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Sustainable use of Earth’s natural resources

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1 Sustainable use of Earth’s natural resources
3/31/2017 Sustainable use of Earth’s natural resources CEO Pertti Korhonen SEB Enskilda Nordic Seminar January 10, 2012

2 Outotec – expert in sustainable technology
Outotec develops and delivers leading technologies enabling sustainable use of Earth’s natural resources Outotec guarantees the best ROI to customers’ life cycle solutions in Minerals and Metallurgical processing Energy production Industrial Water Treatment Chemical industry Technology development and deliveries since 1890s to over 80 countries in all key markets Strong R&D and IP portfolio Approx. 5,000 patents or applications Some EUR 35 million in R&D (2010) 72% of order intake in 2010 is classified as Environmental Goods and Services (OECD definition) Sales and operating profit development EUR million Guidance Sales: EUR bn Ebit%: approx. 8-9 Operating profit, % **) *) Combined basis **) from operations, excl. one-time costs and PPAs Some 3,700 professionals in 25 locations Operating through flexible, scalable and asset light business model Roughly 2/3 of sales (2010) from emerging markets (Dow Jones emerging market list) 2012 SEB Enskilda Nordic Seminar © Outotec Oyj

3 Over a century as a technology leader
3/31/2017 Over a century as a technology leader Year 2012 2011 2010 2006 2001 1990 1970 1950 1900 VPF, ASH DEC, EPI, KILN SERVICES MILLTEAM, EDMESTON AUBURN (2008) Listing on the NASDAQ OMX Helsinki OUTOKUMPU TECHNOLOGY AUSMELT BOLIDEN CONTECH OUTOKUMPU LURGI METALLURGIE GRINDING MILLS KHD ALUMINIUM AISCO, SUPAFLO WENMEC LAROX 2012 SEB Enskilda Nordic Seminar

4 Life cycle offerings delivered globally through four business areas
Market Operations Supply Business Infrastructure Strategy Technology Management Finance & Control Legal Affairs Human Capital for the processing of copper, nickel, zinc, lead, gold, silver, platinum group metals, industrial minerals as well as valuable minor metals for the production of concentrates, industrial minerals, pellets, sinter, pig iron, direct reduced iron, ferroalloys, and titanium feedstock for oil shale, oil sands and biomass processing, light metals and sulfuric acid production, off-gas handling, and industrial water treatment providing life cycle services Non-ferrous Solutions Ferrous Solutions Energy, Light Metals & Environmental Solutions Services Jacobs (Aker), Andritz, Bateman Engineering/Litwin, BGRIMM, CITIC, Delcor, EPCM, FLS, Krupp Polysius, Mesco, Metso, PERI, Siemens, SMS Meer, Thermo Fisher, WesTech, Xstrata Jacobs (Aker), Bateman Engineering, BSIET, Danieli, Downer, FLS, Kobelco, Metso, Midrex, Siemens, SMS Siemag, Tenova Pyromet Jacobs (Aker), Alcan, Alstom, Brochot, FLS, Foster Wheeler, GEA, MECS, Siemens, Solios, Stultz, Veolia FLS, Metso, local competitors, internal maintenance departments Engineering: AMEC, Ausenco, Bechtel, Chalieco, Enfi, Fluor, Hatch, MCC, NERIN, NFC, SNC-Lavalin, SRK, Worley Parsons Competitive landscape is fragmented, no face-to-face competitor Peers /competitors 2012 SEB Enskilda Nordic Seminar

5 Natural resources (ores, minerals, energy, water)
3/31/2017 Portfolio of the world’s best technologies covers the whole value chain from ore to metal Natural resources (ores, minerals, energy, water) Minerals processing Grinding Flotation Filtration Physical separation Thickening and clarification Analyzers and process automation Metallurgical processing Sintering and pelletizing Smelting and refining Direct and smelting reduction Calcination Roasting and off-gas handling Leaching and solution purification Solvent extraction Electrorefining and electrowinning Process control Industrial minerals/concentrates Copper Nickel Zinc Cobalt Precious metals Aluminum Ferroalloys Pellets/sinter DRI/HBI/ Pig Iron Sulfuric acid Water Shale oil Char Energy Services Expert services, spare parts and maintenance, operation, modernization and expansion, life cycle service contracts Chemicals Sulfuric acid production Energy Combustion and gasification, heat recovery, gas handling, bio energy, oil sand and oil shale processing Water treatment Neutralization, effluent treatment, drinking water 2012 SEB Enskilda Nordic Seminar

