OTE AGM 2018 CEO review EN d4 - outotec.com · APC: Metso, Woodgrove, SGS Minerals DCS: Major DCS suppliers FLSmidth, Golder, GR Engineering, AMC Customers own maintenance, …

CEO’s review

Markku TeräsvasaraAnnual General Meeting, March 27, 2018

© Outotec – All rights reserved

Contents

AGM 2018 | CEO's review2

1. Safety2. Outotec today3. Highlights of 20174. Market situation5. Outotec’s opportunities and focus areas6. Outlook for 2018


Safety performance


0

1.7(2016: 1.8)

Fatal accidents

Lost-Time Injury Rateper million work hours incl. employees and subcontractors

Near misses

23(23)

Lost-time injuries

1,512(1,532)

0

13.4million work hours


Contents




Our business on the value chain from ore to metal

Superior technologies and customer service

Minerals processing for all ore types• Comminution• Flotation• Dewatering• Concentrator plants

Metals refining

• Pyro- and hydrometallurgy• Ferrous metals, ferroalloys• Light metals• Acid and off-gas treatment• Effluent treatment

Optimized lifecycle services and digital solutions

From ore body

To metal


Exploration Development ExtractionMaterials handling Comminution Separation Refining

MetallurgyProcessing

OutotecOutotec


Minerals Processing segment’s offeringA complete portfolio of leading process solutions and services with full plant delivery capability

Water Technology

FLSmidth, CITIC, Metso, ThyssenKrupp

FLSmidth, Metso, BGRIMM, Tenova, Woodgrove

FLSmidth, Tenova -Delcor, WesTech

Aqseptence -Diemme, Metso, Andritz, FLSmidth

Thermo Fisher, BGRIMM, Blue Cube

APC: Metso, Woodgrove, SGS Minerals

DCS: Major DCS suppliers

FLSmidth, Golder, GR Engineering, AMC

Customers own maintenance, Major tech. suppliers, Local companies

Thickening AnalyzersGrinding Flotation AutomationFiltering ServicesTailings management

1,100 grinding mills delivered, strong in S/M size mills and process technology

10,000 flotation units delivered since 1960s,big cell technology references, automation

1,800 thickeners delivered, global project execution capability, feedwell design

Full analyser portfolio, lowest min detection limits

Unique combination of automation & analysers, important for risk management

Full process and equipment portfolio, effluent treatment and backfill plants

Prop equipment and total process knowhow, global service network

3,500 filters delivered, most efficient concentrate filtering, proven performance

Competition fragmented, a number of players competing in part of the portfolio

Outotec globally #1-3



Industry-leading technologies, process solutions and services

Metals, Energy & Water segment’s offering

Ferrous metals Sulfuric acid/Off-gas/Roasting

Fives, FLSmidth, Metso, Aqseptence-Diemme

Kobelco, Metso, Primetals, Jemeco

SMS Siemag, Tenova, Jemeco

GEA Bischoff, MECS

Alumina, Aluminum

Base metals (Cu, Ni, Zn, Au, Ag, PGM)

Ferroalloys

GlencoreTechnology, Tenova

Strong in CFB Aluminium Calcination and HOT Tube Digestion

Strong in traveling grate technology, some100 iron ore pelletizing and over 300 sintering plants

650 acid plants and 270 non-ferrous roasting plants. Strong in midsize

Strong in Cu smelting, anode casting, SX and Zn leaching, strong in Ni smelting and EW

Energy Water

Alumina calciner,Green anode plants,

Rod Shop

Sintering, Pelletizing, Direct Smelting

Sulfuric acid plant,Roasting

Smelting, Converting, Leaching, SX/EW,

electrorefining

Smelting, Preheating, Steel

Belt Sintering

Waste-to-energy, Sludge incineration, Oil shale processing

Industrial watertreatment, municipal

water systems

Competition fragmented, a number of players competing in part of the portfolio

Services

Advisory, maintenance, operations & remoteservices, upgrades

Valmet, Andritz, Babcock&Wilcox

Veolia, GE Water, Suez

FLSmidth, Metso, major tech suppliers, locals and customers

Strong in Ferro Chrome, 20 pelletizing and sinter plants and 9 smelters for ferroalloys

Versatile waste-to-energy solution, over 250 materials used

Effluent treatment plants, backfill plants, water recycling

Shutdownservices, bestsuited to provideservices for owntechnologies

Outotec globally #1-3 Selected niches Opportunisticapproach



Outotec in numbers


Services

42%of sales

Experts of

> 60nationalities

4,100employees

Widesupplier network

Deliveries to

> 80 countries

R&D, sales and service centers in

36countries

Sales

1.139 bn EUR


Contents




Highlights of 2017: Strong development in many areas

• New strategy and vision• New Services organization • Order intake• Sales• Profitability• Cashflow• People


• Customers generated 6.2 million tonnesless of CO2e when using Outotec’s metals related technologies compared to annual baselines. From Outotec Ferrochrome Process alone, the CO2e emissions avoided are 2.9 million tonnes.

