Sustainable use of Earth’s natural resources Company presentation Q1 2012

© Outotec - All rights reserved

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

Sales and operating profit development EUR million

2000 1800 1600 1400 1200 1000 800 600 400 200 0

Operating profit, %

12 Guidance 2012 Sales: EUR 1.7-1.9bn Ebit%: approx. 9-10

Strong R&D and IP portfolio • Approx. 5,000 patents or applications • Some EUR 33,5 million in R&D (2011) • 87% of order intake in 2011 is classified as Environmental Goods and Services (OECD definition)

2

Q1/2012

© Outotec - All rights reserved

Company presentation

8 6 4 2 **)

**)

0

Sales



10

*) Combined basis

Operating profit

Operating profit margin

**) from operations, excl. one-time costs and PPAs

• Some 4,100 professionals in 24 locations • Operating through flexible, scalable and asset light business model • Roughly 60-70% of sales from emerging markets (Dow Jones emerging market list) depending on project mix

Over a century as a technology leader, active M&A Year 2012

Demil Manutenção Industrial NUMCORE KILN SERVICES VPF, ASH DEC MILLTEAM EDMESTON AUBURN

2010

Listing on the Helsinki Stock Exchange

2006 OUTOKUMPU TECHNOLOGY

2001

BOLIDEN CONTECH NORDBERG GRINDING MILLS KHD ALUMINIUM AISCO, SUPAFLO WENMEC

1990

1970

OUTOKUMPU

1950 1900

3

Q1/2012

© Outotec - All rights reserved

Company presentation

AUSMELT

LURGI METALLURGIE

LAROX

ENERGY PRODUCTS OF IDAHO

Life cycle offerings delivered globally through four business areas Market Operations Supply Business Infrastructure

Non-ferrous Solutions

Ferrous Solutions

Energy, Light Metals & Environmental Solutions

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

Strategy Technology Management Finance & Control Legal Affairs Human Capital Communications and Corporate Responsibility

Services providing life cycle services

Peers /competitors

Competitive landscape is fragmented

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

4

Q1/2012

© Outotec - All rights reserved

Company presentation

Portfolio of the world’s best technologies Outotec is covering the whole value chain from ore to metal as well as has innovative applications to other industries Natural resources (ores, minerals, energy, water)

Metallurgical processing

5

Minerals processing

Sintering and pelletizing

Grinding

Smelting and refining

Flotation

Direct and smelting reduction

Filtration

Calcination

Physical separation

Roasting and off-gas handling

Thickening and clarification

Leaching and solution purification

Analyzers and process automation

Solvent extraction

Copper Nickel Zinc Cobalt Precious metals Aluminum

Electrorefining and electrowinning

Ferroalloys

Process control

Pellets/sinter

Chemicals Sulfuric acid production Water treatment Neutralization, effluent treatment, drinking water Energy Combustion and gasification, heat recovery, gas handling, bio energy, oil sand and oil shale processing

Services Expert services, spare parts and maintenance, operation, modernization and expansion, life cycle service contracts

Q1/2012

© Outotec - All rights reserved

Industrial minerals/concentrates

Company presentation

DRI/HBI/ Pig Iron Sulfuric acid Water Shale oil Char Energy

Strong leadership in sustainable technologies Several Outotec’s technologies are Best Available Techniques (BAT) rated by EU thanks to their high recovery, energy-efficiency and low CO2 emissions. Outotec deliveries:       

6

140 smelters 600 sulfuric acid plants 1,000 mills 5,000 flotation units 1,600 thickeners 3,500 filters 12 pelletizing and sintering plants for chromites (ferroalloys)

Q1/2012

© Outotec - All rights reserved

Company presentation

   

9 ferroalloy smelters 400 sintering plants (ferrous) 60 pelletizing plants (ferrous) 260 fluidized bed roasting plants (ferrous)

Maximizing the life cycle value

Engineering and supply

Concept  R&D services  Operate & maintain operational model set-up  Life-cycle cost optimization

