ote agm 2019 ceo review en final140319 - outotec · 2009 2012201320142015 201720182019202020212010...

CEO’s reviewMarkku TeräsvasaraAnnual General Meeting, March 14, 2019

CEO’s reviewMarkku TeräsvasaraAnnual General Meeting, March 14, 2019

© Outotec – All rights reserved

Contents

March 14, 2019 AGM 2019 | CEO's review2

1. Outotec today2. Achievements in 20183. Market situation4. Outotec’s opportunities and focus areas5. Outlook for 2019


Leading technologies are ourcore strength


• R&D centers in Pori, Frankfurt and Lappeenranta

• Cooperation with over 30 universitiesand research institutes

• Some results of our R&D in 2018: • Lithium hydroxide process• Hybrid ceramic filter plates to improve filtration

capacity• Digital Optimizer product family for optimizing the production

process and ensuring uniform product quality• Modular prefabricated sulfuric acid plant

• R&D investments totaled EUR 57 million, equaling 5% of sales in 2018

Our technologiesenable our

customers to improve their

profitability in a sustainable way.


March 14, 2019 AGM 2019 | CEO's review

R&D, sales and service centers in

42countries

Deliveries to

> 80countries

Sales EUR

1,276 million4,000

top experts

4

Global operations and local presence



OUTOTEC’S OWN OPERATIONS

51% of electricity consumptionfrom renewable sources

1.9 lost-time injuries per 1 million work hours

Our mission is sustainable use

of Earth’s naturalresources.

SUSTAINABLE TECHNOLOGIES AND INNOVATIONS

90% of order intake represent Environmental Goods and Services according to OECD’s criteria

6.2 million tonnes sulfur dioxide emissions avoided throughuse of Outotec technologies in 2018

TOP INDUSTRY EXPERTS

4,000 top industry experts contribute to the success of ourcustomers and are driven by their unique challenges

72 nationalities work for Outotec

RESPONSIBLE SUPPLY CHAIN

12th on the Global 100 list of the world’s most sustainablecompanies

Our commitment to sustainability


Contents




Significant progress in several areas in 2018

Significant business growth

• Order intake increased 4% (with comparable currencies 8%)• Sales grew 12% (with comparable currencies 16%)

Availability of spare and wear parts improved in theservice business• Service sales grew 3% (with comparable currencies 9%)

Minerals Processing further improved its profitability(adjusted EBIT 11%)

Customer satisfaction clearly improved



Analysis of the ilmenitesmelter is progressing


• A team consisting of Outotec’s, customer’s and third-party experts, altogether 40 people, are investigatingthe furnace in Saudi Arabia.

• The investigations and negotiations withthe customer have progressed well.

• A provision of EUR 110 million was made after careful consideration diligently and booked in the result of Q4/2018.


Largest orders in 2018

AGM 2019 | CEO's review

ENERGY

Biomass power plant to Turkey

55 M€

Modular sulfuricacid plants to

DRC

33 M€

BATTERY CHEMICALS Battery

chemicalstechnology to

Finland

34 M€

Pelletizingtechnology to

China

> 40 M€IRON

Pelletizing plantand filter to

India

>50 M€

BASE METALS

Concentratorequipment to

Russia

24 M€

Minerals processing

technology to South America

25 M€

14.3.2019 9 March 14, 2019


Financial results of 2018

10 March 14, 2019

EUR million 2018 Change from 2017, %

Change with comparable

currencies, %

Sales 1,276 12 16Service sales 497 3 9

Share of services in sales, % 39Adjusted EBIT 1, 2 -46Adjusted EBIT, %1, 2 -4EBIT -66EBIT, % -5Result for the period -67

Net cash from operating activities 701 Excluding restructuring and acquisition-related items as well as PPA amortizations.2 aEBIT for the full year was EUR 63.8 million (5.0%) excluding the provision for the ilmenite smelter project.



March 14, 2019 11

Sales and adjusted EBIT development by quarter

Minerals ProcessingEUR million 2018

Change, %

Change in comp. currency,

%

Order intake 719 -1 4

Sales 758 13 19

Service sales 344 13 20

Adjusted EBIT *) 84

Adjusted EBIT *), % 11

0%

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2012

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Sales aEBIT*, %


Good progress in Minerals Processing – service salesimproved profitability

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


Metals, Energy & Water EUR million 2018 Change,

%

Change in comp.

currency, %

Order intake 532 11 15

Sales 519 9 12

Service sales 152 -13 -10

Adjusted EBIT1, 2 -125

Adjusted EBIT, % -24

March 14, 2019 12 AGM 2019 | CEO's review

Solid order intake and sales development, ilmenite smelter projectprovision impacted profitability in Metals, Energy & Water

Liikevaihdon ja oikaistun liiketuloksen kehitys

-40%

-30%

-20%

-10%

0%

10%

20%

050

100150200250300350400

Q1/

2012

Q2/

2012

Q3/

2012

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2012

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2013

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2018

Sales aEBIT*, %

1 Excl. restructuring and acquisition-related costs as well as PPA amortizations.2 aEBIT for the full year was EUR -15.0 million (-2.9%) and Q4/2018 EUR 2.1 million (1.7%) excluding the provision for the ilmenite smelter project.