• 88% of order intake represent Environmental Goods and Services.

5th mostsustainablecompany in Global 100


Order intake increased 20% from 2016


Americas 30 (33) %

564 710

443495

0

200

400

600

800

1 000

1 200

1 400

2016 2017

Serviceorders

Capexorders

Metals, Energy & Water

Minerals Processing

EMEA 51 (49) % APAC 19 (18) %

Order intake Services/CAPEX

GOLD Q2: Grinding technology to Western Australia, 14 M€

COPPER

Q4: Minerals processing equipment, Australia ~17 M€

COPPER Q1: Filtration plant to copper concentrator in Peru >15 M€

ZINC Q1:Zinc plant technology to Mexico ~ 24 M€

COPPER Q2: Shutdown services to a smelter in South America, 12 M€

LITHIUM Q2: Technology for lithium carbonate plant in South America, 20 M€

GOLD Q3:Gold processing technology, Lundin Gold, Ecuador >10 M€

COPPER

Q4: Concentrator expansion, Chile ~14 M€

ALUMINUM Q1: Aluminum technology to Bahrain

COPPER Q2: Technology to a concentrator expansion in Russia, 17 M€

GOLD Q2: Technology for a greenfield project in West Africa, 13 M€

NICKEL Q3: Minerals processing technology, Norilsk Nickel, Russia >13 M€

COPPERCOBALT

Q4: Hydrometallurgical and minerals processing technology, DR Congo ~65 M€

Q4: Electrowinning technology,Poland ~10 M€ZINC

Q4: Minerals processing technology, Turkey ~13 M€

COPPER

COPPER

Q4: Grinding technology,Southern Africa >10 M€

M€


020406080

100120140160180

Q1/

12

Q2/

12

Q3/

12

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Split in service order intake

Recurring services Shut-downs and modernizations

M€M€

Orders increased toward the year end


M€

400

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1100

Q1/

12Q

2/12

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2/16

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4/16

Q1/

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2/17

Q3/

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4/17

Minerals Processing

Order intake 6 months rolling, annualized Sales 6 months rolling, annualized

350400450500550600650

Q1/12

Q2/12

Q3/12

Q4/12

Q1/13

Q2/13

Q3/13

Q4/13

Q1/14

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Q1/15

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Q1/17

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Services


200

400

600

800

1000

1200

1400

Q1/

12Q

2/12

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4/12

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2/14

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2/16

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4/16

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2/17

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4/17



M€

Split in service order intake


Our profitability improved


EUR million 2017 2016 Change, %

Sales 1,139 1,058 8Service sales 475 447 6Share of services in sales, % 42 42Gross margin, % 24 22Adjusted EBIT 32 -23Adjusted EBIT*, % 3 -2- Restructuring and acquisition-related costs - -37- PPA amortization -7 -7EBIT 25 -68EBIT, % 2 -6Result for the period 2 -69


Minerals Processing


Sales and adjusted EBIT development

• Order intake and sales improved• Profitability improved• Service sales increased

Minerals ProcessingEUR million 2017 2016

Change, %

In comp currency,

%

Order intake 727 627 16 14Sales 661 540 22 21Service sales 304 283 7 6Adjusted EBIT*) 61 37Adjusted EBIT*), % 9 7

Unrealized and realized gains/losses related to valuation of FX forward agreements 6 -4* Excl. restructuring and acquisition-related costs as well as PPA amortizations

0%

5%

10%

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050

100150200250300350

Q1/

2012

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Sales aEBIT*, %



• Order intake increased 25%• Sales declined• Profitability improved but remained

negative


Metals, Energy & WaterEUR million 2017 2016

Change, %

In comp currency, %

Order intake 478 381 25 25Sales 478 518 -8 -8Service sales 171 164 4 4Adjusted EBIT*) -22 -55Adjusted EBIT*), % -5 -11

Unrealized and realized gains/losses related to valuation of FX forward agreements 2 -4

* Excl. restructuring and acquisition-related costs as well as PPA amortizations

Sales and adjusted EBIT development

-40%

-30%

-20%

-10%

0%

10%

20%

050

100150200250300350400

Q1/

2012

Q2/

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Contents




Capex investments regarding most metals have grown, copper and gold leading

17

0

10

20

30

40

50

60

70

80

90

100

110

120

130

20112009 20122010 2013 2014 2015 2016 2017 2018 2019 2020

+8%

Sustaining

Expansion

Source: Woodmac, February 2018

bn USD

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

100 000

202020192018201720162015201420132012201120102009

Iron Ore

Copper

Gold

Lead

Nickel

Zinc

Expansion capex investments by commodity: Copper and Gold expected to lead the growth

bn USD

AGM 2018 | CEO's review

Total capex investments for Copper, Gold, Iron ore, Lead, Nickel and Zinc (mine only)


