Outotec developing and delivering

Transcription

1 Outotec developing and delivering environmentally sound technologies Mr Vesa-Pekka e a Takala, aa, CFO Ms Rita Uotila, IR Öhman Raw Materials Day 2010 Stockholm

2 Sustainable technology expertise D E M A N D D R I V E R S rgy Ore grade CO2 Oil peak Water Ene Outotec solutions enable sustainable use of Earth s natural resources in Minerals processing Metallurgical processing Chemical industry Water treatment Energy production Sales and operating profit development million million We operate through flexible, asset light business model. OUTOTEC O T FACTS Demand for sustainable technology is in constant and rapid growth. Global presence in all key geographical markets Approx employees in 22 countries 4,500 national patents or applications 2

3 Demand for sustainable technology increases D E M A N D D R I V E R S rgy Ore grade Oil peak Water Ene Modern, more efficient Outotec technologies enable higher yield. OUTOTEC TECHNOLOGIES Technologies improving energy efficiency of customer processes, and leading to substantial savings in energy/operating costs. Technologies for water use efficiency and industrial water treatment, enabling significant reductions in fresh water consumption, higher recycling of process water and decrease in water loss. Outotec develops technology for alternative energy production, e.g. oil shale and biofuels. CO2 In Carbon Disclosure Project 2009, Outotec ranked 14th on the Carbon Disclosure Leadership Index among 200 Nordic companies. Thanks to Outotec technologies, CO2 emissions were 4.4 million tonnes smaller in 2008 than if our customers had been using conventional technologies. 3

4 Demand for sustainable technology increases E M A N D D R I V E R S rgy Ore grade Water Ene Outotec technologies minimize emissions and consumption of energy and water, thus reducing operating costs. Depending on the application, about 96% of Outotec s technology could be categorized under the OECD definition as Environmental Goods and Services (EGS). (According to an internal assessment) CO2 D Oil peak 4

5 Covering the whole MinMet value chain Process solutions also for: - Energy - Water treatment - Chemical industry Competition is FLSmidth, Metso, Polysius, Bgrimm, Bateman Engineering, fragmented: Delkor, WesTech, Eriez Manufacturing, Roche Mining, i Thermo Electron Aker Kvaerner, Bateman Litwin, Falconbridge, Mitsubishi, Xstrata, SNC-Lavalin, Bateman Engineering, i Dynatec, Tecnicas Reunidas, Brochot SA, FLSmidth, Solios, SMS Demag, Kobe Steel, Siemens, Midrex Technologies, MMC 5

6 Capex on the rise Metals and Mining Industry Capex USD D, billion e rebased (yea ar 2002=100) LMEX and Copper pric Metals and Mining Industry Capex (lhs) LME base metals price index LME Spot Copper Price Source: CRU (up to 2005 excl. ferrous), UBS, Company reports, LME, Brook Hunt, RBS, Macquarie, Metal Bulletin, Outotec analysis (March 2010) 6

7 China drives consumption Refined Copper Consumption (kt) Source: Brook Hunt World refined copper consumption (rhs) China's refined copper consumption change YoY World ex_china refined copper consumption change YoY 7

8 Outotec operational model Customers Market Operations Supply Business Infrastructure Strategy Technology Management Finance & Control Legal Affairs Human Capital Non-ferrous Solutions for the processing of copper, nickel, zinc, lead, gold, silver and platinum group metals as well as industrial minerals. Ferrous Solutions for the processing of iron, steel and ferroalloys as well as titanium feedstock. Energy, Light Metals & Environmental Solutions for sulfuric acid plants, gas cleaning, alumina, aluminium and light metals, heat recovery systems, coke, bioenergy, oil shale and sands, industrial water treatment. Services focusing on growing and developing the service business globally, and providing life-cycle services to Outotec's customers. 8

9 Outotec asset light business model Customized deliveries, maximizing customers total return on their investment Deliveries based on Outotec s own IPR Global project management skills with flexible use of internal and external resources. Performance guarantees Advance and milestone payments Subcontractors and manufacturers Local design and detail engineering companies Logistics partners Construction and installation partners Other technology and equipment suppliers Services Plant lifecycle EPC / Turnkey MEUR, months Technology package MEUR, months Equipment deliveries Up to 15 MEUR 3-24 months 9

