Review by the
President & CEO
18.3.2014
Sakari Tamminen
1
Sakari Tamminen
Annual General Meeting of
Rautaruukki Corporatio...
Contents
• Strategic focus areas
• Financial performance in 2013
• Ruukki’s transition to a construction and steel special...
Strategic focus areas
18.3.2014
Sakari Tamminen
3
Ruukki’s business areas
18 March 2014 Sakari Tamminen4
Back to profitability
Net sales €292m
Operating loss €10m
Ruukki Bu...
Energy-efficient construction is a growing
business opportunity
18 March 20145 Sakari Tamminen
Products utilising renewabl...
Ruukki Building Products
Foundation and
infrastructure construction
products: steel piles,
retaining wall structures,
guar...
Sakari Tamminen7
Ruukki’s energy panel system saves energy costs
Itella’s logistics centre exceeded air tightness expectat...
8
Ruukki Building Systems
Nordics, Baltics, CEE
Frame and envelope structure design,
manufacture and installation
Russia
C...
Sakari Tamminen9
The world’s largest gasification power plant fired by
waste fuel (Mälarenergi, Sweden)
Ruukki delivered t...
10
Metals
– Ruukki transforming strongly to special steels
Standard steels: 930M€
Hot-rolled special steels
High-strength ...
Products
Segments
and customers
Geographical regions
Nykyinen
liiketoiminta
• Growth from new customers
• Raex 400 tubes, ...
18 March 2014 Sakari Tamminen12
Inmeco (Brazil) – Sustainability and higher payloads
New materials result in significant p...
Yhteenlaskettu tuotekate
Profitability improvement in the steel business
Tuotekate
Korkea
Keskim.
Matala
Volyymi
RT
&
AL
S...
Financial performance
in 2013
18.3.2014
Sakari Tamminen
14
Sakari Tamminen18 March 2014
2013 highlights
• Profitability improved in all business areas.
– Most positive development w...
Net sales down 7% due mostly to lower
market prices of steel products
18 March 2014 Sakari Tamminen16
Ruukki Building Prod...
Profitability improved in all business areas
18 March 2014 Sakari Tamminen17
Operating profit €39 million (-50) in 2013
Op...
336
621
770 765
693
161 173 179
97 90
22.3
44.7
60.3
71.2
68.5
0
10
20
30
40
50
60
70
80
0
100
200
300
400
500
600
700
800...
182
‐64
114
172
184
30
‐226
‐57
78
101
‐250
‐150
‐50
50
150
250
2009
2010
2011
2012
2013
Cash flow improved to €184 millio...
Building Products’ net sales
18 March 2014 Sakari Tamminen20
Net sales by product group (€m)*
Full-year net sales down 5%,...
Building Products’ profitability clearly
improved
18 March 2014 Sakari Tamminen21
EBIT and EBITDA (€m) Comparable operatin...
Building Systems’ net sales at same level
as a year earlier
18 March 2014 Sakari Tamminen22
Net sales by market area, (€m)...
Building Systems’ profitability improved
year on year, but still not yet at a
satisfactory level
18 March 2014 Sakari Tamm...
Metals’ comparable net sales down 10%
18 March 2014 Sakari Tamminen24
Net sales by product group*, (€m)
Clear rise in deli...
Metals’ profitability improved clearly
18 March 2014 Sakari Tamminen25
Impact of efficiency projects was €48 million
Compa...
Share of special steel products
Net sales of special steels and % of Metals’ net sales*
18 March 2014 Sakari Tamminen26
Ne...
Net sales:
Comparable net sales in 2014 are estimated to grow
compared to 2013.
18 March 2014 Sakari Tamminen27
Guidance f...
Ruukki’s transition to
a construction and
steel specialist
18.3.2014
Sakari Tamminen
28
Reinforcement
steels business
(Nordics and
Germany , €400m)
18 March 2014 Sakari Tamminen29
Main disposals and acquisition...
Long-term focus on special steels
Advanced production technology and broad product
portfolio create a strong foundation fo...
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Construction Spec...
Operating profit of €2.4 billion and EBITDA of
€4.0 billion during ten years
18 March 2014 Sakari Tamminen32
Reported net ...
