Investor Presentation
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Investor presentation December 2020 Forward looking statements It should be noted that certain statements herein which are not historical facts, including, without limitation, those regarding expectations for general economic development and the market situation, expectations for customer industry profitability and investment willingness, expectations for company growth, development and profitability and the realization of synergy benefits and cost savings, and statements preceded by ”expects”, ”estimates”, ”forecasts” or similar expressions, are forward looking statements. These statements are based on current decisions and plans and currently known factors. They involve risks and uncertainties which may cause the actual results to materially differ from the results currently expected by the company. Such factors include, but are not limited to: 1) general economic conditions, including fluctuations in exchange rates and interest levels which influence the operating environment and profitability of customers and thereby the orders received by the company and their margins 2) the competitive situation, especially significant technological solutions developed by competitors 3) the company’s own operating conditions, such as the success of production, product development and project management and their continuous development and improvement 4) the success of pending and future acquisitions and restructuring. Metso Outotec in brief Metso Outotec is a frontrunner in sustainable technologies, end-to- end solutions and services for the aggregates, minerals processing, 4.2 50+ and metals refining industries billion euro countries with globally. sales* presence By improving our customers’ energy and water efficiency, increasing their productivity and reducing environmental risks with our process 16,000+ 150 years of and product expertise, we are the employees, 80+ expertise in mining partner for positive change. nationalities and metal * Illustrative combined in 2019. Metso Outotec key financials – illustrative 2019 combined Sales EUR million Sales by industry1 Sales by geography1 4,186 13% 23% Services 26% share of sales 56% 42% 35% Adjusted EBITA2 61% EUR million / % 525 / 12.5% Aggregates EMEA 1. Illustrative combined figures of Metso Minerals business carve-out and Mining Americas Outotec continuing operations' sales for 2019 2. Combined Metso Minerals business carve-out adjusted EBITA and Outotec Metals and recycling APAC continuing operations’ adjusted EBITA for 2019 Our purpose Enabling sustainable modern life Our vision To be customers’ number-one choice for sustainable use of earth’s natural resources. Together we deliver service, reliability, innovation and results – safely. Our strategy Strategy will be implemented via Performance Integration and TOP Priorities culture financial performance Tier-1 company Sustainability Customer centricity Target to be industry leading company with strong financial performance Adjusted EBITA Maintaining margin of investment >15% grade credit over the cycle rating Dividend payout of Progress in sustainability at least in alignment with the 50% 1.5°C of earnings per share commitment Our key strengths provide a strong base… Widest offering Leading services Customer base Strong technology Scale & financial and capabilities expertise and strong brand and R&D power position ...which is supported by focused organization with clear roles and responsibilities Business areas Market • P&L responsibility areas • Offering • Customer service • Go-to-market models • Sales & account 8 • R&D 5 management • Local operations • Scale benefits • Best practices Global functions • Global tools • Cost efficiency 4 Our strong portfolio with aftermarket opportunities Aggregates Minerals processing Metals 25% of sales 63% of sales 8% of sales Global #1 Global #1 Global #1 Aftermarket potential Aftermarket potential Aftermarket potential ~35-45% ~60-70% ~30-40% Note: sales split year-to-date 2020, excluding Recycling 4% Emphasizing services and product development CONTINUOUSLY FOCUS ON PRODUCT GROW SERVICES DEVELOPMENT • Reinforce presence in Insert B•acBuildingkgrou onnd our P iendctu-tore- service-intensive Foendr b eprocessst res uknowledgelt, use businesses an image that is 16:9 • Standardized and pre- • Profitability and engineered products stability over cycles • Securing service • Grow coverage of own business potential via installed base and design to service grow beyond that • Reducing dependency on big projects We are on track in delivering the integration synergies Synergies at announcement of transaction (July 4, 2019): • EUR 100 million cost synergies • EUR 150 million revenue Synergies confirmed after synergies merger (August 4, 2020): • In three years • EUR 120 million cost synergies by end of 2021 Current update at Q3/2020: • EUR 50 million run-rate by end of 2020 • EUR 31 million run-rate in • EUR 150 million revenue synergies cost synergies achieved by end of 2022 • EUR 50 million run-rate to be delivered by end of 2020 November 11, 2020 14 Business specific profitability improvement actions continue Earlier initiated actions continue uninterrupted in Minerals and Aggregates, Metals restructuring and turnaround actions under planning Supply footprint Customer centricity R&D • Ensuring scale and competitiveness • Improving on-time delivery • Ensuring consistent roadmap and • Focusing on reducing internal logistics • Ensuring availability and reliability gate structure and complexity • Focusing on productization, • Improving lead times to reduce working serviceability and sustainability capital Strategy execution will result in measurable financial improvement Building blocks of adj. EBITA % improvement Financial targets Adjusted EBITA >15% over the cycle 11.2 Maintaining an ‘investment- grade’ credit rating Dividend pay-out of at least 50% of earnings per share Progress in sustainability in alignment with the 1.5 °C commitment * Pro forma as published for continuing operations ** Recycling divestment considered, Metals turnaround tbc (work-in-progress) Action taken in Metals & Recycling • Metals’ performance has been unsatisfactory • Restructuring and turnaround initiated • Business scope and cost structure to be addressed • Recycling business to be divested as a result of portfolio assessment • Target to find a new owner to leverage the full potential of the business Our core industries have a solid growth outlook… AGGREGATES MINERALS PROCESSING METAL REFINING – equipment market growth – equipment market growth – equipment market growth EUR billion EUR billion EUR billion 10 4 ~6 6 ~8-10 8 ~3 5 ~7 CAGR CAGR ~2-3 CAGR 19-23F 6 19E-23F 19E-23F 4 4-6% 3-6% 2 3-6% 4 2 2 0 0 0 2019E 2023F 2019E 2023F 2019E 2023F Source: Woodmac; projects data evaluation …and our exposure is balanced… ~80% of sales spread across 4 major applications 9% 10% 30% Copper Aggregates Iron Gold Battery metals 13% Other metals 24% 14% Excluding recycling and other industries …between three major growing metals… MINING CAPEX PRODUCTION 2019-2023 Current market Share of M:O sales M:O addressable market, EUR billion balance COPPER (total committed) 24 21 Slight oversupply Mt +4% Deficit expected >2023 30% 2019 2023 ~8-10 ~7 CAGR IRON ORE 3-6% 2.423 2.534 Mt Slight oversupply +1% Strong demand from 14% China continues Pelletizing driving 2019 2023 2019 2023 growth GOLD 132 120 Moz Balanced 13% +2% p.a. Source: Woodmac, S&P Global Market intelligence 2019 2023 …and a good position in fast-emerging battery metal processing and recycling markets GLOBAL LI-ION DEMAND 2019-30, Mt Current market Future market balance balance BATTERY CELL NICKEL DEMAND (battery-grade / +23% p.a. HPAL route) GWh 1.19 Slight oversupply Shortage of battery-grade is expected after 2025 +26% p.a. 0.12 2019 2030 2,501 LITHIUM +18% p.a. Oversupply expected to Shortage after 2026 last until 2026 1.90 0.32 241 2019 2030 2020 2030 COBALT +7% p.a. Balanced market Shortage 2010-17, no major 0.33 Magnitude dependent on disruptions intensity in batteries is 0.15 expected to decline 2019 2030 Source: S&P Global Market Inteligence Our commitment to the 1.5 °C journey Handprint: Sustainable offering and innovations Energy Water Offering in Safe efficiency and efficiency circularity operations emissions Footprint: Responsible and trusted partner Environmental Responsible Engaged Health and efficiency in procurement and diverse safety operations experts Our business areas Aggregates Minerals Metals Services Consumables Crushing and Equipment and Processing Spare parts, Comprehensive screening full plant solutions and refurbishments offering of wear equipment for solutions for equipment for and parts for mining the production minerals metals refining professional and aggregates of aggregates processing and chemical services for processes processing mining, metals and aggregates customers Our full offering from ore to metal Minerals processing Metallurgy Aggregates processing Prospecting, exploration, Comminution: Comminution: Separation: Separation: From ore Metals refining To development, extraction dry wet beneficiation dewatering body metal Classification / Materials handling / Slurry handling Leading Metso Outotec o f f e r i n g – equipment, systems, lifecycle services Minerals processing offering Metals refining offering • Crushing • Grinding • Dewatering • Pyro- and hydrometallurgy • Screening • Flotation • Tailings systems • Ferrous metals, ferroalloys • Bulk materials handling • Slurry handling • Concentrator plants • Base, precious, battery metals • Leaching