Annual General Meeting 2013 - Outotec › globalassets › company › about... · 2017-03-13 · 14 March 26, 2013 Annual General Meeting • Gas cleaning system, sulfuric acid plant

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CEO’s review

Pertti Korhonen Annual General Meeting 2013


Our values define our way of working

2 March 26, 2013 Annual General Meeting


For Outotec, corporate responsibility means creating shared value

March 26, 2013 Annual General Meeting 3

Shareholder Value ”The social

responsibility of business is to maximize its

profits.” Milton Friedman

Stakeholder Value ”The corporation

must be seen as an institution engaged

in mobilizing resources to create wealth and benefits

for all its stakeholders.”

Edward Freeman

Shared Value ”Creating economic value in a way that also creates value

for society by addressing its

needs and challenges.”

Michael Porter


Economic growth and its impact on environment can be decoupled by using advanced technologies


Welfare

Eco-efficiency

Environmental impact

Source: www.wbcsd.org

Advanced technologies Environmental impact


Outotec’s strategic intent and mission


Our mission:

Sustainable use of Earth’s natural resources.

Our strategic intent: The leading provider of sustainable minerals and metals processing solutions, and an innovative provider of sustainable energy and water processing solutions.


Over a century as a technology leader, 13 M&As since 2010

March 26, 2013 6 Annual General Meeting

Year

2013 2012

2010

2006

2001

1990

1970

1950

1900

Listing on the Helsinki Stock Exchange

BOLIDEN CONTECH

OUTOKUMPU TECHNOLOGY

LURGI METALLURGIE

OUTOKUMPU

NORDBERG GRINDING MILLS

KHD ALUMINIUM AISCO, SUPAFLO

WENMEC

LAROX

AUSMELT

ENERGY PRODUCTS OF IDAHO

SCANALYSE BACKFILL SPECIALISTS, TME GROUP, DEMIL MANUTENÇÃO INDUSTRIAL, NUMCORE

KILN SERVICES VPF, ASH DEC

MILLTEAM EDMESTON

AUBURN


Strong global network

Annual General Meeting 7

• Presence in 25 countries, deliveries to over 80 countries

• Global subcontractor and partner network • 90% of manufacturing sourced from external suppliers

March 26, 2013


Outotec’s business areas

8

Energy, Light Metals and Environmental Solutions

For sulfuric acid production, off-gas handling, alumina refining, roasting, calcining, biomass processing, oil shale & oil sands processing and industrial water treatment

Services

Services for a plant’s entire lifetime

Non-ferrous Solutions

For processing copper, nickel, zinc, lead, gold, silver and platinum group metals in the entire value chain from ore to metal

Ferrous Solutions

For processing iron ores and other ferriferous materials in the entire value chain from ore to metal

March 26, 2013 Annual General Meeting


9

Long term customer relationships, fragmented competition environment

Major global mining companies

Selected reference customers of Outotec

Intermediate sized companies Local mining and metallurgical

companies in emerging regions

Annual General Meeting March 26, 2013


Outotec’s strategy and mission


Sustainable life cycle solutions enabling customers get the best return on investment and license to operate.

Our mission:

Sustainable use of Earth’s natural resources.

Our strategic intent: The leading provider of sustainable minerals and metals processing solutions, and an innovative provider of sustainable energy and water processing solutions.

Applying core technologies in new attractive growth areas

Increasing value through life cycle

solutions

Improving cost competitiveness and scalability

Best return on customer’s investment with minimized ecological impact

Strong local market presence and global integrated operations

Leadership in technology and innovation

Sustainable use of Earth’s natural resources

Outotec Values Technology

Proprietary equipment

Systems integration

Project delivery

Services


Outotec’s long-term financial targets


Dividend policy: at least 40% of the annual net income

Targeting continuous profitable growth

Balance sheet

CAGR 10-20%

On average

10%

Outotec targets to achieve annual average sales growth of 10-20%

Annual operating profit margin from business operations is targeted to be on average at 10% over the cycle, excluding one-time costs and purchase price allocations of acquired businesses.

Outotec targets to maintain strong balance sheet to provide operational flexibility and enable acquisitions.

Sales

Operating profit

margin

Services sales target

EUR 1 billion by the end of 2017


Sales and profitability developed during last twelve months (LTM) in line with long term targets


*) from business operations excl. one-time items and PPA amortizations

0 %

1 %

2 %

3 %

4 %

5 %

6 %

7 %

8 %

9 %

10 %

0,0

500,0

1 000,0

1 500,0

2 000,0

2 500,0

12/2009 3/2010 6/2010 9/2010 12/2010 3/2011 6/2011 9/2011 12/2011 3/2012 6/2012 9/2012 12/2012

EUR

mill

ion

Sales LTM Operating Profit % LTM*


Demand for Outotec’s solutions continued on a good level, because of our competitive offering and good market position

The long term outlook for metals demand continued positive and metal prices recover toward year-end