0
20
40
60
80
100
120
140
160
0
20
40
60
80
100
120
140
160
180
200
220
240
260
280
300
1999
2000
2001
2002
2003
2004
2005...
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
1,6
1,8
2,0
2,2
2,4
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
...
Headcount development 1999-2013
18 March 2014 Sakari Tamminen35
12 491
13 000 12 975
12 804
12 047 12 126
11 374
13 303
14...
Business environment
in the steel industry
18.3.2014
Sakari Tamminen
36
36
CIS
79
EU
209
Asia
25
Nafta*
19
Latin
America*
*nominal gross overcapacity is used for the regions indicated.
Sources: ...
18 March 2014 Sakari Tamminen38
70%
75%
80%
85%
90%
95%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2...
China and other emerging economies
sustain steel market growth – Europe
stagnates
Apparent steel consumption
18 March 2014...
0
50
100
150
200
250
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014F
Special steel market World EU 27
Market for ...
Creating a more competitive steel company with global reach
SSAB and Ruukki – more competitive together
 The combined company will operate on the global market and
offer customers h...
A combination with a strong industrial logic
 Flexible and cost-effective production system to better adapt to
changes in...
1
2
3
11
22
Luleå
Broader steel production base in the Nordic countries
1
2
3
Borlänge
Oxelösund
Raahe
Hämeenlinna
11
22
S...
Overview
Plannja manufacturing
Ruukki manufacturing
Plannja Ruukki Combined
Net sales €120m €740m €860m
Employees 371 3 26...
Value creating share exchange offer for all
shareholders
 For each Rautaruukki share is being offered:
– 0.4752 newly iss...
Estimated timetable of the share exchange offer
 22 January 2014 announcement of the exchange offer
 9 April 2014 SSAB’s...
18 March 2014 Sakari Tamminen48
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Annual General Meeting of Rautaruukki Corporation 18 March 2014 - Review by the President and CEO

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Annual General Meeting of Rautaruukki Corporation 18 March 2014 - Review by the President and CEO

  1. 1. Review by the President & CEO 18.3.2014 Sakari Tamminen 1 Sakari Tamminen Annual General Meeting of Rautaruukki Corporation 18 March 2014
  2. 2. Contents • Strategic focus areas • Financial performance in 2013 • Ruukki’s transition to a construction and steel specialist • Business environment in the steel industry • Ruukki as part of a competitive, Nordic special steels company 18 March 2014 Sakari Tamminen2
  3. 3. Strategic focus areas 18.3.2014 Sakari Tamminen 3
  4. 4. Ruukki’s business areas 18 March 2014 Sakari Tamminen4 Back to profitability Net sales €292m Operating loss €10m Ruukki Building Systems Accelerating sales growth of special steel products Net sales €1 679m Operating profit €27m Ruukki Metals Growth from roofing products and energy- efficient components Net sales €430m* Operating profit €36m Ruukki Building Products * 2013 figures Net sales €2.4 billion Personnel 8 600 Cutting costs by improving operating efficiency
  5. 5. Energy-efficient construction is a growing business opportunity 18 March 20145 Sakari Tamminen Products utilising renewable energy Lower lifecycle costs Increased owner value Lower environmental impact Products saving energy Energy prices Norms, regulations Growing environmental awareness Ruukki Solar thermal roof Ruukki Solar façade Energy piles Energy panels and recyclable Life panels
  6. 6. Ruukki Building Products Foundation and infrastructure construction products: steel piles, retaining wall structures, guard rails, main water and district heat pipes Wall and roof components: sandwich panels, roofing sheets, façade claddings Residential roofing products: steel roofs, rainwater systems and safety products, as well as installation services Renovation and installation Ruukki is the market leader in Finland Net sales €430m Sakari Tamminen18 March 20146