6 Examples of Outotec’s Best Available Technologies (BAT)
Flash smelting and flash converting for copper and nickel Zinc direct leaching Electrolytic refining of copper, nickel, zinc Circored® Direct reduction of iron ore fines Traveling grate process for iron ore pelletizing Emission optimized sintering for iron ores Ferrochrome process Alumina calcination Aluminum smelting (rodding plant, green paste plant) Partial roasting of copper concentrate Zinc roasting in fluidized bed Pyrite roasting Sulfuric acid production (single/double absorption) Spent acid regeneration Wet electrostatic precipitator Outotec delivers a new manganese sinter plant in Hotazel, for Kalagadi Manganese. The new plant will be one of the largest manganese sinter plants (capacity 2.4 million tonnes of manganese sinter p.a.). 2012 SEB Enskilda Nordic Seminar

7 Long-term customer relationships with all the industry’s top companies
Selected reference customers of Outotec Large global mining companies (seniors) Small and medium sized companies (juniors) Local mining and metallurgical companies in emerging regions Repeat business Multiple technologies for single companies The life-cycle customer approach aims at servicing its customers over the full life of a mining site / metallurgical plant Outotec has a strong track record for delivering multiple technologies to single companies 2012 SEB Enskilda Nordic Seminar

8 Industry drivers

9 Emerging market GDP growth is driving metals demand
Long-term metals demand is expected to continue healthy as GDP growth is driving the metals consumption per capita in emerging markets due to urbanization and investments into infrastructure. High GDP growth drives continuing growth of commodities demand in the range of 4 to 7% p.a. Source: IMF, Sept 2011 2012 SEB Enskilda Nordic Seminar

10 Middle class is growing globally
The share of consumers from emerging markets in the global population is expected to double in the next 20 years which will push demand for commodities The rise of the middle class will drive strong growth of consumer spending in emerging markets 2012 SEB Enskilda Nordic Seminar

11 Demand for sustainable technology increases
Ore grades are declining and the demand for metals is increasing. In order to meet the demand, more ore needs to be processed with more advanced technology. Ore grade Making metals requires a lot of energy and energy costs are constantly climbing. More energy-efficient processes are needed. Energy Mining and metallurgical industries are major emitters of CO2 and eco-toxic substances. Cleaner solutions must be developed. Emissions Water availability and pollution are critical issues. Advanced solutions for water cleaning, conservation and recycling are needed. Water Peak oil is approaching. Oil is expected to run out by 2050 with current production rates, thus alternative sources are needed. Peak oil The need for recycling is growing, thus requiring new technologies for turning scrap and waste into products. Recycling 2012 SEB Enskilda Nordic Seminar

12 Industry’s current and future technology trends are favorable for Outotec
Current trends Larger capacities Continuous processes (vs Batch process) Safer processes and cleaner working environment Higher reliability, availability and maintainability Water, energy and material efficiency Zero impact extraction technologies Intelligent automation with remote process control and monitoring Future trends Overall eco-efficiency from mine to metal Shorter process chains Bioprocessing Enhanced leaching technologies with efficient lixiviants Recycling of novel materials Renewable energy technologies Quantum leap technologies 2012 SEB Enskilda Nordic Seminar

13 Positive development of metal prices and demand have been the catalyst for new mine developments
Raw Materials Group mine map Phase status Number of projects Examples of Outotec’s 11/2011 2010 2009 offerings Construction 230 190 84 Plant, process and solution deliveries Feasibility 389 259 246 Piloting, bench scale testing, process design Prefeasibility 470 243 225 bench scale testing, process design Conceptual 206 183 Laboratory services, process consept designs Source: Raw Materials Data. Copyright: Raw Materials Group, 2011 2012 SEB Enskilda Nordic Seminar

14 Outotec’s strategy in a nutshell
The best return on a customer’s investment Global integrated operations and local presence Applying core technologies in new attractive growth areas Increasing value through life cycle solutions Improving productivity and scalability Leadership in technology and innovation Sustainable use of Earth’s natural resources Q1-Q3/2011 Company presentation