10 Flexible use of global resources (example) San Luis Potosi Burlington Jacksonville Pori Skellefteå Outokumpu Oslo Kil St Petersburg Espoo Moscow Cologne Oberursel Frankfurt In Europe conceptual and basic engineering overall project management R&D In Asia procurement Norilsk manufacturing subcontracted detailed engineering Beijing Almaty Kolkata Shanghai Lima Antofagasta Santiago Belo Horizonte In South America final delivery project management local subcontracted construction and temporary project personnel Johannesburg Perth Sydney Melbourne Outotec offices 10

11 Outotec as global corporate citizen Economical responsibility Social responsibility Outotec is committed to increasing Outotec treats people in an equal and fair shareholder value by developing and manner regardless of their ethnic origin, maintaining competitive and profitable nationality, religion, political views, sex, operations based on ethical business sexual orientation, or age. practices. Active participation in the life of Outotec t applies principles i of good communities where we operate via corporate governance and transparent donations to charitable enterprises and accounting. events, and close co-operation with educational institutions. Environmental responsibility Continuous development of better and more efficient solutions for sustainable use of earth s natural resources. Environmental impact of Outotec s own operations is relatively small. ISO14001, OHSAS and unrestricted Safety Checklist Contractors (SC***) in Finland and Germany. Cultural responsibility Outotec s sponsorship, whether international, national or local, primarily targets sustainable development, arts and music, as well as student and youth activities. 11

12 Responsibility examples Economical responsibility Environmental Social responsibility: Local projects worldwide responsibility: In 2009, Outotec supported Unicef s project in Bolivia. The main objective is to insure that Bolivian indigenous girls from Baltic Sea Challenge remote rural areas get to go to school and eventually complete primary school. The objective is to improve the state The project benefits children and of the local waters as well as of the 3500 teachers from 31 municipalities in entire Baltic Sea. Bolivia. Outotec contributes to the important In 2008, Outotec supported Engineers cause through research and without Borders to build three water development of better metallurgical technologies, customer cooperation and by sharing its expertise in clean technologies. For more information or collectors in Kaikipia in Kenya, enabling to collect 50,000 liters of water during rainy season to help families life over dry season. Cultural responsibility 12

13 Award-winning Outotec technologies Flash Smelting - Flash Converting technology for sulfidic copper ores ASM Historical Landmark award in 2001; The cleanest copper smelting technology in the world Yanggu Xiangguang Copper received National Most Environmentally-Friendly Project award from Chinese Government Outotec CDP Report (assured by PWC): 2.3 million metric tonnes of CO 2 emissions avoided* Ferrochrome process Winner of the 2008 Cleantech Finland competition Clean and energy-efficient Outotec CDP Report (assured by PWC): Ferrochrome production: 1.5 million metric tonnes of CO 2 emissions avoided* A new copper production method, CLC Quality Innovation of the Year 2007 by Excellence Finland Low investment and operating cost and environmental sustainability *the annual amount of emissions avoided varies based on the annual production capacity 13

14 Strategy in action

15 Outotec strategy in action Jan Feb Feb March March March April Outotec owns 98.5% of Larox Squeeze out process begins Announcing cost savings program and new operational model Announcing personnel reduction plan Strengthening service business with Millteam Ausmelt acquisition completed 120 personnel reductions in Finland announced More out of ore We help our customers maximize total return on their investment New operational model launched Seek sustainable growth Maintain and improve profitability New Technology Continuous Cross selling Expanding to new Geographical expansion BRICS Increase after-sales Services Selected Acquisitions Seek Procurement and outsourcing Optimize cost-efficiency Efficient use of in-house applications and other Product opportunities Increasing state of the art R&D like alternative emerging development to expand sourcing engineering to better meet energy (e.g. oil markets and growing business e.g. from China tools. customers shale) and through (technology, and India, and Local task force existing and industrial water acquired services and optimizing local approach with future needs treatment business geographically) supply Outotec supervision. Increase value added component R&D efforts, testing facilities to guarantee customer ROI Proprietary technologies and own R&D Sustainable technology Pro customer Share and care Lead in life and work 15

16 Selected acquisitions as part of growth strategy Larox Larox filtration technologies complement Outotec s product portfolio and enable Outotec to offer customers total solutions for minerals concentrators and metallurgical plants as well as comprehensive services and process guarantees. Increases Outotec s service business by approximately EUR 70 million annually. Competitive landscape after Larox acquisition: Company Outotec / Larox Metso Minerals FLS (GL&V) Krupp Polysius Roche Mining (MT) Thermo Electron Corporation Schultzer Diemme Bateman/Delcor Grinding Flotation Thickening & Clarifying Physical Separation Analyzers & Automation Filters No direct one-to-one competitors, but a number of players competing with part of the portfolio 16