New capacity investments in non-ferrous metals and ilmenite, customers seeking operational improvements through expansions and modernizations

Capacity utilization rates supported services sales in all business areas and interest in operation and maintenance as well as shut down services

Local legislation, tighter environmental permitting and the complexity of large financing packages slowed down some sales negotiations

In alternative energy solutions, low energy prices and uncertainties in political regulation impacted investment decisions in some countries


Approximately

89% of 2012 order intake consisted of Environmental Goods and Services (OECD criteria)


Q4 orders received included new breakthroughs in environmental solutions


• Gas cleaning system, sulfuric acid plant and related technologies Namibia (approx. EUR 130 million)

• The largest sewage sludge thermal treatment plant Switzerland (nearly EUR 50 million, mainly booked Q2/2013 order intake)

• Biomass power plant Turkey (approx. EUR 55 million, booked in Q1/2013 order intake)

Order intake in 2012 totaled EUR 2,084.4 million (2011: EUR 2,005.4 million), up 4%. Largest order in Outotec’s history, over EUR 350 million, was received in the second quarter of 2012.

Asia Pacific 15% EMEA 59% Americas 26%

Published orders in Q4/2012:


Solid order intake despite of the uncertain global macroeconomic environment, strong year end backlog


EUR million

Order backlog at the end of 2012 was EUR 1,947.1 (1,985.1) million, decrease of 2% from 2011 38 projects with value in

excess of EUR 10 million, accounting for 70% of the backlog Roughly 77% (or approx.

EUR 1,500 million) of the backlog is estimated to be delivered in 2013 0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

2 200

2 400

Order backlog at the end of the period Share of unannounced orders

Order intake by quarter

419 350

269 357

344

532

803

327 425

736

186 240

371 235

168

493 418

384 299

475

139 260

120 106 202

111

452 471



EUR million 2012 2011 Chg %

Q4 2012

Q4 2011

Sales 2,087.4 1,385.6 +51 649.8 496.8

Gross margin, % 20.8 24.0 - 21.8 23.9

Operating profit from business operations 193.8 121.5 +60 74.0 54.9

- one-time costs +3.0** -4.7* - +4.3 -4.7

- PPA amortization -12.5 -4.9 - -3.3 -1.3

Reported operating profit 184.3 111.9 +65 74.9 48.9

FX impact (unrealized, realized) +2.1 +1.7 - +2.3 -0.6

Operating profit margin, % 8.8 8.1 - 11.5 9.9

- from business operations, % 9.3 8.8 - 11.4 11.0

Strong profitable growth

*) Costs related to M&A and restructuring **) Costs related to M&A and restructuring as well as EUR 6.3 million positive impact from the reduction of EPI earn out payment liability of EUR 8.8 million.

Top 10 customers accounted for 35%

of sales


Diversified sales split in terms of geography and materials - roughly 2/3 coming from emerging markets


Sales by destination Sales by end product

Americas 36% (31%)

Asia Pacific 19% (25%)

EMEA (incl. CIS) 46% (44%)

2012 (2011) 2012 (2011)

Copper 33% (33%)

Iron 14% (15%)

Aluminum 6% (5%)

Ferroalloys 7% (4%)

Precious metals 13% (10%)

Zinc 2% (3%)

Nickel 4% (6%)

Energy & environmental solutions *)

14% (11%)

Other metals 4% (9%)

Others 2% (4%)

*) incl. water, sulfuric acid and off-gas


Services: Strong growth, almost hitting 2015 sales target

39% growth from 2011 23% of Outotec sales Acquisitions (TME Group, Demil) accounted for approximately

9% of the sales growth New service offerings such as O&M New sales target EUR 1bn by 2017 M&A and development of offering support the growth


55 81

141 149

283

344

476

0 50

100 150 200 250 300 350 400 450 500

2006 2007 2008 2009 2010 2011 2012

Services sales EUR million


= Outotec R&D and competence centers (18)

Record-high number of patent applications due to strong innovation activity and increased R&D investments


0 10 20 30 40 50 60 70 80

1990

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Patented inventions by filing year

R&D expenses totaled EUR 41.6 million (2011: EUR 33.5 million), up 24% from 2011 and 2.0% of sales (2011: 2.4%)

Outotec filed 70 new priority patent applications (2011: 41) and 286 new national patents were granted (2011: 326)

At the end of 2012, Outotec had 630 patent families, including a total of 5,745 national patents or patent applications.

STOXX® Global ESG Leaders

http://www.kemira.com/en/media/pressreleases/Pages/1353012_20091106070040.aspx�


Corporate responsibility and sustainability Sustainability is a core element in our mission and values.

Reporting based on GRI guidelines level B+ since 2010.

89 % of order intake (2012) classified as Environmental Goods and Services (OECD definition).

The United Nations Global Compact: we are committed to its principles of human rights, environment, labor and anti-corruption.

Outotec ranked 12th in the The Global 100 list of the world's most sustainable companies by Corporate Knight.