 Maintenance strategy  Training programme  Equipment life assesment  IT systems and integration

Commissioning  Spare parts  Installation  Start-up and ramp-up services  Training

Operation  Spare parts  Modernizations  Technical services  Auditing  Training  Shutdown services  O&M

Decommissioning  Refurbishment of equipment for reuse  Plant decomissioning

Sustainability aspects Energy Efficiency – Water Treatment - Recycling – Closed Processes – Process Control - Health & Safety

7

Q1/2012

© Outotec - All rights reserved

Company presentation

Long-term customer relationships with all the industry’s top companies In 2011, top ten customers accounted for 30% of sales. Companies building their first plant/process accounted for less than 5% of the backlog. Selected reference customers of Outotec Major global mining companies

Intermediate sized companies

Local mining and metallurgical companies in emerging regions

Repeat business Outotec is offering ore-to-metal total solutions and life cycle services

8

Q1/2012

© Outotec - All rights reserved

Company presentation

Strong presence in all geographical markets Roughly 60-70% of sales from emerging markets (Dow Jones EM list) depending on project mix.

Sales by destination

Sales by end product

2011 (2010)

2011 (2010) Other *)

Americas

11% (16%)

EMEA (incl. CIS)

31% (34%)

44% (38%)

Copper 33% (25%)

Other metals 8% (6%) Sulfuric acid 5% (8%) Nickel 6% (7%) Zinc 3% (5%)

Asia Pacific 25% (28%)

Precious metals

Iron

10% (11%)

15% (12%) Ferroalloys

Aluminum

4% (3%)

5% (7%)

*) incl. energy, water and chemical industry

9

Q1/2012

© Outotec - All rights reserved

Company presentation

Outotec in China

© Outotec - All rights reserved

History  First deliveries in the 1960’s  Copper rod upcast machines, flash smelter technology, anode casting technology, analyzers, aluminium rodshop equipment

 1994 – Representative office established in Beijing  Technology & Copper Products

 2004 – Trading company established in Shanghai  Technology & trading only  Assembling is subcontracted

 2005 – first exports from China  2006 – Services business sold in local currency  2009 – Sales to China and India accounted for EUR 126 million (2008: EUR 142 million). Projects scopes are normally smaller in China  2010 – Integration of acquired Larox China with Outotec China operation, production and assembling factory in Suzhou  2011 – orders in China: Ferrochrome plants for Mintal Group and TISCO, copper flash smelting and converting plant for Guangxi Jinchuan Non-Ferrous Metals

11

June 18

© Outotec - All rights reserved

MS China Industrial Summit 2012

Outotec’s customers include all main metals producers in China Deliveries to China include:                 

12

Copper flash smelters Copper tankhouse equipment Ferrochrome plants Aluminum rod shop equipment Aluminum casting equipment Alumina calciners Sulfuric acid plant Process equipment for acid plants Roasting furnaces Zinc plant processes & equipment Processes for precious metals Pellet plant Flotation cells Grinding mills Thickeners Filters for solid-liquid separation Process automation & analyzers

June 18

© Outotec - All rights reserved

MS China Industrial Summit 2012

Latest Flash smelting technology delivered to China Copper smelter, refinery, precious metals and sulfuric acid plant in Yanggu, China

Yanggu Xiangguang Copper received the reputable Chinese environmental award. Thanks to Outotec's environmentally friendly technology, the copper plant will meet even the strictest environmental requirements not only now but for years to come.