Contents




Demand outlook, % 2019-2023e

Ferrochrome

Zinc

Aluminum

Gold

Copper

Nickel

Iron ore

Lähde: HSBC Quarterly Report14 AGM 2019 | CEO's review

3,3

1,7

3,7

1,9

3,2

0,2

2,2

Production growth outlook, % 2019-2023e

March 14, 2019

Metals demand outlook support new investments

4,0

3,0

1,9

1,7

3,4

-0,1

3,2


010 00020 00030 00040 00050 00060 00070 00080 00090 000

100 000110 000120 000130 000140 000

2010 201620112009 2012 2013 2014 2015 2017 2018 2019 2020 2021

ExpansionSustaining investment

MUSDForecast

15

Source: Woodmac Q4 2018

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

100 000

20122009 20152010 2011 20202013 20162014 2017 2018 2019 2021

Copper

NickelLead

Iron oreGold

Zinc

MUSD

Larger projects expected in

2020-21


Total capex investments for copper, gold, iron ore, lead, nickel and zinc (mines only)

Expansion capex investments by commodity: copper and gold expected to lead the growth

March 14, 2019

Investments are expected to increase


AGM 2019 | CEO's review16

Copper 35%

Battery metals: copper, nickel, cobalt, lithium> 40%

Preciousmetals 17%

Energy and environmental 6%

Alumum8%

Iron and ferroalloys14%

March 14, 2019

Outotec well positioned to meet the growth of metals market

87% of sales from

metals relatedtechnologies and

services



Electric vehicles drivingthe demand for battery metals

• Rapid increase of electric vehiclesdrive the demand of battery metalsand the development of relatedtechnologies

• Cathode is the most important part in batteries, as it stores the energy neededin electric motors

• Most cathodes include cobalt, lithiumand nickel in varying amounts



Source: CRU, Thomson Reuters, HSBC, Macquarie Research

0

100 000

200 000

300 000

400 000

500 000

600 000

700 000

20192018 2020 20232016 2017 2021 2022

+21%

0

50 000

100 000

150 000

200 000

20192016 2017 20202018 2021 2022 2023

+9%

0

500

1 000

1 500

2 000

2 500

3 000

20182017 20202016 2019 2021 2022 2023

+3%

Lithium Cobalt Nickel

18

0

5

10

15

20

25

201820172016 2019 2021 20222020 2023

+2%

Copper

Expected CAGR

million tonnes kilotonnestonnestonnes LCE

March 14, 2019

EV’s the most significant driver of the demandfor battery metals


• Outotec’s technologies are suitable for processing all battery metals from ore to refined metal and raw material for the battery industry

• We deliver technology to most of the ongoing lithium projects • AMG (Brazil), Keliber (Finland), other projects (Australia, South America)

• We are participating in preparing the European wide research relating to EV battery raw materials and battery recycling


Outotec is well positioned in the growth market for batterymetals and technologies


Innovative process for producinglithium hydroxide for battery industry


• Production without intermediateproducts

• Technology is ready for commercialuse, patent application submitted

• Developed and piloted with Critical Elements (Canada) and Keliber(Finland)

Leadingtechnologiesare our core

strength.


Contents





We continue to implement our strategy


Customer focus Service business Product competitiveness Project excellence Our people

Customer satisfactionimproved

remarkably

Faster quotationlead times and

delivery handling

Productizationreduced

engineering hoursand improved

quality

Improved riskmanagement and

project control

New values, trainingprogram for sales,

service business and project managers

23 AGM 2019 | CEO's reviewMarch 14, 2019

Achievements in our focus areas



2

1

3

4

2018: 5% aEBITExcluding the EUR 110 million provision for the ilmenite smelter project

March 14, 2019

By 2020 we aim to achieve the following targets

2020: 10%

Margins

Volumes/fixed cost

Service

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.


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

Mari Tuominen-ReiniSenior Vice President,

Sourcing & Manufacturing as of

August 19, 2019 at the latest

March 14, 2019


Contents




Largest orders in Q1 / 2019


SULFURIC ACID

Sulfuric acid plant to Morocco

~ 80 M€

LITHIUM

Filtration technology and services to

Australia

12 M€

NICKEL

Mine paste backfill system to Canada

~ 20-30 M€

27 March 14, 2019


Service opportunities Declining ore grades and complex ores

new technologies | digitalization |

tailings management

New uses such as EVs support long-

term view

Water scarcity is a concern and cost

factor

solutions for reducingfreshwater consumption | purification of wastewater

Emission tradingschemes, tighteningregulation and social

license to operate

energy efficiency | emission reduction | gas handling and

gas cleaning | recycling


Solid market outlook


Financial guidance for 2019


Based on the current market outlook, we expect our sales to increase, and our aEBIT* to increase significantly from the 2018 aEBIT (EUR 63.8 million) without the provision for the ilmenite smelter project.

*Excluding restructuring- and acquisition-related items, as well as PPA amortizations.

ote agm 2019 ceo review en final140319 - outotec · 2009 2012201320142015 201720182019202020212010...

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