  7. 7. Sakari Tamminen7 Ruukki’s energy panel system saves energy costs Itella’s logistics centre exceeded air tightness expectations According to Itella’s environmental values, energy efficiency is one way the company can reduce its carbon footprint. The building’s measured air tightness rate (q50) was 0.7 m3/(h m2), when existing regulations in Finland require a rate of 4.0 m3/(h m2) Annual energy savings are around €25 000 - €40 000, or about 20% of the building’s total energy costs 18 March 2014
  8. 8. 8 Ruukki Building Systems Nordics, Baltics, CEE Frame and envelope structure design, manufacture and installation Russia Concept buildings, material deliveries without installation Single-storey construction Sports stadium construction Commercial construction Development unit Agricultural construction Sakari Tamminen18 March 2014 Net sales €292m
  9. 9. Sakari Tamminen9 The world’s largest gasification power plant fired by waste fuel (Mälarenergi, Sweden) Ruukki delivered the steel frame and precast concrete base blocks for the gasification plant, along with 12,000 m2 of sandwich panels and 2,300 m2 of insulated roofing panels. The boiler house building features contemporary architectural design and has visually impressive external walls created using Ruukki’s colourful sandwich panels. 18 March 2014
  10. 10. 10 Metals – Ruukki transforming strongly to special steels Standard steels: 930M€ Hot-rolled special steels High-strength and wear-resistant steels Hot-dip galvanised special steels Colour-coated special steels Special steels: €558m* Stainless steel and aluminium: €122m Hot-rolled plate and strip Cold-rolled and metal coated Colour-coated Standard plate and strip products: €772m Structural hollow sections Tubes and profiles: €228m Precision tubes Other tubes and profiles 18 March 2014 Sakari Tamminen * 2013 figures
  11. 11. Products Segments and customers Geographical regions Nykyinen liiketoiminta • Growth from new customers • Raex 400 tubes, Optim 700 Plus MH – structural hollow sections • Optim 700 plates up to 60 mm • Pural farm & Hiarc reflect coatings • Ramor 550 • Raex plates up to t 80 mm • Growth from new customers and customer segments • Wear-resistant steels for the mining industry • High-strength steels in construction • Growth from new geographical regions • New sales offices and partners • New recruits for special steels sales Present business Growth in special steels from new products, customers, customer segments and geographical regions
  12. 12. 18 March 2014 Sakari Tamminen12 Inmeco (Brazil) – Sustainability and higher payloads New materials result in significant product improvements Dump trucks have a short distance cycle. The wearing of equipment can be a costly problem when transporting abrasive materials. Wear-resistant Raex® 450 was used for the new open-box bed and has significantly increased the product’s useful life. Thanks to special steels, the equipment is up to 400 kg lighter, which has increase the payload and decreased fuel consumption. .
  13. 13. Yhteenlaskettu tuotekate Profitability improvement in the steel business Tuotekate Korkea Keskim. Matala Volyymi RT & AL Standardi- tuotteet RT & AL Standardi- tuotteet Volyymi ja kannattavuus ei mittakaavassa Putket & Profiilit Erikois- teräkset Total product margin Product margin* High Medium Low Volume* *Volumes and profitability are not to the same scale Tubes & Profiles Special steels SS & AL 1. Strong growth in special steel products -> €850m (2015*) 2. Smaller, selected share of standard grades – Growth in tube products – Growth in colour-coated and hot-rolled flat products – Fewer galvanised products 18 March 2014 Sakari Tamminen13 (*2013: €558 million)
  14. 14. Financial performance in 2013 18.3.2014 Sakari Tamminen 14
  15. 15. Sakari Tamminen18 March 2014 2013 highlights • Profitability improved in all business areas. – Most positive development was in Ruukki Building Products. – Comparable operating profit was €39 million (-50). • Net cash from operating activities rose to €184 million (172). • Efficiency projects generated earnings improvement of around €70m. • Net sales were down due to lower market prices of steel products. • Ruukki Metals’ delivery volumes were slightly higher. • Earnings per share were -€0.10 (-0.85). • Relating to the combination agreement of SSAB AB and Rautaruukki Corporation, the Board of Directors proposes that no dividend (0.20) be paid for the financial period ended 31 December 2013. 15