13

June 18

© Outotec - All rights reserved

MS China Industrial Summit 2012

China’s 12th FYP is impacting on many levels

Sources: 12th FYP, McKinsey analysis

14

June 18

© Outotec - All rights reserved

MS China Industrial Summit 2012

Urbanization drives metals consumption

15

June 18

© Outotec - All rights reserved

MS China Industrial Summit 2012

Middle class is growing globally 





16

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 Household total disposable income will grow from RMB 11 trillion (2010) to RMB 39 trillion by 2025

June 18

© Outotec - All rights reserved

MS China Industrial Summit 2012

Emerging market GDP growth is driving metals demand GDP (PPP) growth in BRIC and Emerging vs Advanced economies 170 160

China

150

India

140

Russia

130

Brazil

120

Emerging and developing economies Advanced economies

110 100 2010

2011

2012

2013

2014

2015

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. Source: IMF, Sept 2011

17

June 18

© Outotec - All rights reserved

MS China Industrial Summit 2012

Copper demand per capita (kg)

18

June 18

© Outotec - All rights reserved

MS China Industrial Summit 2012

Outotec’s business opportunities in China   



Outotec is a well known provider of technologies in China since 1960s China has grown its copper production capacity by 5 times since 1994 while reducing the SO2 by more than half. Outotec is building two largest ferrochrome plants in China, Mintal Group and Wanbang-TISCO which is the largest stainless steel producer in the world. Further growth opportunities following the decrease of ore quality and the increased concern for environmental and energy issues (main focus in 12th 5yr plan) • Adoption of Outotec Solutions, China Ferroalloy Industry will save 40 – 50% electricity • There are about 2,000 small open furnaces in China producing about 40 million tons of ferroalloy per year, consuming electricity about 160 billion kWh, and emitting millions of tons of toxicants. • If all Chinese ferroalloy smelters adopt Outotec process, the total electricity saved per year roughly equals the power generated by Three Gorges Dam. • By increasing the recovery rate the toxicants (chromites) emitted can be significantly reduced. • Recovery more Titanium and Rare Earth Elements

  

19

New renewable energy and environmental technologies and solutions are required in China. China Sourcing gives more competitiveness for all Outotec business lines and will be further increase Proactive IPR management and protection process

June 18

© Outotec - All rights reserved

MS China Industrial Summit 2012

Q1/2012 Financial information

© Outotec - All rights reserved

Positive momentum continued 

The overall market activity was good and customer negotiation activity remained strong in all market areas



Positive long-term outlook for metals demand continues - copper, gold, aluminum and iron ore prices continued to be on a good level



Outotec succeeded well in scaling up its delivery capacity



Delivery times lengthened somewhat but had no material impact on delivery schedules or negotiations



Competitive landscape remained unchanged but varying by country and technology - industry consolidations continued



Tightening environmental regulations were reflected in increasing demand for Outotec’s sustainable technology solutions



Financing was available for companies with strong cash flows and balance sheets

21

Q1/2012

© Outotec - All rights reserved

Company presentation

Strong sales activity in all technology and market areas 

Order intake in Q1/2012 EUR 425.4 million (Q1/2011: EUR 343.7 million), +24%

Americas 35%

Copper concentrator technology for Grupo Mexico, Mexico nearly € 28 million

Concentrator technology for slag treatment plant for Codelco, Chile approx. € 10 million

EMEA (including CIS) 50%

Asia Pacific 14%

Feasibility study for alumina refinery for PT ANTAM, Indonesia

Gas cleaning and sulfuric acid plant for Kansanshi Mining, Zambia over € 80 million

Outotec offices

22

Q1/2012

© Outotec - All rights reserved

Company presentation

Order backlog continued to strengthen due to strongest ever Q1 order intake EUR million

2200

 Order backlog at the end of Q1/2012 was EUR 1,991.8 (1,444.4) million, 38% higher than at the end of Q1/2011

2000 1800 1600

 37 projects with value in excess of EUR 10 million, accounting for 65% of the backlog

1400 1200

 Roughly 60% (or approx.