17 Acquisitions Ausmelt Complements Outotec's smelting technologies. Outotec Flash Smelting is suitable for copper and nickel primary smelting in large scale plants, whereas Ausmelt technology is suitable for small to mid-size plants and for other feed materials, such as ferrous metals, zinc, lead and tin concentrates, zinc bearing residues, and various secondary and waste materials. Outotec smelting technology portfolio: Outotec Flash Smelting Outotec Kaldo Ausmelt Primary Copper Nickel Lead Tin Precious metals Copper Secondary Lead Slag fuming Spend potlining Residues Zinc dusts Zinc residues Existing technology Additional technology New technology 17

18 Selected acquisitions as part of growth strategy Millteam Millteam offers maintenance services for mining companies and has special expertise in grinding mill service. Supports Outotec's strategy to expand the service business. With the new service center in Sweden Outotec can provide better life-cycle services for its customers in Europe and the CIS area. Annual sales volume EUR 4 million, 35 employees 18

19 Financial information

20 Operating environment Market sentiment in the mining and metals industry improved, but there is still 150 idle production capacity. 145 Strong metals prices and reduced inventory levels suggesting g recovery in the real economy. 115 Many mining and metals companies 110 have continued to upgrade their investment plans. Long-term outlook for all metals is solid. Investments in new capacity in developing economies. Competitive situation continued to be intensive because of fewer new projects. i Demand growth for selected commodities (rebased 2009=100) Alumina Aluminium Copper Zinc Nickel Gold Iron Ore SAcid DEMAND CAGR% Increase pa, Kt 2009 production, Mt Alumina, SGA 6.2 % Aluminium 6.8 % Copper 4.4 % Zinc 5.9 % Nickel 6.1 % Gold (09 12)* 5.2 % Iron ore 4.7 % Outotec was able to defend its gross margins thanks to its asset light Sulfuric acid 5.1 % operating model. *gold in tons Sources: Brook Hunt, RBS, CRU 20

21 Largest orders in Q1 Order intake EUR million (Q1/2009: EUR million) Copper smelter technology for Tongling, China 15 million Copper roasting and sulfuric acid plant for Codelco, Chile Pelletizing technology for Bhushan Power & Steel Plant, India Precious metals plant l t for f Baiyin B i i Non Ferrous Group, China 6 million 116 million Sinter Si t plant l t for f Kalagadi Manganese, South Africa 119 million illi 21 Outotec offices

22 Order intake and backlog development EUR million Order intake in was 201% and order backlog 6% higher compared to March 31, 2009 Roughly 54% of the current backlog is estimated to be delivered in 2010 and the rest in 2011 and beyond 22

23 Low revenue recognition in EUR million Q1 Q Change-% Last 12 months 2009 Sales Gross margin, % Operating profit from operations - one-time restructuring cost - PPA amortization + revaluation of Ausmelt shares Reported operating profit Operating profit margin, % - from operations reported Profit before taxes

24 Increased market activity resulted in high order intake EUR million Q1 Q1 Last months 2009 Earnings per share, EUR Order intake Order backlog at the end of the period Net cash from operating activities 1, , , Return on investment, % Return on equity, %

25 Sales by division Q1 Q1 EUR million Minerals Processing Base Metals Metals Processing Larox Other businesses Unallocated items and intragroup sales TOTAL

26 Operating profit by division Q1 EUR million 2010 In relation to Q1 division sales, % 2009 In relation to division sales, % 2009 Minerals Processing Base Metals Metals Processing Larox*) Other businesses Unallocated and intra-group items TOTAL *) including PPA amortization of EUR -2.9 million 26

27 Sales by end product *) *) Energy included in the Other 27

28 Sales by destination 28

29 Services business Sales of the Services business increased by 63% to EUR 50.5 million (Q1/2009: EUR 30.9 million), representing some 27% (Q1/2009: 13%) of Outotec s sales. The growth came from Larox. The target is to grow the Services business to the annual level of EUR million by the end of The Services business is included in the sales figures of Outotec s business divisions and Other businesses, and it is reported as a total on the Group level. Sales of Services 29