  16. 16. Net sales down 7% due mostly to lower market prices of steel products 18 March 2014 Sakari Tamminen16 Ruukki Building Products Ruukki Building Systems Ruukki Metals 1 741 2 275 2 620 2 597 2 404 0 500 1 000 1 500 2 000 2 500 3 000 2009 2010 2011 2012 2013 Net sales 2009-2013* (€m) Net sales by market area* 2013 (2012) 100% = €2 404m (€2 597m) Other Nordic countries 31% (30%) Finland 25% (26%) Central Eastern Europe 15% (14%) Rest of Europe 13% (14%) Other countries 7% (6%) Russia and Ukraine 10% (10%) * Comparable Growth in markets outside Europe
  17. 17. Profitability improved in all business areas 18 March 2014 Sakari Tamminen17 Operating profit €39 million (-50) in 2013 Operating profit and group EBITDA (€m) Change in operating profit* by business area (€m) 2013 vs. 2012 * Comparable ‐248 70 78 ‐50 39 ‐177 150 171 55 164 ‐250 ‐200 ‐150 ‐100 ‐50 0 50 100 150 200 2009 2010 2011 2012 2013 Comparable operating profit Reported EBITDA ‐50 39 6 58 14 11 ‐60 ‐50 ‐40 ‐30 ‐20 ‐10 0 10 20 30 40 50 2012 Other Ruukki Metals Ruukki Building Products Ruukki Building Systems 2013
  18. 18. 336 621 770 765 693 161 173 179 97 90 22.3 44.7 60.3 71.2 68.5 0 10 20 30 40 50 60 70 80 0 100 200 300 400 500 600 700 800 900 2009 2010 2011 2012 2013 Net debt decreasing 18 March 2014 Sakari Tamminen18 Net interest-bearing debt Gross capex in tangible and intangible assets Gearing ratio 68.5% at year-end 2013 Net gearing €m %
  19. 19. 182 ‐64 114 172 184 30 ‐226 ‐57 78 101 ‐250 ‐150 ‐50 50 150 250 2009 2010 2011 2012 2013 Cash flow improved to €184 million 18 March 2014 Sakari Tamminen19 €62 million freed up from working capital (173) Net cash from operating activities and before financing activities (€m) Net cash from operating activities Net cash before financing activities
  20. 20. Building Products’ net sales 18 March 2014 Sakari Tamminen20 Net sales by product group (€m)* Full-year net sales down 5%, growth in residential construction, Sweden and in components in Norway * Reported Building components Infrastructure construction Residential roofing products Building Products 457 452 430 0 50 100 150 200 250 300 350 400 450 500 2011 2012 2013 Net sales by market area 2013 (2012)* Other Nordic countries 26% (25%) Finland 32% (33%) Central Eastern Europe 31% (30%) Rest of Europe 2% (3%) Russia and Ukraine 8% (10%) *Comparable
  21. 21. Building Products’ profitability clearly improved 18 March 2014 Sakari Tamminen21 EBIT and EBITDA (€m) Comparable operating profit €36m (22) in 2013 • Impact of efficiency programmes on earnings improvement €8 million • Better gross margin • More favourable geographical spread than earlier of residential roofing products • More effective steering of sales of building components • Better functioning of business processes Building Products Comparable EBIT Reported EBITDA 5 6 26 22 36 10 20 36 30 45 0 5 10 15 20 25 30 35 40 45 50 2009 2010 2011 2012 2013
  22. 22. Building Systems’ net sales at same level as a year earlier 18 March 2014 Sakari Tamminen22 Net sales by market area, (€m) * Building Systems * Reported Russia Nordic countries Central Eastern Europe 300 288 292 0 50 100 150 200 250 300 350 2011 2012 2013 • Net sales in Finland down clearly due to weak demand • Rouble-denominated net sales in Russia up 9% year on year
  23. 23. Building Systems’ profitability improved year on year, but still not yet at a satisfactory level 18 March 2014 Sakari Tamminen23 Comparable operating profit -€10 (-21) in 2013 • Impact of efficiency programmes on earnings improvement €8 million • Profitability weakened by a few loss- making steel structure contracts which, had a negative impact totalling around €8 million • Shift in focus of production to lower cost countries • Better gross margins and more efficient capacity utilisation rate • Healthy order books and capacity utilisation rate in Russian businesses Building Systems ‐49 ‐51 ‐29 ‐21 ‐10 ‐34 ‐32 ‐13 ‐11 6 ‐60 ‐50 ‐40 ‐30 ‐20 ‐10 0 10 2009 2010 2011 2012 2013 EBIT and EBITDA (€m) Comparable EBIT Reported EBITDA