1000

EUR 1,190 million) of the backlog is estimated to be delivered in 2012 and the rest in 2013 and beyond

803 800 600

493 371

400 200

186

240

235

532

475

418 384 299

168

419 260 120 139 106

350 269

202

357 344

425 327

111

0

Order backlog at the end of the period

23

Q1/2012

© Outotec - All rights reserved

Company presentation

Order intake by quarter Share of unannounced orders

Strong sales growth reflects successful execution and capability to scale up EUR million

Q1 2012

Q1 2011

Change %

Sales

410.4

247.5

+66

Gross margin, %

21.4

26.6

-

22.9

24.0

Operating profit from business operations

30.6

20.2

+52

131.9

121.5

- one-time costs (M&A)

-0.1

-

-

-4.7

-4.7

- PPA amortization

-3.0

-1.2

-

-6.6

-4.9

Reported operating profit

27.6

19.0

+45

120.5

111.9

FX impact (unrealized, realized)

-0.0

+3.8

-

-2.1

+1.7

Operating profit margin, %

6.7

7.7

-

7.8

8.1

- from business operations

7.5

8.2

-

8.5

8.8

24

Q1/2012

© Outotec - All rights reserved

Company presentation

Last 12 months

2011

1,548.5 1,385.6

Non-ferrous Solutions Q1 highlights:  Solid market demand continued  Strong order intake  Very strong sales growth  Good profitability  Continued good development in service sales Q1 2012

Q1 2011

Change %

2011

260.7

162.0

+61

947.6

Operating profit from business operations *)

26.3

19.1

+37

113.1

Operating profit*)

25.4

18.1

+41

107.7

Operating profit margin from business operations, %

10.1

11.8

-

11.9

9.7

11.1

-

11.4

EUR million Sales

Operating profit margin, %

*) unrealized and realized foreign exchange gains EUR 0.9 million (Q1/2011: gain of EUR 3.9 million) 25

Q1/2012

© Outotec - All rights reserved

Company presentation

Ferrous Solutions Q1 highlights: 

Low order intake (timing of large sales projects)



Very strong sales growth



Improving profitability

EUR million

Q1 2012

Q1 2011

Change %

2011

Sales

70.0

43.6

+61

221.1

Operating profit from business operations*)

5.5

3.2

+68

9.8

Operating profit*)

5.5

3.2

+68

6.7

Operating profit margin from business operations, %

7.8

7.5

-

4.4

Operating profit margin, %

7.8

7.5

-

3.1

*) unrealized and realized foreign exchange losses EUR 0.1 million (Q1/2011: loss of EUR 0.1 million) 26

Q1/2012

© Outotec - All rights reserved

Company presentation

Energy, Light Metals and Environmental Solutions Q1 highlights: 

Solid order intake



Very strong sales growth



Lower operating profit margin reflecting the progress of large projects in an early stage of completion when profit recognition is low

EUR million

Q1 2012

Q1 2011

Change %

2011

Sales

85.9

46.1

+87

236.1

Operating profit from business operations*)

6.0

3.5

+71

25.8

Operating profit*)

3.8

3.3

+15

23.8

Operating profit margin from business operations, %

6.9

7.6

-

10.9

Operating profit margin, %

4.5

7.3

-

10.1

*) unrealized and realized foreign exchange losses EUR 0.5 million (Q1/2011: gain of EUR 0.1 million). 27

Q1/2012

© Outotec - All rights reserved

Company presentation

Strong Services sales growth due to successful strategy execution and high capacity utilization rates of customers 

Service sales in Q1/2012 were EUR 89.5 million (Q1/2011: 71.1 million), up 26%   

Further penetration to installed base New service offerings Scaling up sales and delivery capability

EUR million

1400 1200



Service business represented 22% of sales (Q1/2011: 29%)



Ahead of schedule in reaching longterm Services sales target of EUR 500 million by the end of 2015

1000 800 600 400 200

282.5 55.3 80.6

343.5

141.2 148.6

0

Service sales

28

Q1/2012

© Outotec - All rights reserved

Outotec sales

Company presentation

89.5

Strong balance sheet enables further acquisitions

EUR million Net cash from operating activities

Q1 2011

Last 12 months

2011

9.9

59.8

197.2

247.0

-334.2

-248.7

-334.2

-339.1

380.6

327.6

380.6

399.5

36.4

36.6

36.4

39.1

-87.8

-75.9

-87.8

-84.9

-249.6

-153.0

-249.6

-270.3

ROI, %

25.1

20.4

27.7

26.4

ROE, %

19.8

14.7

24.3

20.9

Earnings per share, EUR

0.42

0.28

1.89

1.75

Net interest-bearing debt*) Equity*) Equity-to assets ratio, %*) Gearing, %*) Working capital*)