15 Increasing value through life cycle solutions
We strengthen our earnings logic by offering ore-to-metal total solutions and life cycle services. Outotec solution elements Value Growing solution scope Services Project delivery System integration Value-based pricing Proprietary equipments We minimize the lifecycle costs of our customers’ sustainable operations through best available technology and service solutions. Pertti:- teksti pitäisi katsoa vielä läpi - ei ole nyt sujuva. Miettikää Antti Laulaisen kanssa pohjautuen Antin OT mgmt forumissa läpikäymään solutions business määrittelyyn. Pitää saada artikulaatio napakammaksi. - lisäksi tästä jää puuttumaan se tärkeä asia, että minerals&metals procesing liiketoiminnassa nimenomaan tämä on se ydinstrategia vahvistaa ansaintalogiikkaamme ja kasvaa nopeammin kuin markkina ja pärjätä niitä kilpailijoita vastaan jotka kilpailevat pelkällä hinnalla. Technology, equipment, systems integration, project delivery Spare parts Operation and maintenance Technology Upgrades Maintenance shutdown Research and analysis Outotec CAPEX solutions Outotec service solutions Maximizing life cycle profitability for Customer and Outotec Q1-Q3/2011 Company presentation

16 Applying core technologies in attractive new growth areas
Outotec uses proven technologies and core capabilities to create innovative solutions to adjacent industries. Entering adjacent industries with high technological synergies and manageable risks Opportunities to provide expert services and innovative technological solutions in energy industry and industrial water treatment sector Current metals and minerals IWT Energy Project delivery System integration Services Proprietary equipments Technology Q1-Q3/2011 Company presentation

17 Q3 results in brief and delivering long-term financial targets

18 Strong order momentum in Q3
Order intake in Q1-Q3/2011 EUR 1,678.4 million (Q1-Q3/2010: EUR 1,038.2 million), +62% Order intake in Q3/2011 EUR million (Q3/2010: EUR million), +198% Orders from EMEA (including CIS) represented 52%, Americas 34% and Asia Pacific 14% Concentrator technology (gold) for the Petropavlovsk Group, Russia € 25 million Gas cleaning and sulfuric acid plant for OJSC Almalyk Mining & Metallurgical Company, Uzbekistan approx. € 30 million Copper concentrator for ZAO Miheevsky GOK, Russia € 60 million High Gradient Magnetic Separators (iron) for London Mining Plc, Sierra Leone over € 10 million Iron ore pelletizing plant for Novolipetsk Metallurgisk Kombinat, Russia € 150 million Aluminum smelter technology for Emirates Aluminium PJSC (EMAL), Abu Dhabi over € 100 million Ferrochrome plant for Mintal Group Co. Ltd, China value not disclosed 2 Calciners for Ma'aden Bauxite Aluminium Company, Saudi Arabia € 62 million (roughly € 50 million in Q3 order intake) Concentrator technology for Codelco, Chile approx. € 24 million (half in Q2 and the rest in Q3) Outotec offices 2012 SEB Enskilda Nordic Seminar

19 Record-high order intake in Q3 resulting in order backlog over EUR 2bn
EUR million Order backlog at the end of Q3/2011 was EUR 2, (1,332.2) million, 54% higher than at the end of Q3/2010 35 projects with value in excess of EUR 10 million, accounting for 68% of the backlog Roughly 25% (or approx. EUR 510 million) of the backlog is estimated to be delivered in 2011 and the rest in 2012 and beyond Strong quarterly fluctuations in order intake Announced orders in Q4/2011: approx EUR 100 million Share of unannounced orders 2012 SEB Enskilda Nordic Seminar

20 Solid organic sales growth and improved profitability
Solid organic sales growth and improved profitability EUR million Q1-Q3 2011 Q1-Q3 2010 Change % Last 12 months 2010 Q3 2011 Change % Sales 888.8 639.4 +39.0 1,219.1 969.6 352.8 228.5 +54.4 Gross margin, % 24.0 25.8 24.8 26.2 24.9 27.3 Operating profit from business operations 66.6 41.2 +61.6 100.1 74.7 34.3 26.4 +30.0 - one-time restructuring cost -22.3 -4.2 -26.5 -6.2 - PPA amortization -3.6 -7.6 -5.4 -9.4 -1.2 -2.0 + revaluation of Ausmelt shares - +2.2 + Other +0.6 Reported operating profit 63.0 13.5 +367.4 91.1 41.6 33.2 18.1 +83.0 FX impact (unrealized, realized) +2.3 +3.3 +0.9 +1.9 -2.5 +4.7 Operating profit margin, % 7.1 2.1 7.5 4.3 9.4 7.9 - from business operations, % 6.4 8.2 7.7 9.7 11.5 2012 SEB Enskilda Nordic Seminar

