Outokumpu Capital Markets Day – Delivering on our promises for 2020
Outokumpu Oyj
Stock exchange release
November 20, 2018 at 1.00 pm EET
Outokumpu Capital Markets Day – Delivering on our promises for 2020
Outokumpu hosts a Capital Markets Day today, November 20, 2018 in London starting at 2.30 pm EET. The focus of the event will be on the strategy to achieve the 2020 vision and financial targets.
Financial targets remain unchanged
Outokumpu’s financial targets for 2020, adjusted EBITDA of EUR 750 million, return on capital employed of 12% and gearing of less than 35%, remain unchanged. The targets will be achieved through efficiency gains and commercial growth.
Says Roeland Baan, President and CEO: “We are firmly set to achieve our targets. This year, we have witnessed exceptionally challenging market conditions but our underlying performance has continued to be strong. To reach our 2020 EBITDA target, we are aiming for a EUR 270 million profitability improvement out of which EUR 160 million will be achieved through efficiency gains and the remaining EUR 110 million from commercial growth.”
Outokumpu has made significant progress and all the targets the company set in April 2016, have been systematically reached.
Roeland Baan: “We have successfully achieved all our short-term targets. For example, we have reduced our safety incidents by over 70% and achieved the recordable incident frequency rate of less than 5.0 already last year, three years ahead of schedule. Our organizational health index has improved from the bottom to the second quartile in just two years, which is an exceptional performance for any company. In addition, our customer satisfaction has improved by over 30% making us the industry leader. Furthermore, I am particularly happy that we over-achieved our net debt target by reducing our debt by over EUR 500 million in only two years. All these great achievements show that we have delivered on our promises and that we are determinedly making progress to become the best value creator in stainless steel industry by 2020.”
Net debt reduction remains a key priority
Outokumpu’s balance sheet has strengthened significantly since 2016 and deleveraging the company further remains a key priority.
Says CFO Christoph de la Camp: “Our net debt has decreased significantly, and as a result of improving profitability and tight net working capital management, we are very confident that we will achieve the net debt to adjusted EBITDA ratio of below 1.0 by 2020.”
Outokumpu’s improved profitability has been significantly supported by EUR 310 million efficiency gains since 2016. Particularly the SG&A cost reduction has been greater than expected. The company had a target to reduce its SG&A costs by 25% to EUR 300 million by the end of 2017. By now, those costs have been cut down by over 30%.
Competitive advantages securing growth beyond 2020
Outokumpu is the world leader in sustainable steel production with the lowest energy intensity and CO2 emissions in the industry. Outokumpu uses more recycled materials in its production than any other steel company in the world: the recycled content in stainless steel production has reached 89%.
Roeland Baan: “The need for sustainable solutions is growing rapidly around the world. As the original inventor of stainless steel, we have unparalleled amount of technical and product expertise, which brings us significant competitive advantage.”
Focus on digital manufacturing will improve Outokumpu’s competitiveness over the next years with Tornio mill becoming the most digitalized and cost-competitive stainless steel mill already by 2020. The same concept will be implemented in all Outokumpu mills by the end of 2023. In Tornio, digitalization is expected to free up over 100,000 tonnes of blocked capacity while inventories are expected to decrease by over 20 days.
Roeland Baan: “Digitalized, efficient and flexible production will increase our agility and secure an efficient supply chain. These coupled with our broad product portfolio and services that meet all sustainability standards, we are well positioned to be the best value creator to our customers also beyond 2020.”
Webcast
Online live webcast from Outokumpu Capital Markets Day will be held today at 2.30 pm EET (1.30 pm CET, 12.30 pm UK time and 7.30 am US time) and is available at http://view-w.tv/981-1388-20493/en. Presentations will be available at https://www.outokumpu.com/en/investors/ir-events/capital-markets-day.
For more information:
Investors: Tommi Järvenpää, tel. +358 9 421 3466, +358 40 576 0288
Media: Reeta Kaukiainen, tel. +358 50 522 0924
Outokumpu Group
Outokumpu is the global leader in stainless steel. We aim to be the best value creator in stainless by 2020, through our competitive edge of customer orientation and efficiency. The foundation of our business is our ability to tailor stainless steel into any form and for almost any purpose. Stainless steel is sustainable, durable and designed to last forever. Our customers use it to create civilization’s basic structures and its most famous landmarks as well as products for households and various industries. Outokumpu employs 10,000 professionals in more than 30 countries, with headquarters in Helsinki, Finland and shares listed in Nasdaq Helsinki. www.outokumpu.com