*) At the end of the period

29

Q1 2012

Q1/2012

© Outotec - All rights reserved

Company presentation

Personnel  

At the end of Q1/2012, Outotec had 4,123 employees (Q1/2011: 3,274) The increase was mainly due to acquisitions and personnel recruited for:  Project implementation  Service business



Temporary personnel accounted for 11.3% (March 31, 2011: 7.5%) of the total number of employees



Additionally some 729 FTE contracted people in projects (March 31, 2011: 349) Personnel by region at the end of the period EMEA

Americas

Asia Pacific

30

Q1/2012

© Outotec - All rights reserved

Company presentation

Personnel at the end of the period 4500 4000 3500 3000 2500 2000 1500 1000 500 0

3883 3128 3130 2674 1831 1802

2144 1797

4123

Events after Q1 New orders:  Mega size ilmenite smelter project to Cristal Global in the Kingdom of Saudi Arabia (over EUR 350 million)  Solvent extraction and electrowinning (SX-EW) technology for Grupo México's Buenavista del Cobre plant, in northern México (approx. EUR 22 million)  Emission Optimized Sintering process for next BPSL sinter project in India (EUR 20 million)  Major filtration technology order from Brazil (some tens of millions of EUR)  Flotation technology for Kennecott Utah Copper concentrator in the U.S. (Q1)  Iron ore pelletizing plant for Gol-E-Gohar Mining & Industrial Co., Iran (approx. EUR 80-85 million (approx. EUR 25 million booked in Q2)  Filtration technology for the lithium processing pilot plant in Bolivia (some millions of EUR) Acquisitions and partnerships:  Acquiring Demil Manutenção Industrial Ltda in Brazil  Exclusive rights to sell the Tower Mills (STM) grinding technology as Outotec® HIGmill Others:  Publishing of sustainability report 2011  BlackRock, Inc. in shares of Outotec Oyj exceeded 5%

31

Q1/2012

© Outotec - All rights reserved

Company presentation

Focus in 2012 – progress in Q1 Objective Order intake, scalability and execution excellence to ensure continuous growth Value based pricing, supply savings and scalability to ensure profitability improvement Solution offering and services to strengthen earnings logic M&A to strengthen offering portfolio and accelerate growth

32

Q1/2012

© Outotec - All rights reserved

Company presentation

Status

Market outlook  The long-term outlook for metals demand is expected to remain good and support further investments  Ongoing investments in new capacity are not sufficient to fulfill the future metals demand  Industry-specific trends increase the need for modern technology  Many countries are developing new export regulations to increase value capture from natural resources  Financing is available for good projects and for companies with strong cash flows and balance sheets  Export financing agencies are actively involved  Service business growth is mainly driven by • further penetration to Outotec’s large installed base • new CAPEX orders • customers’ capacity utilization rates

33

Q1/2012

© Outotec - All rights reserved

Company presentation

Financial guidance for 2012

Based on strong order backlog at the end of 2011, market outlook and customer tendering activity, management expects that in 2012: • sales will grow to approximately EUR 1.7-1.9 billion, and • operating profit margin from business operations will be approximately 9-10% (excluding one-time items and PPA amortizations). The achievement of the guidance is subject to overall development of world economy and financial markets, progress in projects in the order backlog, exchange rates, product mix, timing of new orders, license fee income and project completions.

34

Q1/2012

© Outotec - All rights reserved

Company presentation

Appendices

© Outotec - All rights reserved

Our mission:

Sustainable use of Earth's natural resources.