21 Services – very strong organic growth
Sales of the Service business in Q1- Q3 were EUR million (Q1- Q3/2010: million), up 29% In the reporting period, Service business represents 26% of sales (Q1-Q3/2010: 28%) Sales of the Service business in Q3/2011 were EUR 87.7 million, representing 25% of sales (Q3/2010: million, 30% of sales) Long-term Services sales target: EUR 500 million by the end of 2015 EUR million 2012 SEB Enskilda Nordic Seminar

22 Strong cash flow and further strengthened financial position
EUR million Q1-Q3 2011 Q1-Q3 2010 Last 12 months 2010 Q3 2011 Net cash from operating activities 225.8 92.3 221.0 87.5 120.1 50.3 Net interest-bearing debt*) -356.7 -206.0 -200.9 Equity*) 351.2 328.0 357.7 Equity-to assets ratio, %*) 39.3 41.9 41.2 Gearing, %*) -101.6 -62.8 -56.2 Working capital*) -269.6 -141.3 -113.5 ROI, % 21.8 3.9 24.2 9.2 34.6 18.5 ROE, % 15.9 3.3 17.9 7.6 25.5 14.2 Earnings per share, EUR 0.93 0.18 1.34 0.59 0.48 0.25 *) At the end of the period 2012 SEB Enskilda Nordic Seminar

23 Improving EBIT margin towards long-term target of average 10%
Guidance Sales: EUR bn EBIT%: approx. 8-9 L-T targets: Sales: 10-20% CAGR EBIT%: avg 10% Maintain strong balance sheet Div policy: at least 40% EUR million Operating profit margin, % 2010 EUR 26 million annualized savings have been reinvested into future growth and profitability improvement Investment areas in 2011: Services business Sales and marketing Supply and partnering network development R&D Shared business processes IT platforms M&A Investments today enable future growth and better sales- to-fixed-cost ratio. **) Financial Statements Review 2011 will be published on Thursday, February 9, 2012. *) Combined basis **) from operations, excl. one time costs and PPAs 2012 SEB Enskilda Nordic Seminar

24 Key factors of operating profit margin development
Quartely and annual fluctuations Project scope & mix (CAPEX vs Service) Timing of license fee payments Timing and success of project completions Percentage of Completion schedules Foreign Exchange rates L-T Target: average 10% Services sales Life cycle solutions Pricing excellence Supply savings Engineering productivity License fee incomes Global resourcing Scaling effect _ Pricing pressures Competition Cost inflation R&D investments Selling and marketing Administration + 2012 SEB Enskilda Nordic Seminar

25 Events after Q3/2011 Outotec has agreed with Luossavaara-Kiirunavaara AB (LKAB) on a delivery of technology package for thickening the tailings in the Svappavaara iron ore mine in Sweden. The contract value is some millions of Euros. Outotec acquired a furnace refractory demolition business of Kiln Services Australia Pty Ltd. The parties have agreed not to disclose the purchase price. Outotec acquired all interests in Energy Products of Idaho Limited Partnership (EPI) in the United States. The acquisition price consists of two components: a fixed cash element of approx. EUR 43 million and an earn-out payment of max EUR 25 million based on EPI's financial performance in 2012 and 2013. Outotec and one of the world's leading sustainability consulting companies, PE International (Germany), announced a joint development of a new software interface for metals production sustainability and lifecycle evaluations. Greenfield copper production plant for Guangxi Jinchuan Non-Ferrous Metals Compay in Fangchenggang, China. Over EUR 30 million. Outotec received jury's honorary mention in the competition evaluating the corporate responsibility reporting of the Finnish companies. Outotec published its first corporate responsibility report, Outotec Sustainability report 2010, this year. New copper-molybdenum concentrator for Quadra FNX Mining Ltd in Sierra Gorda, Chile. EUR 26 million (the majority is booked in Q3 order intake with a small part being booked in Q4). Gold pressure oxidation (POX) technology for Russian Petropavlovsk Group. The contracts complement contracts disclosed in May and July EUR 34 million (the majority is booked in Q4 order intake with a small part being booked in Q3). New ferrochrome plant based on Outotec's proprietary technology for TISCO, on the to Jinzhong, China. Value not disclosed. On October Outotec was featured in CDP’s Nordic Carbon Disclosure Leadership Index. Outotec received 81 out of 100 points and was ranked among the top 10 percent of the 260 companies. 2012 SEB Enskilda Nordic Seminar

26 Sustainable use of Earth's natural resources.
3/31/2017 Our mission: Sustainable use of Earth's natural resources. 2012 SEB Enskilda Nordic Seminar

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