Our sustainability report awarded with Readers’ Choise in the competition evaluating the reporting of Finnish listed companies in 2012.

20

STOXX® Global ESG Leaders

Sustainability indexes: The Global 100 RobecoSAM 2013

March 26, 2013 Annual General Meeting

http://www.kemira.com/en/media/pressreleases/Pages/1353012_20091106070040.aspx�


-30 0

30 60 90

120 150

Net cash flow from operating activities, quarterly

-400

-300

-200

-100

0

Net interest-bearing debt

Financing structure continued to be strong and liquidity was good


-300

-200

-100

0

Working capital


Significant improvement in ROI and ROE due to strong financial result


0 10 20 30 40 50 60 70

ROI%, quarterly

0

10

20

30

40

50

ROE%, quarterly


Outotec one of the top performers on Total Shareholder Return


26

24

22

20

18

16

14

12

10

8

6

4

2

0 40% 20% 0% -20% -40%

Amer Sports

Cargotec

Elisa

Fiskars

Fortum

Huhtamäki

Kemira

Kesko

Kone

Konecranes Metsä Board

Metso

Nokia

Nokian Renkaat

Rautaruukki Sanoma

Stockmann

28

Tieto

UPM-Kymmene

Uponor

Vacon

Wärtsilä

Stora Enso

-60%

Ramirent

Outotec

Outokumpu

Orion

Yit

22

28

26

0

20

18

14

12

10

8

6

4

2

20% 0% -20% -40%

Nokia

Nokian Renkaat

Orion

Outokumpu

Outotec

Konecranes

16

Rautaruukki Sanoma

Stockmann

Stora Enso

UPM-Kymmene

Uponor

Vacon Wärtsilä

Yit

Tieto

Metsä Board Metso

24

40% -60%

Amer Sports

Cargotec

Elisa

Ramirent

Fortum

Kemira Huhtamäki

Kesko

Kone

Fiskars

3-year ranking (Mar '10 - Feb '13)1

1. Three-year average annual TSR (28 Feb 10 – 28 Feb 13) 2. Five-year average annual TSR (29 Feb 08 – 28 Feb 13) Note: TSR (Total Shareholder Return) = capital gain + dividends and dividend-like items; dividends are reinvested at pay out Source: Thomson Reuters Datastream; BCG analysis

Average annual TSR

5-year ranking (Mar '08- Feb '13)2

Average Annual TSR

Rank (n=28) Rank (n=28)


Outotec outperformed peers and indices in past five years


Return Index1

150

2013 2009 2008

200

100

0 2012 2011

MSCI Europe Metals & Mining

SNC Lavalin Group

2010

Outotec MSCI Europe Machinery

50

Aker Solutions

FLSmidth Euro STOXX

OMX Helsinki

Metso

1. Theoretical growth in value assuming that dividends are reinvested; 31.01.08 = 100 Source: Thomson Reuters Datastream; BCG analysis


Outotec’s focus areas in 2013


Focus area

Ensure continuous sales growth through order intake and services growth as well as earnings logic enhancement

Improve profitability through value based pricing, supply savings and sales mix improvement

Continue making acquisitions to strengthen the offering portfolio and accelerate growth Continue investments in developing and rolling out global platforms to ensure future growth and profitability improvement


Revised financial guidance for 2013 (earlier guidance in parenthesis)


Based on the strong order backlog, current market outlook and the customer tendering activity, the management expects that in 2013:

Sales will be approximately EUR 2.1-2.3 billion (grow from 2012), and

Operating profit margin from business operations*) will be approximately 9.5-10.5% (further improve from 2012).

*) excluding one-time items and PPA amortizations

In 2013, PPA amortizations are estimated to be approximately EUR 13 million.


0 %

20 %

40 %

60 %

80 %

100 %

120 %

140 %

0,00

0,20

0,40

0,60

0,80

1,00

1,20

1,40

2006 2007 2008 2009 2010 2011 2012*

EUR

Dividend Payout Ratio %

Outotec has been distributing dividends in line with the dividend policy while executing the growth strategy


*Board of Directors dividend proposal for the AGM: EUR 1.20 per share


High participation in Employee Share Savings Plan

New Employee Share Shavings Plan launched in 2012 for Outotec employees globally.

The first savings period is calendar year 2013. Following periods are subject to Board decision.

For each share purchased in 2013, Outotec gives one free share after 3 years holding period.

1,513 employees in 22 countries (approx. 34%) have signed up in this voluntary Plan. Participation in Finland, Sweden and 5 other countries exceeds 50% of the employees.

Savings in 2013 will be approx. EUR 3.65 million, which equals 83,715 shares (using the Dec 19, 2012 share price of 43.60 EUR).


Documents

Annual General Meeting 2013 - Outotec › globalassets › company › about... · 2017-03-13 · 14 March 26, 2013 Annual General Meeting • Gas cleaning system, sulfuric acid plant