36

Q1/2012

© Outotec - All rights reserved

Company presentation

Our strategic intent:

The leading provider of sustainable minerals and metals processing solutions, and an innovative provider of sustainable energy and water processing solutions. 37

Q1/2012

© Outotec - All rights reserved

Company presentation

Outotec’s strategy in a nutshell

The best return on a customer’s investment Global integrated operations and local presence

Increasing value through life cycle solutions

Applying core technologies in new attractive growth areas

Improving productivity and scalability

Leadership in technology and innovation

Sustainable use of Earth’s natural resources 38

Q1/2012

© Outotec - All rights reserved

Company presentation

World megatrends impact our industry SUSTAINABILITY

POLARIZATION OF THE WORLD

Awareness increasing in environmental, social and economic sustainability.

Increasing gap between stagnating developed economies and fast growing emerging markets, dominance of China.

ENVIRONMENTAL PROBLEMS Global warming, pollution of environment, lack of clean water.

GLOBALIZATION Increasing competition, consolidation and intensifying global talent war.

FOCUSING

NATURAL RESOURCES

Outsourcing of non-core activities increasing and Asia is established as the world’s manufacturing powerhouse.

Natural resources are being exhausted and with current exploitation rate many resources will run out during the next decades.

NEW ENERGY PARADIGM Oil will run out by 2050 and nuclear power is being abandoned by many countries.

GLOBAL ECONOMY World economy has become highly interconnected and financial crises follow each others every few years.

DEMOGRAPHIC CHANGES World population and size of middle class will grow rapidly in emerging markets and demand for commodities will increase.

39

Q1/2012

© Outotec - All rights reserved

Company presentation

Ore grade Energy

Making metals requires a lot of energy and energy costs are constantly climbing. More energy-efficient processes are needed.

Emissions

Mining and metallurgical industries are major emitters of CO2 and other ecotoxic substances. Cleaner solutions must be developed.

Water

Water availability and pollution are critical issues. Advanced solutions for water cleaning, conservation and recycling are needed.

Oil peak is approaching. Oil is expected to run out by 2050 with current production rates, thus alternative sources are needed.

Recycling

Ore grades are declining and the demand for metals is increasing. To produce the current level of metal, more ore needs to be processed with advanced technology.

Oil peak

Demand for sustainable technology increases

40

Q1/2012

© Outotec - All rights reserved

The need for recycling is growing, thus requiring new technologies for turning scrap and waste into products.

Company presentation

Long-term requirement for copper mine production implies healthy mining equipment demand

41

Q1/2012

© Outotec - All rights reserved

Company presentation

Positive development of metal prices and demand have been the catalyst for new mine developments

Raw Materials Group mine map Phase status Construction Feasibility Prefeasibility Conceptual

Number of projects Examples of Outotec’s offerings 11/2011 2010 2009 230 190 84 Plant, process and solution deliveries 389 259 246 Piloting, bench scale testing, process design 470 243 225 Bench scale testing, process design 206 190 183 Laboratory services, process consept designs

Source: Raw Materials Data. Copyright: Raw Materials Group, 2011

42

Q1/2012

© Outotec - All rights reserved

Company presentation

Declining ore grades mean more throughput and advanced technologies are needed 

Exploration has not been sufficient in order to feed the mine production pipeline with enough new high grade ore deposits



Mined ore head grades have been steadily declining



This in turn has an effect on processed volumes and increases the need for efficient technologies

43

Q1/2012

© Outotec - All rights reserved

Company presentation

We enable sustainable operations

44

Q1/2012

© Outotec - All rights reserved

Company presentation

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

Value-based pricing

Services Project delivery System integration Proprietary equipments Technology

Technology, equipment, systems integration, project delivery

Outotec CAPEX solutions

Spare parts

Operation and maintenance

Upgrades

Outotec service solutions

Maximizing life cycle profitability for Customer and Outotec

45

Q1/2012

© Outotec - All rights reserved

Company presentation

Maintenance shutdown

Research and analysis

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

•

46

with high technological synergies and manageable risks Opportunities to provide innovative technological solutions in energy industry and industrial water treatment sector

Q1/2012

© Outotec - All rights reserved

Company presentation

Services Project delivery System integration Proprietary equipments Technology Current metals and minerals

IWT

Energy

Outotec’s long-term financial targets Targeting continuous profitable growth

Sales

CAGR 10-20%

Outotec targets to grow faster than the market resulting in compound average annual sales growth target in the range of 10-20%.