  24. 24. Metals’ comparable net sales down 10% 18 March 2014 Sakari Tamminen24 Net sales by product group*, (€m) Clear rise in delivery volumes of special steels Special steel products Strip and flat products Stainless steel and aluminium Tubes and profiles * Reported Metals 1 783 1 787 1 679 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2011 2012 2013 Net sales by market area* 2013 (2012) Other Nordic countries 32% (33%) Finland 26% (27%) Russia and Ukraine 5% (5%) Other countries 10% (8%) Rest of Europe 18% (19%) Central Eastern Europe 10% (9%) * Comparable
  25. 25. Metals’ profitability improved clearly 18 March 2014 Sakari Tamminen25 Impact of efficiency projects was €48 million Comparable EBIT €27 million (-31) in 2013 • Impact of efficiency projects on earnings improvement €48 million • Lower raw material costs • EBIT weakened by lower average selling prices of steel products Metals ‐190 130 95 ‐31 27 ‐130 202 161 62 128 ‐200 ‐150 ‐100 ‐50 0 50 100 150 200 250 2009 2010 2011 2012 2013 EBIT and EBITDA (€m) Comparable EBIT Reported EBITDA
  26. 26. Share of special steel products Net sales of special steels and % of Metals’ net sales* 18 March 2014 Sakari Tamminen26 Net sales of special steel products * Share of special steel products has been calculated based on comparable net sales i.e. the reference figures have been restated to reflect the current corporate structure Share of special steels of Metals’ comparable net sales Target is net sales of €850 million in 2015 Metals 77 114 109 124 151 160 128 122 144 161 130 120 135 148 131 149 22% 25% 27% 29% 30% 33% 31% 26% 29% 33% 31% 27% 30% 34% 34% 37% 0% 5% 10% 15% 20% 25% 30% 35% 40% 0 20 40 60 80 100 120 140 160 180 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13
  27. 27. Net sales: Comparable net sales in 2014 are estimated to grow compared to 2013. 18 March 2014 Sakari Tamminen27 Guidance for 2014 Operating profit: Comparable operating profit in 2014 is estimated to improve compared to 2013.
  28. 28. Ruukki’s transition to a construction and steel specialist 18.3.2014 Sakari Tamminen 28
  29. 29. Reinforcement steels business (Nordics and Germany , €400m) 18 March 2014 Sakari Tamminen29 Main disposals and acquisitions Omeo Mekaniska Verkstad (Sweden,€ 23m) Aprítógépgyár (Hungary, €43m)Velsa (Finland, €47m*) Syneco Industri (Sweden, €37m) Metalplast- Oborniki (Poland, €65m) PPTH Steelmanagement (Finland, €101m) Steel-Mont (Slovakia, €27m) OOO Ventall (Russia, €70m) Skalles Elendomsselskap (Norway, €16m) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Acquisitions Disposals Plåtleverantören i Stockholm AB (Sweden, €17m) AZST-Kolor (Ukraina) * net sales at time of disposal/acquisition Ruukki Construction Ruukki Engineering Ruukki Metals Star Tubes, steel tube wholesaler (UK, €15m*) Froh HouseTech (Germany, €12m) Duisburg Service Centre (Germany) Fredericia plant (Germany, €15m) Fortaco arrangement Shares in Ruukki Tisza Zrt and Ruukki Slovakia s.r.o. together with net assets of Wroclaw, Kurikka, Sepänkylä and the components business in Kalajoki (€137m) ~€61m ~€189m Scanbridge AS (Norway, €9m) UAB Gensina (Lithuania) Wolter Metallverarbeitung (Germany, €5m) Ovako Long steels (Finland, €600m) Metalplast Systems (Poland, €8m) Gävle colour- coating line (Sweden) Carl Froh GmbH (Germany. €58m) ~€483m ~€93m Tot. €576m Tot. €250m Halikko plant (Finland, €13m)
  30. 30. Long-term focus on special steels Advanced production technology and broad product portfolio create a strong foundation for growth Product range Sales & distribution Total of 13 certified partners in Brazil, Chile, Europe, Peru and Middle East 40 new positions in international salesOwn stocks in China New sales offices in Australia, India & China 4 new sales offices and new stock in Russia New sales offices in Chile, Canada, USA & Russia Focus in Europe Z600 Zinc coating New sales offices e.g. in France and Benelux Expansion in Russia Global business New distributor cooperation partners in Americas, Asia, Europe and Middle East Raex plate up to 80 mm Pural farm & Hiarc reflect coatings