30 Capital structure EUR million Q Q Net cash from operating activities Net interest-bearing debt *) Equity *) Equity-to to assets ratio, % *) Gearing, % *) Working capital *) ROI, % ROE, % *) At the end of the period 30

31 Personnel 3,167 employees (Q1/2009: 2,557), an increase of 610 individuals due to acquisitions 557 from Larox 45 from Ausmelt Temporary personnel accounted for 6% of the total number of employees. Additionally some 230 FTE contracted people in projects (2009 year-end: 250 FTE) Employee negotiations in Finland; 84 employees were made redundant in April, total personnel reduction globally forecasted to be 170 during 2010 Number of employees at the end of the period Larox

32 Cost savings program EUR 25 million annualized savings in operational fixed costs, comprising also the fixes costs of sales, compared to Q4/2009 level Organizational restructuring Synergy benefits from recent acquisitions iti Personnel reductions Developing the purchasing function In Q1, one-time costs EUR 12.4 million, which lead to approximately EUR 7 million sustainable annualized cost savings beginning in the second quarter Fixed asset write-offs Provisions related to personnel reductions in Finland Full effect as of

33 Priorities for 2010 Win new orders Implement the new operational model Integrate Larox, Ausmelt and Millteam businesses Achieve cost savings Accelerate the growth of the Services business 33

34 Outlook and financial guidance

35 Market outlook for 2010 Marke ets The overall market sentiment is supported by improving macro-economic outlook, growing metals demand and strong commodity prices. Most of the growth in global metals consumption will come from developing economies and China is expected to represent nearly 50% of the growth in Metals demand outside China shows also signs of recovery. There is also a continuous demand for modernization and debottlenecking at mine sites and metals processing plants, as well as for energy-efficient and sustainable solutions. According to mining and metals companies announcements, their investments will increase in 2010 compared to There are many active sales projects, which are expected to turn into orders in 2010 or later, which is in line with normal industry lead times when planning capital investments. Despite of the strengthening market outlook, there is still idle production capacity. 35

36 Revised financial guidance for 2010 ec Outot Due to the post-cyclical nature of Outotec s business and a low order intake in 2009, the year 2010 will be challenging. Based on the actual order intake during the first quarter, management expects that in 2010: order intake will be significantly higher compared to 2009 sales will grow to approximately EUR 1 billion due to the Larox and Ausmelt acquisitions, and operating profit, which includes EUR 10 million purchase price allocation amortizations, will remain on the same level as in 2009, excluding one-time items. In 2010, one-time costs, which are included in one-time items, are estimated to be in the range of EUR million (previous estimate: EUR 20 million). One-time costs, which are related to restructuring initiatives, are estimated to be recorded in the first half of One-time costs related to the integration of the acquired businesses are estimated to be recorded in the financial results of the third quarter (previous estimate: first half). Operating profit is dependent on exchange rates, product mix, timing of new orders, and project completions. 36

37 Examples of energy efficient and environmentally sound processes

38 Factors affecting energy-efficiency Use of different energy types Utilization of energy in the raw materials Need of external energy Efficiency of energy usage Use of fossile fuels Recovery of process heat Intensivity it of the process Amount of total energy used Recovery of metal Energy costs account for some 50% of the production costs at a concentrator Example: Energy consumption in copper production S melti ng 27 % El ectr ol yti c r efi ni ng 11 % Tr ansport ati on of concentr at e 5 % Tr ansport ati on of pr oduct s 5 % Mi ni ng 18 % Pr ocessi ng t o concentr at e 34 % Source: Inventory of a Life Cycle Analysis of Copper Production from Primary and Secondary Raw materials and Manufacturing of Semi-finished Products and selected Products of copper and copper Alloys. Ed. J. Krüger. RWTH Aachen

39 Example: Flash smelting Low investment and operating costs (energy-efficient) Capability to treat different qualities of raw material with variable feed rates High recovery of valuable metals Reliable and proven process and equipment The cleanest smelting method available (99.9% 9% of sulfur can be captured) BAT technology in Europe Outotec CDP Report (assured by PWC): Copper flash smelting: 2.3 million metric tonnes of CO 2 emissions avoided

40 Energy consumption in copper smelters 60 Total net energy concumptio on,gj/t Cu Outotec Flash Other Smelters Power (Other Smelters) Total Cu-Production, tpa based on Brook Hunt data 40