Operating profit margin

On average 10%

Annual operating profit margin from business operations is targeted to be on average 10%, excluding one time costs and purchase price allocations of acquired business.

Balance sheet

Maintain strong balance sheet to provide operational flexibility and enable acquisitions.

Dividend policy: Outotec aims to pay at least 40% of the annual net income.

47

Q1/2012

© Outotec - All rights reserved

Company presentation

Improving EBIT margin towards long-term target of average 10% Operating profit margin, %

EUR million 2000 1800 1600 1400

12

Guidance 2012: Sales: EUR 1.7-1.9bn EBIT%: approx. 9-10

10

L-T targets: Sales: 10-20% CAGR EBIT%: avg 10% Maintain strong balance sheet Div policy: at least 40%

8

1200 1000

6

800 4

600 400

2

200

**)

**) 0

0 2003 *) 2004 *) 2005 *) 2006 *) 2007

Sales

Operating profit

*) Combined basis

48

Investment areas in 2011&2012: • Services business • Sales and marketing • Supply and partnering network development • R&D • Shared business processes • IT platforms • M&A

Q1/2012

© Outotec - All rights reserved

2008

2009

2010

2011 2012E

Operating profit margin

**) from operations, excl. one time costs and PPAs

Company presentation

Investments today enable future growth and better salesto-fixed-cost ratio.

Services business continues on a growth track Sales target for Services EUR 500 million by the end of 2015

49

Q1/2012

© Outotec - All rights reserved

Company presentation

The growth will be achieved through: • Organic means • Bolt-on acquisitions • New life cycle service offerings

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

_

50

Q1/2012

© Outotec - All rights reserved

Pricing pressures Competition Cost inflation R&D investments Selling and marketing Administration

Company presentation

L-T Target: average 10%

+

Services sales Life cycle solutions Pricing excellence Supply savings Engineering productivity License fee incomes Global resourcing Scaling effect

M&A as part of growth strategy 

Outotec is looking for acquisitions which will • complement the existing technology portfolio, • accelerate growth in the new application areas such as energy and water, and • expand the Service offering and resources.

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Life cycle solutions Services

Processes Proprietary equipment

Technology

Examples of Outotec’s Best Available Technologies (BAT) 

Flash smelting and flash converting for copper and nickel



Zinc direct leaching

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Electrolytic refining of copper, nickel, zinc

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Circored® Direct reduction of iron ore fines

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Traveling grate process for iron ore pelletizing

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Emission optimized sintering for iron ores

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Ferrochrome process

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Alumina calcination

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Aluminum smelting (rodding plant, green paste plant)

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Partial roasting of copper concentrate

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Zinc roasting in fluidized bed

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Pyrite roasting

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Sulfuric acid production (single/double absorption)

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Spent acid regeneration

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Wet electrostatic precipitator

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Company presentation

Outotec delivers a new manganese sinter plant in Hotazel, for Kalagadi Manganese. The new plant will be one of the world’s largest manganese sinter plants (capacity 2.4 million tonnes of manganese sinter p.a.).

Mirabela Nickel, Santa Rita: nickel plant, Brazil

5 Mtpa Ni plant 

Technology package for entire flotation and dewatering plant • • • • • • • •



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12 x Outotec TankCell® 160 9 x Outotec TankCell® 70 4 x Outotec TankCell® 30 35m and 15m Outotec® Thickeners Outotec Courier® 6SL and Outotec PSI® 300 Outotec® SAG and Ball mills Installation and start-up supervision Performance guarantee