Raex & Optim 700 Plus tubes Raex plates 30-40 mm Optim 700 plate up to 40 mm Form Z600 tubes RWS Pural coating Optim 700 plate to 60 mmLaser-welded products Optim 700MCPlusRaex 400-500 strip Optim 900-1100 -nauhat Raex plate 11-16 mm Optim 700 plate 8-30 mm Raex plate 8-30 mm Purex coating Ramor 500 strip Litec 800-1000DP Litec 100DP Litec 1000 DP Pural Matt coating PVDF coating Ramor 550 30 18 March 2014 Sakari Tamminen Investments Cut-to-length line #2 leveller (€13m) Strip mill automation (€12m) Direct quenching equipment at plate mill (€29m) Plate mill cold leveller (€24m) Cut-to-length line #2 improvement (€14m) New cut-to-length line #3 (€26m) Improvement of normalising furnace(€7m)Strip mill automation 2 (€15m) ~€210m 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013200320022001 New coilbox at strip mill (€24m) Steel ladle processing equipment (€17m) Plasma cutting and bundling of plates (€9m)
  31. 31. 0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 % 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Construction Special steels Engineering Other steel and metal products Long steels Share of construction and special steels rose from under 20% to more than 50% 31 18 March 2014 Sakari Tamminen Long steel products Other steel and metal products Engineering business Special steels Construction business Share of businesses of reported net sales 2004-2013 (%)
  32. 32. Operating profit of €2.4 billion and EBITDA of €4.0 billion during ten years 18 March 2014 Sakari Tamminen32 Reported net sales 1999-2013 (€m) Reported EBIT and EBITDA 1999-2013 (€m) 0 500 1000 1500 2000 2500 3000 3500 4000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 The period since the years of rapid growth and strong profitability in 2004-2008 has been characterised by clearly weaker demand and overcapacity in the steel industry ‐350 ‐150 50 250 450 650 850 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Reported EBIT Reported EBITDA
  33. 33. 0 20 40 60 80 100 120 140 160 0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Over €1.1 billion invested in production facilities during the past ten years 33 Net investments, acquisitions and gearing ratio 1999-2013 €m 18 March 2014 Sakari Tamminen Net investments Acquisitions Gearing ratio %
  34. 34. 0,0 0,2 0,4 0,6 0,8 1,0 1,2 1,4 1,6 1,8 2,0 2,2 2,4 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Over €1.3 billion in dividends during the past ten years 18 March 2014 Sakari Tamminen34 0 50 100 150 200 250 300 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Dividends paid 1999-2013 (€m) Dividend paid per share 1999-2013 (€)
  35. 35. Headcount development 1999-2013 18 March 2014 Sakari Tamminen35 12 491 13 000 12 975 12 804 12 047 12 126 11 374 13 303 14 587 14 286 11 648 11 286 11 382 9 034 8 600 0 2000 4000 6000 8000 10000 12000 14000 16000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 * The Fortaco deal resulted in a decrease of 1,334 in personnel numbers. * Personnel at year-end 1999-2013
  36. 36. Business environment in the steel industry 18.3.2014 Sakari Tamminen 36
  37. 37. 36 CIS 79 EU 209 Asia 25 Nafta* 19 Latin America* *nominal gross overcapacity is used for the regions indicated. Sources: OECD Steel Committee 2012 (overcapacity data for 2011) and World Steel Association 2013 (production data for 2012) Overcapacity in the steel industry a global problem Nominal overcapacity in the steel industry and crude steel production by region (mt) 18 March 2014 Sakari Tamminen37 120 47 169 112 1012 Production
  38. 38. 18 March 2014 Sakari Tamminen38 70% 75% 80% 85% 90% 95% 100% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: World Steel Association 2014 Lower capacity utilisation rate in steel production New “normal” < 80% Capacity utilisation rate in steel production
  39. 39. China and other emerging economies sustain steel market growth – Europe stagnates Apparent steel consumption 18 March 2014 Sakari Tamminen39 Source: World Steel Association Short Range Outlook 10/2013 0 200 400 600 800 1000 1200 1400 1600 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013e 2014f Kiina EU 27 Maailma Million tonnes ~45% China’s share of global steel market -0.5% Growth of European steel market in 2013
