive advantage for Outokumpu not just in relation to our customers, but it also supports us to compete against Asian producers whose carbon footprints are five times higher compared to European producers. New measures, such as carbon border adjustment, are needed to prevent carbon leakage to Asia. In addition, we are in a continuous dialogue with the EU to establish a level playing field for steel producers through stronger safeguards and other trade defense measures.

Focus on cash and cost to reduce net debt continues

Outokumpu’s balance sheet has strengthened significantly since 2016. At the end of 2019, our net debt amounted to 1,155 billion euros, or 1,024 billion euros excluding the IFRS16 impact. Furthermore, our operating cash flow has developed positively amounting to 1.3 billion euros since the start of 2016.

CFO Pia Aaltonen-Forsell: “In 2020, we continue to strengthen our balance sheet and reduce net debt with a strong focus on cash generation and efficient management of working capital. Our target is to release an additional 100 million euros from net working capital on top of the 220 million euros that were released last year. With our strong liquidity and improved maturity profile, we are well positioned to face tougher periods if needed.”

In 2020, Outokumpu’s capital expenditures are expected to be approximately 220 million euros driven by a few strategic investments such as the expansion of the Kemi chrome mine, digitalization and the ferritics investment in the US.

Conference call

To participate in the conference call today at 12.30 pm UK time (2.30 pm EET), please dial in 5−10 minutes before the beginning of the event:

Finland: (09) 424 508 06
UK/Europe: +44 20 7192 8000
US: +1 631 510 7495

Conference ID: 6590568

Presentations will be available through this link.
 

For more information:

Reeta Kaukiainen, EVP – Communications and IR, tel. +358 50 522 0924

 

Outokumpu Oyj