Start-up April 2009

Q1/2012

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Company presentation

Boliden, Aitik: copper-gold plant, Sweden

36 Mtpa Cu-Au plant 

Scope of supply: • • • • • • •



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26 x Outotec TankCell® 160 14 x Outotec TankCell® 50 12 x Outotec TankCell® 40 Flotation Air Blowers to above Regrinding mill 6,5*9m, 3 MW Total engineering Design and management

Start-up 2010

Q1/2012

© Outotec - All rights reserved

Company presentation

Inmet, Cobre Las Cruces: Copper SX-EW Plant 72,000 t/a

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Company presentation

Outotec® Smelting technology portfolio

Cu and Ni Flash Smelting

Ausmelt Top Submerged Lance (TSL) technology Kaldo-Cu, Pb, precious metals

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Company presentation

Outotec® Fire Refining and Anode Casting 

Outotec ® Anode Casting technology is the world's most popular copper anodes casting technology  Installed in over 200 weighing and casting units in smelters around the world  State-of-art technology for fire-refining: • • • • •

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Steam gas reduction system New cooling solutions Electrically heated launders Off-gas treatment Process control

Q1/2012

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Company presentation

Making progress in penetrating the oil shale market

New Enefit 280 shale oil winning plant is being built in Narva, Estonia. Development work has been carried out in collaboration with Eesti Energia.

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Company presentation

Ferrous Solutions - references 

More than 400 sinter plants since 1920  More than 60 pellet plants since 1967  More than 60 SL/RN direct reduction kilns since 1967  14 Midrex® modules

Emission Optimized Sintering; Ijmuiden, NL

• (no longer an Outotec offering)



1 Circored® fine ore reduction plant  1 Circoheat® ore preheater for HIsmelt®  12 SBSTM plants for FeCr furnaces, one for Nb

World’s largest pellet plant (7.5 million tpy) Samarco; Brazil

First commercial hydrogen-based direct reduction plant

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Company presentation

ELE: Sulfuric acid: Ma‘aden (Saudia Arabia)

Key facts

    

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Company presentation

Capacity: 3 x 5,000 tonnes per day (Sulfuric acid)  20% of World’s integrated fertilizer prod. Overall contract value: USD 500 million Contract: EPC Project implementation schedule: 31 months to mechanical completion

  

Market share: References: Key competitors: Chemetics; Monsanto



Highlights: World’s largest sulfuric acid plant  20% of world’s integrated fertilizer production

35% ~ 400

ELE: Light Metals/fluidized bed: Cajarmarquilla (Peru)

Key facts

       

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Company presentation

Capacity: 160,000 tonnes (zink concentrate) Overall contract value: EUR 85 million Contract: LSTK Project implementation schedule: 27 months to mechanical completion Market share: > 70% References: > 100 Key competitors: Chinese (for small plants) Highlights: Complete solution delivery from roaster to off-gas to acid plant

ELE: Light carbon plants: Emal (UAE)

Key Facts

       

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Company presentation

Capacity: 2 x 50 tonnes per hour (primary aluminium) Overall contract value: EUR 105 million Contract: EPC Project implementation schedule: 29 months to mechanical completion Market share: > 40% References: > 45 Key competitors: SOLIOS Carbone (Fives Group) Highlights: World benchmark for capacity Technology benchmark; vertical mill and RTO for pitch fume treatment

Management incentives 

Annual cash bonus (10-60%) • For the whole personnel • BOD sets targets annually



Share-based Incentive Program • • • •



BOD selects participants and sets targets annually 2010: 68 persons 2011: 94 persons 2012: 148 persons

Outotec Management Oy • For Executive Board members • For the long-term share performance

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Company presentation

Share information • • • • •

Free float 100% Some 13,960 shareholders Households 10.3% 52.4% of the shares in nominee register & foreign ownership 21 analysts covering the company

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Company presentation

Profit recognition – EPC/turnkey example

100 %

Project Profit

80 %

60 %

Releasing of provisions

40 %

20 %

0% 1

2

3

4

5

6

7

8

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Month

Timing of large project completions affects quarterly earnings NOTE: The figures are illustrative and vary project by project

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Company presentation