  40. 40. 0 50 100 150 200 250 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014F Special steel market World EU 27 Market for special steels grows faster 40 Growth of hot-rolled special steels vs. total steel market Global market for hot- rolled special steels ~3m tonnes in 2013 Ruukki global #2 position in hot-rolled special steels Hot-rolled special steels are Ruukki’s largest product group, others are high-strength galvanised and special colour-coated products Source: WSA SRO 10/2013 and Ruukki’s forecast of the hot-rolled special steels market Hot-rolled special steels include the following trademarks: Raex, Optim and Ramor. (Indexed 2004=100) 18 March 2014 Sakari Tamminen Global addressable market for Ruukki’s special steels ~15m tonnes in 2013 Special steels World
  41. 41. Creating a more competitive steel company with global reach
  42. 42. SSAB and Ruukki – more competitive together  The combined company will operate on the global market and offer customers high-strength steels, heavy plate, standard strip and tubular products  Value creation through tangible synergies and improved earnings potential and through greater flexibility and cost efficiency  The Boards of Directors of both companies recommend shareholders to accept the offer and the main shareholders of both companies have expressed support for the offer  Expected annual cost synergies of up to €150 million (SEK 1.4 billion) 42
  43. 43. A combination with a strong industrial logic  Flexible and cost-effective production system to better adapt to changes in market demand  Value creation through tangible synergies  Accelerated growth in high-strength steels, heavy plate, standard strip and tubular products – continue the shared strategic direction of both companies  Enhanced ability to invest in product development and R&D – innovation leader A more competitive Nordic and US-based steel company 43
  44. 44. 1 2 3 11 22 Luleå Broader steel production base in the Nordic countries 1 2 3 Borlänge Oxelösund Raahe Hämeenlinna 11 22 Steel production, heavy plate and strip products Strip products Steel production, heavy plate Steel production Strip products and tubes 44
  45. 45. Overview Plannja manufacturing Ruukki manufacturing Plannja Ruukki Combined Net sales €120m €740m €860m Employees 371 3 266 3 637 Manufacturing sites 5 11 16  High quality, strong brands and competences  Complementary presence in Nordic markets, with strong focus on the residential segment  Synergies from optimising production network and product portfolio 45 Further synergy potential through construction business
  46. 46. Value creating share exchange offer for all shareholders  For each Rautaruukki share is being offered: – 0.4752 newly issued SSAB class A shares – 1.2131 newly issued SSAB class B shares  Based on the three-month volume-weighted average share prices of both SSAB and Rautaruukki, the share exchange offer corresponds to a premium of 20% for Rautaruukki shareholders 46 Conditions for completion of the share exchange offer  Subject to SSAB’s shareholders passing the resolutions required to implement the combination and share exchange offer  Acceptance of over 90% of Rautaruukki’s shareholders  Subject to clearance from the regulation authorities in the EU and in certain other areas
  47. 47. Estimated timetable of the share exchange offer  22 January 2014 announcement of the exchange offer  9 April 2014 SSAB’s Annual General Meeting resolves to implement the share exchange offer  Share exchange offer document and prospectus to Rautaruukki’s shareholders April 2014  Period to accept the exchange offer estimated to be late April/early May 2014  The combination is subject to approval from the competition authorities. 47 Announcement of exchange offer 22 January 2014 Acceptance of exchange offer (estimated) April-May 2014 SSAB’s Annual General Meeting 9 April 2014 April 2014 Offer document published (estimated) >
  48. 48. 18 March 2014 Sakari Tamminen48

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