41 Example: Ferrochrome process Outotec s ferrochrome process has pelletizing phase. The use of pellets increases profitability in ferrochrome production Preheating and pelletizing i reduces energy consumption up to 25% High environmental limits can be met with closed furnace Utilizes scrubbed furnace gas as fuel in sintering and preheating BAT technology in Europe Outotec CDP Report (assured by PWC): Ferrochrome production: 1.5 million metric tonnes of CO 2 emissions avoided ption kwh/t Pow wer consum Electric power consumption in ferroalloy smelting depends d on chromite quality RUN-OF-MINES, BRIQUETTES, FINES Preheated CHROMITE QUALITY LUMPY ORE PELLETS Preheating & pelletizing reduces power consumption ~1,000kWh/t Outotec s process 41

42 Example: Grinding technology TPL TM (Turbo Pulp Lifter) technology for SAG mills increase mill capacity and saves energy up to 15% Efficiency in the grinding circuit improves the overall performance of the concentrator Outotec t provides Advanced d Control Tools (ACT) for grinding circuits: Desired particle size distribution is achieved and maintained Throughput of the mill is optimized Ensuring cost-effective, trouble-free and efficient i operation of the grinding circuit it 42

43 Example: Flotation technology Outotec sets new standards for Superior flotation performance: aeration, mixing and froth removing Low operating and maintenance costs and high equipment reliability The wide range of available cell sizes, including the world largest operating flotation cell (TC-300) permits plant design to be compact, economical and efficient 43

44 Example: Thickener technology The revolutionary SUPAFLO High Rate Thickener concept has pioneered and redefined the methods of clarification and thickening around the world over the past decade. 44

45 Example: Sulfuric acid plant technologies LUREC high concentration SO 2 processing Heat recovery system improves energy efficiency S melti ng 27 % El ectr ol yti c r efi ni ng 11 % Tr ansport ati on of concentr at e 5 % Tr ansport ati on of pr oduct s 5 % Mi ni ng 18 % Pr ocessi ng t o concentr at e 34 % Process comparison Basis 3000 mtpd LUREC savings Outotec has designed and delivered over 600 sulfuric acid plants. Plant cost (turnkey) -15 % Power consumption (kwh/t H 2 SO 4) -25 % Cooling water consumption (m³/t H 2 SO 4 ) -25 % Heat recovery (kwh/t H 2 SO 4 ) +50 % Emissions (kg SO 2 /t H 2 SO 4 ) -50 %

46 Example: Alumina calcining Outotec s Circulating Fluidized Bed (CFB) based calcining gprocess saves 30% in energy consumption compared to conventional rotary kiln technology Annual production is about 55 million tons alumina; total fuel consumption is estimated at 4.5 million tons per year Specific fuel consumption ranges from 66 kg fuel/ton alumina by Outotec s latest design to 120 kg fuel/ton alumina by a rotary kiln About 30% of installed alumina calcination capacity is still in the form of rotary kilns There is potential ti to save some 700, tons fuel per year if all calciners were of modern Outotec CFB design Outotec CDP Report (assured by PWC): Alumina calcination: 0.6 million metric tonnes of CO 2 emissions avoided Calciner delivery for Rio Tinto Alcan Gove, Australia 46

47 Appendices

48 Financial targets and dividend policy Outotec has defined sustainable profitable growth as its objective and adopted the following financial targets: EPS growth Average annual increase in earnings per share in excess of 10% Minimum i operating profit margin Annual operating profit margin at least 5% Balance sheet Strong balance sheet providing operational flexibility and enabling development of operations including potential acquisitions Dividend policy: approximately 40% of the annual net income Dividend payment history Year Dividend per share, EUR Pay out ratio, % Yield, % 2007 (financial year ending Dec 31, 2006) (financial year ending Dec 31, 2007) (financial year ending Dec 31, 2008) (financial year ending Dec 31, 2009)

49 Share information April 30, 2010 Free float 100% Some 16,600 shareholders Households 16% 55% of the shares in foreign ownership 19 analysts covering the company Spin off from Outokumpu and listed on NASDAQ OMX Helsinki on October 10, 2006 Outokumpu sold 88% of the shares at IPO and remaining 12% on April 27,

50 Profit recognition EPC/turnkey example 100 % 80 % Proje ect Profit 60 % 40 % Releasing of provisions 20 % 0 % Month Timing of large project completions affects quarterly earnings NOTE: The figures are illustrative and vary project by project 50