Expansion investments by region

18

0

5 000

10 000

15 000

20 000

25 000

30 000

20132009 20122010 2011 2014 2015 2016 2017 2018 2019 2020

North AmericaOceania

Africa

EuropeAsia

Russia and the Caspian

Middle EastLatin America

Copper

Source: February 2018, Woodmac

0

5 000

10 000

15 000

20 000

20132009 20122010 2011 2014 2015 2016 2017 2018 2019 2020

0

1 000

2 000

3 000

4 000

5 000

6 000

20132009 20122010 2011 2014 2015 2016 2017 2018 2019 20200

2 0004 0006 0008 000

10 00012 00014 00016 00018 000

20132009 20122010 2011 2014 2015 2016 2017 2018 2019 2020

Gold

Zinc Nickel

‘000 USD ‘000 USD

‘000 USD ‘000 USD



Our business is well placed to meet the fastest growing metal markets


81% of Outotec’s sales coming from

metals relatedtechnologies and

services

Copper 30%

Batterymetals Cu, Ni, Co, Li 36%

Preciousmetals 21%

Energy and environmentalsolutions 7%

Aluminum9%

Iron and ferroalloys9%


Contents




Emission trading schemes, increasing regulation and social license to operate.

Mining companies’ key challenges: energy, water, and productivity improvement


Deep knowledge of processing all types of ores to achieve high yields and optimize plant performance; Lifecycle services to further improve productivity

Clean technologies to avoid emissions

Technologies for producing metals from secondary raw materials and tailings

Energy-efficient process technologies, gas handling and heat recovery systems

Water management solutions for significant reduction in freshwater consumption through recycling and purification of wastewater

Water scarcity is a concern and cost factor, concerns with tailings ponds at mine sites.

21

Energy

Water

Productivity improvement

Making metals is energy intensive, energy contributes largely to CO2 emissions.

More recycling is needed.

Outotec’s solutions

Ores are more complex and grades are declining.


Our industry needs digitalization to solve its challenges


"When purchasing Outotec solution I expect to get an access to metallurgical know-how, not just piece of equipment" - A. Bariliuk, Polyus Managing Director

"All technology suppliers should furnish their equipment with advanced diagnostics to increase our productivity." - Dragan Janicievic Global Supply Manager, Anglo American

"We are very good at running our plants and expect Outotec to bring their global experience for our use." - L Evrell, Boliden CEO Actionable information

Co-creation with customersEfficient internal processes

Digital workplaceNew business models

SafetyAsset performance and reliability

Improved productivityProcess optimization

Service effectiveness and efficiency

Outotec’s solutions

Smart connected equipmentSmart processes

Smart sitesSmart services

Smart ways of working




Must-win battles help us to achieve our targets

Customer focus Service business Product competitiveness Project excellence Our people

Health and safety is our first priority

Delivering the best customer experience

Steady cash flow, long-term customer

relationships and sustained margins

Improving cost competitiveness to improve margins

Improving the quality of our project

deliveries and bringing flexibility to the cost

base

Creating an environment for our people to develop,

succeed and find joy in their work



Our targets

By 2020, we aim to achieve the following targets:


Sales growth faster than the market

Annual average service sales growth over 10%

Profitability (aEBIT) 10% of sales by 2020

Gearing at maximum 50%

We aim to grow volumes while containing fixed cost and improve margins through product competitiveness and project excellence.

2

1

3

4

2017: 3% aEBIT

2020: 10%

Margins

Volumes/fixed cost

Service


Outotec’s Executive Board


Gustav KildénStrategic Customers & Business Development

Kalle Härkki Metals, Energy & Water

Kimmo KontolaMinerals Processing

Markku Teräsvasara CEO

Jari ÅlgarsCFO

Kaisa Aalto-Luoto Human Resources & Communications

Olli NastamoOperational Excellence

Nina KivirantaLegal, Contract Management & Corporate Responsibility

Tomas HakalaServices


Contents




Market sentiment improving


Service opportunities in all categories

Several base metals, lithium, aluminum, gold,

cobalt and energy prospects

Market and complex ores

offer many attractive

opportunities

New uses suchas EVs supportlong-term view


Financial guidance for 2018


The guidance for 2018 is based on the current order backlog as well as expected order intake:

• Sales are expected to be approximately EUR 1.2 – 1.3 billion, and

• Adjusted EBIT* is expected to be approximately 5 – 7%

*) Excluding restructuring and acquisition-related costs, as well as purchase price allocation amortizations.

Documents

OTE AGM 2018 CEO review EN d4 - outotec.com · APC: Metso, Woodgrove, SGS Minerals DCS: Major DCS suppliers FLSmidth, Golder, GR Engineering, AMC Customers own maintenance, …